Half of U.S. magazine distribution gone as Anderson and Source quit
At a stroke, 50% of the magazine distribution in the United States disappeared today, as Anderson News and Source Interlink exited the business, according to a breaking news from Folio:. The outcome may be that The News Group, Canada's largest distributor, may become a dominant player in single copy distribution south of the border. It has just taken over the huge Wal-Mart account.(Reports are that Anderson News delivered magazines to more than 2,300 Wal-Marts, while Source delivered to an estimated 700 Wal-Marts.)
A couple of weeks ago, CEO Charles Anderson of Anderson News told publishers they would have to pay a 7-cent surcharge for every copy, in order to address chronic unprofitability, or else they would no longer be distributed. “What we are trying to do is give some stability to the channel. Short of that, there will be an implosion in the business," he said. It turned out that Anderson wasn't kidding.
Major publishers balked at the surcharge, including Time Inc., which began to withhold its most in-demand titles like People. Other distributors, like Comag, extended contracts without agreeing to the price increase. The assumption was that, somehow, something would be worked out or that someone would back down; however, it looks like Anderson and Source have called the bluff.
Related posts:
A couple of weeks ago, CEO Charles Anderson of Anderson News told publishers they would have to pay a 7-cent surcharge for every copy, in order to address chronic unprofitability, or else they would no longer be distributed. “What we are trying to do is give some stability to the channel. Short of that, there will be an implosion in the business," he said. It turned out that Anderson wasn't kidding.
Major publishers balked at the surcharge, including Time Inc., which began to withhold its most in-demand titles like People. Other distributors, like Comag, extended contracts without agreeing to the price increase. The assumption was that, somehow, something would be worked out or that someone would back down; however, it looks like Anderson and Source have called the bluff.
According to distribution sources, Hudson News and News Group—two other major magazine wholesalers—have been working behind the scenes to pick up the business left on the table by Anderson and Source. Most of the major retailers, the sources said, are negotiating contracts.Several sources told Folio: that this will be a mess not easily cleaned up and sales will be hurt dramatically.
According to these sources, Hudson News will expand into Southern California and its East Coast operations into the mid-Atlantic. Newsgroup will expand into the southeast and Chicago.
“Fifty percent of the distribution market has just evaporated,” said John Loughlin, executive vice president and general manager at Hearst magazines.
“The thing I worry about is the law of unintended consequences,” he added. “You can debate who precipitated this, but I'm a believer in free-market competition.”
Loughlin said it is going to be “very difficult to smoothly transition that tonnage of magazines to the market using alternative methods.”
He added: “I guess I'm glad I'm not publishing weeklies."
Related posts:
- Pay an extra 7 cents a copy, or else, U.S. magazine distributor says
- Source Interlink adds 7 cent surcharge, following Anderson's lead
- News Group won't surcharge on single copies, at least for now
- Time Inc. holds back popular titles in retaliation for wholesale surcharge demand
Labels: Circulation, single copies
posted by D. B. Scott at
7:32 pm
1 Comments:
At least this creates great opportunities for the smaller players in the market.
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