Today, March 19th at 5 pm et is the deadline for bids on Diamond Comics assets. The auction will be held on March 24th in New York at the offices of Raymond James, the company tasked with overseeing the sale of assets, with a hearing to approve the sale on March 27th in Maryland bankruptcy court.
Who will the bidders be? Court documents said that there were 30 potential buyers under NDA who were investigating the assets. Since the bidding process must, by law, be private, we won’t know until March 24th, and maybe not even then.
We do know that Universal Distribution has put in a bid for Alliance Games, the most profitable division of Diamond, and a stalking horse (trial balloon) bid for Diamond UK. Universal has been described to me as “the Diamond of Canada,” they’ve been trying to expand into the US for a while, and everyone seems to think they are a motivated bidder. But they could be outbid.
So who are the other 29? It must be remembered that Diamond is selling off all its various parts, and even office equipment. There are 11 separate business units up for auction:
Diamond Comic Distributors
Diamond Book Distributors
Alliance Game Distributors
Collectible Grading Authority
FandomWorld
FreeComicBookDay.com
Diamond Select
Gentle Giant Ltd.
Ironguard Supplies
Comic Exporter, Inc.
Comic Holdings, Inc.
The last two are holding companies that each own 50% of Diamond UK. In theory someone could bid on the toy assets (Diamond Select and Gentle Giant) and someone else on the book distribution business. It’s possible, or even likely, that toy companies will get the toy businesses, and so on. It seem improbable that any company that wants to get into the comics distribution business would also want to make licensed toys based on DC Comics and House of the Dragon.
I don’t have any inside track on who potential suitors for Diamond’s assets are beyond Universal. However Milton Griepp wrote about this in a recap of Toy Fair:
I stopped at the booth for Diamond Select Toys, Diamond Comic Distributors, and Alliance Game Distributors and spoke to Ramy Aly, Senior Director at Getzler Henrich & Associates, the restructuring consultants that are helping to guide Diamond through its Chapter 11 process. He told me that events since the filing were proceeding as well as or better than expected, including good vendor support and additional parties interested in acquiring Diamond assets. Bidding may be complex, because there are a lot of moving parts, but he said that things were generally going well.
That interaction was coupled with direct and indirect information from other sources that indicated that well-funded buyers that are strategically connected but outside the comics and games businesses are circling Diamond assets, with one telling me directly that they intended to bid.
Since Griepp is the last word on all things distribution, I’ll take this as an optimistic report and Griepp even comes out and says that “I now have higher hopes for a viable future for Diamond as a comics and merch distributor, with the backing and transformative management that could produce a better company.”
Anyone who wonders how this will all shake out should also read a two part interview with Lunar Distribution’s co-owners Christina Merkler and Cameron Merkler. (part one, part two), It’s a frank discussion of how Lunar has approached expanding their business, and also problems that Diamond had, from Christina Merkler:
Christina: This is the thing. Any distributor that takes on 10 publishers that do a million units is going to be way more efficient than a distributor that takes on 50 publishers with a million units, because then you have to deal with 50 people and data. It’s a data issue, it is a resource issue, and it is capacity at some point.
What I can say our experience has been as a retailer is that some of the smaller publishers, not all, have a lack of consistency in product, a lack of consistency in shipping. It’s difficult for a distributor to deal with multiples of those, with constant moving of dates, constant pushing of things.
When it comes down to it, it is much easier to distribute a cover that sold 5,000 than it is a cover that sold 500. The capacity isn’t necessarily capacity‑driven, as actual square footage in the warehouse. It is, how many SKUs do we have to pick in a week? That is something that I think created the downfall of Diamond (whatever you want to call it): the inability to be as profitable as you can be, because it’s a losing game. [laughs]
To which Griepp responds:
They had the hardest part of the business left after they lost their biggest publishers.
Which is as succinct a summary of the situation as possible. The number of SKUs generated by the vast number of variant covers produced by several publishers could be a strain on any potential bidder’s infrastructure, and its something that Lunar is already quite mindful of. At ComicsPRO I was told that Lunar is even limiting the number of variant covers publishers can put out. Change has come.
As far as I can tell, the auction on the 24th is public, so that might be quite a day for the history of comics. In the meantime, as required by law, Diamond has been publishing notices of the bankruptcy sale in various local newspapers. Even after everything that has happened, it’s still a sobering thing to see.
English (US) · 