LA VERGNE, Tenn. -- Ingram Entertainment here, the nation's largest video distributor, just got larger by purchasing rival distributor Major Video Concepts, Indianapolis, on Oct. 12.
"Ingram's getting very powerful," said Greg Rediske, president, Video Management Co., Tacoma, Wash.
"Because of the Universal deal we actually sped up the closing" by a few days, Ingram Chairman and President David Ingram told SN, referring to the Universal City, Calif.-based studio's recent decision that Ingram would be one of only three distributors to carry its forthcoming product.
Since that announcement by Universal Studios Home Video President Craig Kornblau the previous week, the video industry had been abuzz with rumors of the impending purchase. "If you were consolidating distributors you would certainly keep Ingram and Major," said one industry observer at the time, giving the consensus of trade opinion. "So the fact that Universal isn't going with Major means that Ingram is going to buy Major."
This assessment was due to MVC's standing in the industry. "Major was obviously our strongest competitor," said Ingram's Bill Bryant, vice president of sales, grocery and drug. "They have good people, high standards and a good service level."
Despite the timing of the two events, however, Ingram insisted they were unconnected. "We're under confidentialities with both companies, so it was a true coincidence," he said. "But it was probably more predictable that another studio was going to [change distribution strategies] than that we were going to buy a competitor."
Instead the Warner Direct startup may have been a more influential factor. "After the Warner deal the holding company that owns MVC decided that maybe they wanted to get out of the video distribution business," said Ingram. "They shopped the company and we had a fairly drawn-out negotiation with them."
After reaching an agreement, "since we're both privately owned companies we didn't have to announce the deal," Ingram said. So disclosure was delayed until shortly after the 30-day waiting period for possible Federal Trade Commission objection (on anti-trust grounds) had expired.
Now Ingram is dealing with the resulting operational changes. "The transition should be smooth," said Ingram. "It's a difficult time but we have a good plan. We're sensitive to not wanting any disruption during the fourth quarter, which is an important time for everybody."
"It's just a scramble trying to get credit applications filled out and submitted and get commitments from retailers to buy from us, too," Bryant said. "There's quite a bit of confusion out there, but it's a fun kind of frenzy."
In the interim "we will be managing two businesses for a period of time," Ingram said. "We're planning to switch Major to the Ingram name at the first of next year. Universal will still ship product through the former Major."
Universal's distribution shakeup complicates an already massive undertaking. "Universal's decision wasn't factored in when we started planning the Major deal," said Ingram. "Because the Universal situation leaves us with more customers than we had before, we're really trying to understand what that's going to mean for our personnel needs in the future. We're proceeding in a fairly cautious manner."
The company is determined to contact all potential customers. "If anyone hasn't heard from an Ingram representative with respect to Universal," said Ingram, "please have them e-mail me at David.Ingram@ingramentertainment.com and I'll be happy to forward the information to the appropriate salesperson."
So far communication seems effective. "Ingram just got in touch with us," said Craig Hill, video specialist, Harps Food Stores, Springdale, Ark.
As for the reaction from Major associates, "from a morale standpoint this has been a good thing," Ingram said, because "before the announcement they didn't have access to Warner or Universal rental product on a go-forth basis."
The acquisition adds to Ingram's prominence in the industry. In 1999 Ingram had over $1.1 billion in gross revenue, while MVC had well over $250 million. "It's often dangerous to have too much power in too few hands," said Rediske of Video Management Co. "Ingram's market share will now be extreme." And that concerns some specialists.