Sunday, February 08, 2009

Anderson News Folds the Tent

Anderson News has given up and ceased magazine distribution operations as of Sunday. PND Readers may recall that competing magazine distributor Source Interlink and Anderson wanted to impose a 7cent per copy tax on all magazines they distributed. None of their clients seemed to agree with this and have moved their operations to other providers. From MediaWeek:
The move was far from unexpected. Industry observers have predicted that Anderson, along with Source Interlink Cos., would be forced to shut down after leading newsstand publishers Time Inc., Bauer Publishing and American Media Inc. refused to meet the wholesalers’ demands back in January for an extra 7 cents per copy to deliver their magazines to the nation’s retailers.

The debacle has wreaked havoc on the nation’s newsstand sales, as Time Inc. and co. are expected to see a short-term loss of sale as a result of their wholesaler change.

The latest move by Anderson raises new questions for Comag Marketing Group, which represents Hearst Magazines, Condé Nast and Wenner Media titles. As of the week of Feb. 2, Comag was still relying on Anderson and Source to deliver their magazines.
The disagreement has left magazine publishers scrambling to identify alternative distributors (Anderson and Source represent about 50% of the market) but also to placate advertisers who will be closely watching the amount of lost newsstand sales if titles are not on store shelves when promised (or at all). If rate bases are not met a publisher will be obliged to rebate some amount of the advertising paid by advertisers. In this environment where titles are already perilously thin this is the last thing any publisher will want to contemplate. The SI swim suit issue comes out Feb 1oth which represents big money for Time and they will want to have this situation solved quickly.

There is also the situation with mass market book titles which have had little mention in this disagreement. Without the carry over from the magazine scale, it is doubtful Anderson would continue with books by themselves.

Earlier in the week WalMart indicated many of their customers would have to do without People Magazine (whatever will they do?). (NYPost - with cheesy picture of Ron Burkle)

Wal-Mart, the single-biggest magazine retailer in the country, will be without copies of People, Sports Illustrated and Time. They will also not have Bauer Publications' In Touch and Life & Style, and American Media-owned Star and National Enquirer.

While it's too early to know how many of Wal-Mart's 4,200 US stores will be affected, it appears a majority of them will be.

A Wal-Mart spokeswoman confirmed that some stores are expected to be without magazines this week, but did not offer specifics on the titles or how many stores will be affected.

Early in the week, Source Interlink denied it would exit the business. MediaWeek


Anonymous said...

Magazines have raised their prices this year. I know I put them out. Anderson has not had a rate increase in a long while and has been operating in the red. Anderson is simply trying to stay in business and make it through this economic crisis. Publishing is having bad economic times along with the distributors. Share some of your price increases with your distributors. Their cost has gone up too.

Maybe the retail outlets need to go back to the selling philosophies in the seventies. People come into the stores and read an entire magazine at the rack or shop and read. They do not purchase the magazine. These "free readers" need to be asked to put the magazine up or purcahse it.

Anonymous said...

When a magazine raises their price by 20%, Anco's wholesaler commission goes up 20%. The increased revenue from price increases is shared with distributors. Anco's problem was that they gave away the store eleven or twelve years ago with no plan and no clue.