Baltimore comic-book titan Stephen A. Geppi solidified his dominance of the comics distribution business yesterday by buying a major competitor and adding $50 million in sales to his company.
With the purchase of Capital City Distribution Inc., Geppi's Diamond Comic Distributors Inc. of Timonium will book considerably more than $200 million in annual sales, boosting it back toward its 1993 peak. The deal won't increase Diamond's employment in Timonium much, however.
"It's a substantial recapture for us," said Geppi, who also owns Baltimore Magazine and who is a minority shareholder of the Orioles.
The price, which Geppi called "substantial," wasn't disclosed. But Capital has deteriorated sharply in the last year, the victim of an industry consolidation of which its deal with Diamond is the latest evidence.
Capital City, whose titles include "The Crow" and which Geppi said had $150 million in annual sales not long ago, lost business when many of its publishers signed exclusive deals with other distributors, including Geppi.
Lately, "Capital City had only one good, exclusive comic book that I needed ['The Crow']," said Jay Bull, owner of the Comics Kingdom store in Baltimore. "There's been this big move with these distributors to get exclusive deals" with publishers.
The shift started in early 1995, when Marvel Entertainment Group Inc., the industry's No. 1 publisher, decided to use a Marvel-owned distributor for all of its shipments to specialty comic-book stores.
The move stripped sales from Diamond and other distributors, and Diamond struck back a few months later by entering an exclusive deal with DC Comics, the No. 2 publisher.
Since then, Image Comics (the Spawn character), Dark Horse BTC Comics (Star Wars) and other smaller players have flocked to Diamond, and Capital City has shrunk.
"My feeling was it was not in the best interests of the industry to have a major player collapsing," Geppi said, referring to Capital City. "Too many small publishers would have been hurt. You would have had the little guys getting hammered."
Store owners, however, are wary of Geppi's dominance. He has more than half of the wholesale market for specialty comics stores, although dealers have the option of buying through news distributors.
Geppi said the Capital City merger will reduce shipping costs and simplify ordering. And he denied that Diamond has locked up the market.
Many of its distribution arrangements are voluntary, he said. A fourth of comic books are sold through nonspecialty stores, which don't buy from Diamond.
And Diamond's products include games, videos and other products for which there is ample rivalry from discount stores and other mass retailers, he said.
Asked whether federal regulators charged with preventing monopolies might look at the transaction, Geppi said, "Our lawyers are very comfortable with our position in this deal."
The merger won't add many workers in Timonium, where Diamond has more than 100 employees, although Geppi said a few Capital City workers might be hired. Capital City's Madison, Wis., headquarters will disappear, but Diamond will probably use Capital City's large warehouse in Sparta, Ill., Geppi said.
Pub Date: 7/27/96