Tuesday, April 22, 2008

For a Few Dollars More: update on Flagler vs. Wal-Mart

Last week, I ran two posts on Wal-Mart that discussed the attempts of a small video production firm (Flagler) that had in its possession some more than interesting corporate films they'd made for Wal-Mart.

Wal-Mart had dumped Flagler, which had worked with them for years on a handshake deal, with no notice, pretty much sinking the small Lenaxa, Kansas, business.

Hell, apparently, hath no fury like a small Lenaxa, Kansas business scorned, and they decided that the videos they'd made on behalf of Wal-Mart were actually Flagler's, and they tried to get Wal-Mart to buy them back.

One of my posts dealt with the situation itself, the other with business lessons to be derived from it.

Well, it didn't end there.

A day or so after I posted on the Flagler-Wal-Mart contretemps, I received a very nice e-mail from a reader in Kansas City, letting me know that I'd gotten my facts wrong.

Basing my post primarily on info I'd read in a WSJ Online article, I missed the bit that came out later - the one that claims that Flagler was looking for $145-150M from Wally for the videos, not the "several million" the WSJ reported. (Here's the link, kindly provided by my very helpful reader, to the later article in which the big bucks are discussed.)

$150 million. I guess Flagler was so focused on their squeeze play, they forgot the Wal-Mart fanatical devotion to everyday, rockbottom pricing.

Reading the letter that Flagler's attorney sent Wal-Mart - posted on the Wal-Mart corporate website - almost makes me begin to feel a little bad for big bad Wal-Mart.

Fortunately, I don't have to read a lot of legal documents, but this one sure reads like a blackmail letter.

No, it isn't written using letters cut out of magazines - it's word processed. And it doesn't ask Wal-Mart to put $145M in small, unmarked bills in a suitcase and leave it in the hollow tree on Locust Avenue at midnight.

But it does let Wal-Mart know that "the prospective buyers range from a political bent, to legal, to national media."

For $150M (or even $145M), it's understandable that Wal-Mart didn't want to embark on this particular shake-down cruise. (And I'm naturally disappointed to learn of the larger figure, since the story was a lot funnier in the earlier rendition, when it looked like Wal-Mart was being pound foolish over the pittance that I orginally thought Flagler was looking for.)

My business lessons still hold up reasonably well, although Wal-Mart obviously wasn't being asked for the chump change I had thought they were. And I'm not so sure that either side gets much by way of kudos for their negotiation strategy.

Still, one or two of the lawsuits that routinely come Wal-Marty's way will inevitably get settled for bigger bucks than they may have "deserved" because of how foolish and culpable Wal-Mart is going to look on these internal videos. (In one of them, some execs are apparently joshing around about a flammable gasoline container - the same type of container that, a while later, was in some kid's hands when he was severely burned. What do we think this one will be worth in court?)

While it's understandable that Wal-Mart didn't want to fork over the $145M-$150M Flagler wanted, it may turn out to be a mistake not to have settled for a few dollars more than the $500K they offered for what may turn out to be Corporate America's Funniest - or Most Damning - Home Videos.

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