VSDA MULLS MERGER WITH MUSIC RETAIL GROUP

ENCINO, Calif. -- It may be a case of divorce and remarriage association style.The Video Software Dealers Association here and the music retailers' group, the National Association of Recording Merchandisers, Marlton, N.J., are considering a merger, the groups have reported. VSDA had its beginnings as a committee within NARM, and ultimately split away from the now smaller music association about 20

ENCINO, Calif. -- It may be a case of divorce and remarriage association style.

The Video Software Dealers Association here and the music retailers' group, the National Association of Recording Merchandisers, Marlton, N.J., are considering a merger, the groups have reported. VSDA had its beginnings as a committee within NARM, and ultimately split away from the now smaller music association about 20 years ago.

"If this does come to fruition, we will have come full circle," Bo Andersen, VSDA's president, told SN. "VSDA arose out of NARM, and ultimately became a separate organization because it was the best way to serve our members at that time. Now we are looking at recombining our efforts because today we believe we may more effectively and efficiently serve our members by sharing the wealth of resources and institutional expertise that resides in the two organizations."

A formal letter of intent is being finalized, and a steering committee is being formed to work out the various issues involved, according to a joint statement issued by the groups. Both associations' conventions will proceed as planned this summer, and VSDA's recently formed iGroup, a separate division representing the interests of smaller video retailers, including those in the supermarket channel, will continue, Andersen said.

"Supermarkets would benefit from a trade organization that represents a greater swath of the entertainment industry. Our networking and research capabilities would be enhanced, and our ability to impact public policy debates would be even greater than it is today."

The decision to negotiate the merger was unanimously approved by VSDA's board of directors, and will likely be discussed in meetings during the VSDA show, July 14 to 16 in Las Vegas, and the NARM convention, Aug. 21 to 24 in San Diego, he said.

The two groups have common policy interests, such as piracy, copyright laws and First Amendment protections. However, the member retailers also operate in the same kind of challenging environment with problems of theft, digital delivery and emerging business models, according to the joint statement.

"The fundamental reason to merge, or form another strategic alliance, is to aggregate overall strength and legislative clout, as well as to achieve future operational efficiency and economies of scale -- all of which means greater value for our members. Thus, this is much more a matter of common missions and shared retailing cultures than it is a question of economics," Andersen said.

The advent of DVD has increased the common interests of VSDA and NARM, and has also changed the retail marketplace, with music retailers devoting more floor space to DVDs, he said. Meanwhile, video retailers have looked for other entertainment software opportunities, according to industry sources.

"Combining NARM and VSDA would benefit many retailers because a substantial segment of video retailers sell music," said Bill Bryant, vice president of sales, Ingram Entertainment, La Vergne, Tenn. "Combining the two trade shows would also add excitement, as both shows sponsor different types of entertainment. If the two shows are combined, it would be a win/win for everyone -- suppliers and retailers," he said.

Andersen concluded, "The sum of a combined NARM/VSDA would be more than the sum of the two separate associations. We have many complementary strengths. The reasons companies come together in a trade association are to gain greater influence and legislative clout and to enjoy broader member services and operational efficiencies. All of these would be available in a consolidation of these two associations."

Top 5 Supermarket Video Sell-Through Titles

Rank, Last Week: Title (Weeks Out), Studio, DVD Retail

1, 1: Lord Of The Rings: Return Of The King (1), New Line/Warner $29.95

2, 1: Miracle (2), Buena Vista, $29.99

3, 3: The Last Samurai (4), Warner, $29.95

4, N: Starship Troopers 2, Columbia, $24.96

5, N: Shrek/Shrek 3-D, DreamWorks, $26.99

N = New

As of June 6, 2004 This chart, tailored for the supermarket video market, is based on information taken from more than 1,000 supermarket rental locations serviced by Ingram Entertainment, La Vergne, Tenn.