Did you hear Best Buy is trying to buy 49% of D&M Holding?

[Mr Peabody]

I heard from a reliable source that Best Buy has made a bid for 49% of D&M. I've also heard some of the Marantz people have jumped ship which tells me something is going on. I'm not sure why D&M would sell to BB it seems D&M has market penetration already. This is like Wal-Mart buying McIntosh. Best Buy sucks, I believe in the archieves there's a whole thread dedicated to their suckage. Does anyone know if D&M is having problems? If not, I just don't see what's in it for them aside from a boat load of money. The money wouldn't mean anything though if their stuff becomes just another BB brand.

[anamorphic96]

Here is some more info. So is Kenwood.

http://www.audioholics.com/news/industry-news/denon-up-for-sale-best-buy-and-kenwood-bidding

[Mr Peabody]

Found this:
http://www.dealerscope.com/story/story.bsp?sid=95544&var=story

This is good:

http://www.mirandalambert.com/community/viewtopic.php?t=19349

I said Mac, I forgot, D&M has Mac. It is like Wal-Mart buying Mac!! I could be a gloomy day for Mac owners.

[kexodusc]

Not surprised - this is a prime example of vertical integration.
Personally, I think the move makes sense for Best Buy. It offers them an opportunity to increase margins on a significant portion of their products, and diversify into a higher margin industry that isn't going away.

Watch audiophiles dismiss Denon, Marantz, Snell, and MacIntosh as "big box" items the day after...

[Woochifer]

Why would this be surprising? D&M Holdings was formed by an investment group. These guys are not engineers or home theater enthusiasts -- they are money guys. It's all about acquiring companies, building up the value of their holdings, and presumably selling off their stake at some point for a profit. Doesn't have to be anything wrong with D&M. If they're doing well, then that presumably increases the value of their holdings. Could be as simple as BB making an attractive offer, and D&M accepting.

Best Buy already owns Magnolia Audio Video, and D&M Holdings' companies already supply a large portion of the product carried in the Magnolia standalone stores and ministores inside of BB. So, BB and D&M have had a fairly tight business relationship to begin with.

I think you're mistaken if you assume that BB will turn D&M's brands like McIntosh into glorified Insignia bargain items. If anything, BB has done a pretty job at managing Magnolia's market expansion and protecting that higher end brand. They've let the Magnolia division operate autonomously while integrating the chain into its BB stores. Certainly a lot better than how CompUSA mismanaged Good Guys into oblivion.

Plus, this ownership stake would be 49%? I assume this means that someone else is holding the other 51%. Sounds to me more like a supply chain position than anything. With an ownership stake, BB won't have to worry about D&M pulling their products out of BB and Magnolia stores, and vice versa.

If anyone should worry, it's Circuit City. They recently terminated their long-time distribution agreement with Harman International (which supplied them with JBL, Harman, and Infinity products), and began carrying stuff from D&M Holdings. Aside from now having a lot more product overlap with BB, CC selling D&M's products means that they will be propping up the bottom line for their primary rival! CC's move didn't make sense to me when they announced it, and it makes even less sense now.

I think the real question mark will rest with D&M's relationships with smaller regional chains and independents. Does this now mean that a lot of them will begin dumping Denon, Marantz, Boston Acoustics, McIntosh, et al? JBL lost virtually their entire independent dealer network 20+ years ago when they began selling their speakers in big box stores. This is not quite the same situation, since the higher end D&M products are not sold inside BB but rather under the Magnolia umbrella. But, with BB holding a 49% ownership stake, will those other stores view their business relationship with D&M in the same negative light that JBL's dealers did back in the mid-80s?

[Mr Peabody]

One of the links I posted said something about Phillips owning 12% of D&M and vowed to the sell those shares to the buyer of the 49%. Apparently this 49% has been on the market and Best Buy is just one of the bidders.

There will undoubtedly be back lash but it could be a positive for Mac and consumers, Mac will be more accessible to consumers. More affordable, maybe not, but more can drool. If Magnolia does a good job of displaying the product it could work. I don't think Mac will be seen in the same light anymore though. Then again, who knows, Ultimate carried Krell at one time, as well as Martin Logan. We may see more of this as internet sales bite into the B&M stores market and bottom line. I think more elite manufacturer's will be enticed to go with larger chains as they see their product stagnate in boutiques. It's a tough economy and the higher end companies are sitting and waiting for the format war to end and I'm afraid they may have missed a big portion of those looking to upgrade. I've yet to see any of them offer a BR player or include up to date processing. Maybe they still think BR will go the way of SACD? I don't think so, most of them offer SACD. It's a strange period.

