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It's hard to say what happened years ago in the executive suites at B&N. I can point to some reported facts.
B&N was a pioneer in e-books, introducing e-books for GemStar's RocketBook back in 2000. They gave up on that in 2003 after GemStar gave up on the RocketBook.
From 2003 until early this year, the CEO of B&N was Len Riggio's brother, Steve Riggio. Len (Chairman of the Board) and the Board replaced Steve with William Lynch, who had been the head of B&N's digital operations. (The Board includes Steve Riggio, who was and continues to be vice-chairman.) This move seems to have been done to give more momentum to the shift to digital.
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Because B&N's Board adopted a "poison pill" which effectively blocks unfriendly takeovers, the Board has a fiduciary duty to the shareholders to entertain friendly takeover offers. It's not a "sale", it's a legal technicality.
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The "red tape of being public" is something that's definitely been talked about. A public company is measured by its quarterly and annual profits. It's very difficult to make a deep change in the operation of a company without spending a fair amount of money, and that rips into the short-term profits. That, in turn, is hard on dividends and stock price.
The sad fact is that most stockholders (in any company) don't give a hoot about the company itself. They want to make money, and they want it now! If B&N were taken private, it could be more aggressive about spending some of its savings on the transition to the 21st Century. Len Riggio would like to do that, if he can put together a suitable consortium of investors.
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