Sunday, June 23, 2024

Independent production

Independent production

A successful business lawyer teams up with a tattooed dissident to save a video store but finds a happy ending is hard to come by.
By Spencer Campbell

""Mickey Aberman will probably work 60 hours this week at his law office. He’ll work two more each night after he gets home. Right now, on this weekday morning, his desktop is buried under thousands of pages of case files that he should be scrutinizing, but he’s seated at a conference table, trying to explain why he spent $100,000 to buy a video store. Finally, he gives up. “I’m not sure why I did that. It was pretty stupid.”

Aberman, 55, practices business law at James McElroy & Diehl PA in Charlotte. During his 28 years there, he has developed hard-and-fast rules for clients who want to buy something. Among them: Avoid dying industries, partners you’re not familiar with and haste. Know the numbers, not just how much you’ll need to buy the business but keep it going. “And I proceeded to disregard all that.”

When he bought it last year, VisArt Video was having a store-shuttering liquidation sale, its Durham-based owners battered by giant Netflix Inc. Aberman’s partner is Gina “Twiggy” Cerniglia, a fervent Occupy Charlotte supporter whose skin is a mural of Homer Simpson tattoos and piercings. He agreed to buy the place in just minutes, closing the deal in two weeks. He did make a cash-flow projection — afterward — and his investment paid for the inventory, but he can’t afford marketing. Or ransom. (More on that later.)

VisArt distributes a pamphlet touting that it’s one of Video Business magazine’s top 100 chains in the nation, but it isn’t a chain anymore, and Video Business ceased publication in 2010. Video rental peaked in 2001, according to Encino, Calif.-based Entertainment Merchants Association, when it hit $8.6 billion. By 2010, that had dropped 28% to $6.2 billion, and Los Gatos, Calif.-based Netflix and Redbox, a subsidiary of Bellevue, Wash.-based Coinstar Inc., generated $3.4 billion, up from $1.3 billion three years earlier. The technologies they use for distribution — Netflix’s online and mail-distribution model and Redbox’s unmanned kiosks — have made brick-and-mortar retailers bit players. The share of industry spending at stores dropped from 92% in 2004 to 36% in 2010.

VisArt is the lone survivor of a small, once-successful North Carolina chain and employs roughly the same business model its first owner unveiled in the mid-1980s. Customers roam its red-wire shelves in search of movies, which they can rent after showing a membership card. If a patron is tardy returning the movie, he is charged a late fee. In fact, most everything about VisArt is old-school, from the “staff picks” its four employees make to its “adult” section. It didn’t even have a website until recently. And as opposed to the McDonald’s-like conformity of Blockbuster, VisArt is fiercely independent. A sign taped to the front counter reads: “Please don’t let your kids run wild,” its letters cut from magazines. A painting hanging above the TV section reads “Good Grief” and depicts The Simpsons-shaped figures gloomily bowing their heads, a local artist’s take on Peanuts’ Charlie Brown.

Despite its unwillingness to adapt — or maybe because of it — Aberman thinks VisArt should be preserved. He and his wife used to wander through independent bookstores when they were dating, and when his kids — ages 12, 15 and 19 — were younger, VisArt introduced them to Rocky and Bullwinkle. “We need our quirky mom-and-pop stores,” he says, arguing his case. “Charlotte has less of a soul than a lot of other cities have. It seems to have a preference for sanitized chains.” Buying VisArt is his chance to make a change, similar to something his father would have done. “I haven’t done that much good. This is good.” “He’s got big kahunas,” longtime patron Tommy Nations says. “No one takes on something like this purely for business.”

He was born John Mitchell Aberman, a seventh-generation South Carolina Jew. “There’s more of those than people realize,” he notes. His grandfather owned a successful scrapyard, but his father didn’t inherit the same kind of business savvy. Edward Aberman converted a denim mill into a double-knit factory just as denim boomed and poured $150,000 into a restaurant that never opened. “My dad was a horrible businessman. But he did help a lot of other people.”

Eddie, as people in Rock Hill called him, recruited at least a dozen companies to York County, S.C. He co-founded its economic-development board and an agency that builds homes for the mentally handicapped. He died 12 years ago. “Every small community in the South has a godfather who operates from a truly altruistic standpoint,” says Mark Farris, the county’s director of economic development. “For Rock Hill, that was Eddie.” He also was his son’s best friend.

Mickey Aberman started as a theater major at the University of Virginia, where he helped revive The Washington Literary Society and Debating Union. Its activities included drunkenly reciting limericks on the steps of Washington Hall. (The group instituted the Aberman Amendment, fining members a quarter if they told a joke so awful nobody laughed.) After graduation, he attended business school at the University of South Carolina, where he was named outstanding MBA student in his class. He thought he might teach or become a writer but went to law school at UVA because he missed Charlottesville and a family friend guaranteed him a clerkship. “It was never the law,” he says. “I just sort of fell into that.” He started at James McElroy & Diehl in 1984, trying his hand at litigation but settling into business law. He made partner at 29. He got married and had kids. He bought a house in the affluent Myers Park neighborhood and, with a few friends, a cabin on a few hundred acres near Mount Mitchell. He plays harmonica in a local band. But his career, the law, has lost its luster, he confesses.

“There’s more evil than there was 25 years ago,” he says. “And it’s getting worse.” Every week, he turns away potential clients with good cases but not enough money. That, rather than justice, is what fuels the profession. The recession and its aftermath haven’t helped his outlook. Clients went broke. Some would call, asking him to review their life-insurance polices to make sure the beneficiaries would collect if they died “no matter why or how,” he says. “That makes for a bad day.” He often tells himself he’s going to find something different to do. “Then I don’t.”

