The last months of 2002 were uneven ones for electronics retailers. American consumers, apparently trying to stretch their home entertainment dollars as far as possible, patronized discount stores while bypassing more upscale competitors.
Price fixing rumors squashed: On Tuesday, December 23, the US Department of Justice officially ended a two-year investigation of price fixing by major record labels, with a report that it had found no evidence to support any of the allegations. The investigation began in summer 2001 and concentrated primarily on online music service MusicNet, a joint venture by Warner Music Group, EMI Group, BMG Entertainment, and RealNetworks; and Pressplay, a joint venture by Sony Music Entertainment and Universal Music Group. The majors had been accused of conspiring to keep startups out of the online music distribution business.
Retail may be bouncing back. Best Buy, North America's number one electronics chain, reported an 18% gain in total sales for its third quarter ended November 29. The Richfield, MN–based operation posted $6.03 billion in total sales, with same-store sales up 8.6%.
Bronfmans bid Vivendi adieu: On Wednesday, December 3, Edgar M. Bronfman and his son Edgar Bronfman, Jr. officially resigned from Vivendi Universal's board of directors. The move followed an announcement by Time Warner that it would accept a $2.6 billion offer for its Warner Music Group (WMG) from an investment group led by the younger Bronfman.
With few exceptions, 2003 has been a slow year for specialty A/V retailers. In late November, both Ultimate Electronics and Tweeter Group reported disappointing figures for their third and fourth fiscal quarters, respectively. New York's Harvey Electronics, however, posted respectable gains given the stagnant economy.
Consumer electronics stores have long carried computer gear, everything from laptops and desktop systems to software and accessories. Computer stores, led by Gateway Country stores, have slowly been moving in the other direction. Now it looks as if convergence in the retail realm is about to take another great leap forward.
The music goes round and round: An investment group led by former Universal Music chief Edgar Bronfman, Jr. is in the lead to acquire Warner Music Group (WMG) and Warner/Chappell Music Publishing from corporate parent Time Warner, according to reports issued the third week of November. Bronfman's group—a consortium of banks and venture capital firms—has offered $2.8 billion for Time Warner's musical properties, possibly forcing prior suitor EMI Group PLC to drop out of the bidding. On Thursday, November 20, EMI chairman Eric Nicoll told reporters that Time Warner had informed his company of "a possible proposal from another party as an alternative to our own firm offer."