[pixelthis]

What happens will be determined by the marketing dept.
DENON, MAC, and Marantz are probably safe, but there will be consolidation.
And selling of brands, like westinghouse sold their name to be used on a LCD tv.
Actually a lot of high end sound has been marketing for awhile, true "high end"
has become scarce. Stuff like this just raises the veil a bit.
Look for a "mid range" MACINTOSH, a "big mac" mac.
Marantz in best buy, denon boom boxes.
This will just accelerate the change that has been going on the last few years.
How about a 42in LCD mac flatscreen? HMMM?:1:

[Woochifer]

One of the links I posted said something about Phillips owning 12% of D&M and vowed to the sell those shares to the buyer of the 49%. Apparently this 49% has been on the market and Best Buy is just one of the bidders.

There will undoubtedly be back lash but it could be a positive for Mac and consumers, Mac will be more accessible to consumers. More affordable, maybe not, but more can drool. If Magnolia does a good job of displaying the product it could work.

No guarantee of this happening. Keep in mind that the Magnolia ministores inside of Best Buy operate differently than the standalone Magnolia Audio Video stores (which only operate in Washington, Oregon, and California). Only the standalone stores have McIntosh demo units out. I have not seen any of the Magnolia ministores stock McIntosh, although I believe that anyone can special order McIntosh. Personally, I don't think any of this will denigrate the brand, since Magnolia has a solid reputation and BB has purposely limited the inventory that get stocked by the Magnolia ministores to home theater components (i.e., no two-channel gear, no analog components, etc.)



I don't think Mac will be seen in the same light anymore though. Then again, who knows, Ultimate carried Krell at one time, as well as Martin Logan.

Actually, the standalone Magnolia stores already carry Krell and Martin Logan, and have been stocking those brands since well before Best Buy acquired the Magnolia chain back in 2000. I don't see any denigration of those brands at all. Many of the Magnolia ministores stock Martin Logan, but don't demo the higher end models. I think BB's stake in D&M would be more for Denon, Marantz, and Boston Acoustics than anything, and presumably getting price breaks and supply chain assurances. Doesn't hurt that Magnolia's been selling McIntosh for decades.


We may see more of this as internet sales bite into the B&M stores market and bottom line. I think more elite manufacturer's will be enticed to go with larger chains as they see their product stagnate in boutiques.

I don't think this has anything to do with the boutiques or mail order, but more with the rapid disappearance/consolidation of regional specialty chains. Just in California over the last two years, we've seen Good Guys go belly up and Tweeter file for bankruptcy protection and then exit the California market. They were Magnolia's primary competitors, and now they're gone. These regional chains have always carried a selection of higher end products, along with the midrange and mass market brands.

Brands like Monitor Audio, Parasound, and Energy didn't suffer imagewise just because a specialty chain like Good Guys carried their products. But, I would think that they suffered a lot more when they lost upwards of 3/4 of their California retail locations after Good Guys closed.

High end brands selling through chain stores is nothing new. What's new is the dwindling number of these specialty chains.


It's a tough economy and the higher end companies are sitting and waiting for the format war to end and I'm afraid they may have missed a big portion of those looking to upgrade. I've yet to see any of them offer a BR player or include up to date processing. Maybe they still think BR will go the way of SACD? I don't think so, most of them offer SACD. It's a strange period.

Better question is how many of the brands you're thinking of make video products of any kind. The ones that even bother with making DVD players took their time before introducing DVD players. Blu-ray has been around less than two years, so if you need a point of reference, think back to 1998. How many of the high end companies were making DVD players at that time?

[Mr Peabody]

Wow, when I thought back to 1998 I realized how short of a time DVD has actually been around. I have had only two in my system, first a Sony, then my Denon 1600 and now my BD-P1200.

[pixelthis]

Only 14 years or so.
CD has been around 26 years
Records over a hundred
VCRS 33 :1:

[kexodusc]

Wow, when I thought back to 1998 I realized how short of a time DVD has actually been around. I have had only two in my system, first a Sony, then my Denon 1600 and now my BD-P1200.
Yeah, I've only had 3. A cheap Panasonic that I paid $600 for in 1999, then a decent Yamaha universal player and Toshiba universal that I bought a few years later...2004 or so.

I'm pretty sure I went through more VCR's in 1995.