He had been a VisArt customer since about 2000. “We kind of decided the Disney Channel has a lot of real shit. And Nickelodeon. If the kids were going to be in front of the TV, we thought we’d give them a little bit of a cultural education.” They got Buster Keaton movies and Monty Python and the Holy Grail from VisArt. But when he went there on New Year’s Eve 2010, a clerk told him it was closing, selling off its stock for $3 a piece. He asked for the number of the manager.

Cerniglia, the woman who would wind up as his partner, recalls that phone conversation. “He was just like, ‘You can’t do that. You can’t sell these things. Some of these things are priceless. You can’t sell them. It’s like a museum here.’” She told him to call the owner, Andrea Kubachko.

Kubachko and her husband, Clay Evans, had opened VisArt Video Services Inc. in the mid-1980s. It started in Durham and expanded to Chapel Hill and Carrboro, but the Charlotte store, which opened about the time Aberman became a customer, was its only one outside the Triangle. At its peak, VisArt ran about 10 video stores and newsstands with sales between $1 million and $2 million. It outlasted Blockbuster by carrying the independent and art-house flicks the megachain didn’t, but overhead made it impossible to compete with online vendors. “Where we really took the biggest hit was the advent of Netflix and being able to download movies onto your computer,” Kubachko says. “When it hit cyberspace, that’s when it was difficult.” They started closing branches around 2007 and dissolved the company last year.

She had offered to sell the Charlotte store to Cerniglia for the price of inventory, about $100,000. Cerniglia, who has worked there since 2003, had collected donations, arranged some benefit concerts and screenings, even sold some of her collection of rare action figures but raised only about $5,000. Thousands of dollars in debt from her daughter’s diabetes treatment prevented her from borrowing the money from a bank, she says. “They even laughed about it. They were like, ‘There’s no way, no way you’re getting a loan.’”

After learning the asking price, Aberman did some quick math —“Well, second kid might not go to college” — and telephoned Kubachko from VisArt’s children’s section. Five minutes later, she called the store and ordered the clerks to stop purging inventory and lock the doors. “We really like the idea of local, independent business,” says Linda MacDonald, Aberman’s wife. “The thought of one actually going under when we could’ve done something to save it …” She lets the sentence die. “And the kids were thrilled.”

They weren’t the only ones. Local media outlets and VisArt’s customers hailed Aberman as a savior. Video store hero is lawyer’s latest role, a headline in The Charlotte Observer read. “Yeah, it’s crazy,” says Nations, 62, who watches at least one VisArt rental every day. “All heroes have to be a little crazy.”

And if this were a movie, that’s where the story would end.

If Twiggy doesn’t show up, she’s probably in jail. The co-owner with sweat equity in what’s now VisArt Video Ventures LLC will spend Monday protesting the police’s eviction of Occupy Charlotte from the front lawn of old city hall. If things get ugly, Cerniglia, 36, had warned a writer she might not make it to their meeting at a bar across the street from the video store. It needed to be somewhere close because she didn’t have a driver’s license at the time.

This is Aberman’s partner, the person tasked with running the store. But if you think she’s slack about the business, you’re wrong. She buzzes from mission to mission, whether it’s restocking the candy inventory or running down a request from a customer seeking comedies with aviation themes. She is rather high-strung, once chiding Aberman — who she believes is part of the 1%, when he is closer to the 4%, he says — for attempting to restock movies without undergoing the proper training. “I’ve gotten lucky with Twiggy,” he admits. “It’s just luck. She could’ve been an alcoholic ax murderer.” So the Abermans try to be silent partners, helping out with things such as taxes and bookkeeping.

The Charlotte store wasn’t in as dire straits as the chain’s others because it leased less space — about 3,000 compared with 7,000 square feet — and revenue, which owners past and present won’t disclose, improved slightly last year. Cerniglia has expanded merchandise to include T-shirts and action figures, and it has gained customers due to its competitors’ missteps. In an effort to cut its postage costs by nudging customers into streaming movies online, Netflix increased the price of DVD service last summer. “So a lot of people dropped Netflix and came back to us,” Cerniglia says. VisArt racked up 200 new members — now more than 14,000 — in January after a crosstown Blockbuster announced it was closing. The store typically adds half that each month.

That’s where the good news ends. Though sales increased, so did rent, and the business is losing a few hundred dollars each month. Aberman wants to distribute fliers in the neighborhood around the closing Blockbuster and advertise on local public radio, but he can’t afford marketing. They tried Groupon but had to discount too much. They forgot to renew registration of the website’s domain, which was taken hostage by Jamaican cyber squatters. If it were a staff or family member, it would “just have to die,” Aberman says, because he can’t afford the ransom. Because of its budget, the store is at the mercy of good Samaritans. Nations, for instance, designed a new website in exchange for free rentals. “What I really need is a third business partner who can channel Steve Jobs,” Aberman says.

The boost it got from its competitors’ blunders last year was fool’s gold. Though bricks-and-mortar retailers receive most new releases 28 days before Netflix and Redbox, VisArt’s biggest draw is its inventory — more than 30,000 titles — that is huge compared with those kiosks and the average store’s 2,500. But Netflix has more than 100,000 choices on its DVD-by-mail plan, and though its streaming service doesn’t offer nearly that due to licensing restrictions, it will. “When that happens, its momentum is going to displace a lot of physical stores,” says Alejandro Zentner, an assistant professor of management at University of Texas at Dallas who has published several studies on the industry. Redbox recently inked a deal with a subsidiary of New York-based Verizon Communications Inc. to develop a streaming platform.

Though he harbors altruistic tendencies, Aberman is a realist who keeps track of closings of independent video stores across the country. “The good news,” he says, “is that we’re hanging in there despite not doing anything we should be doing.” But can the business survive long term like that? “Probably not. I don’t know. Twiggy seems to think so.”

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