UK Retail Magazine Distribution Upheaval

The Guardian reports (and Dawson confirms) that Frontline a joint venture of three magazine publishers has decided not to renew their distribution agreement with Dawson Holdings. The agreement that covered approximately 1,000 magazine titles that were distributed to newstands, agents and stores across the UK will be split between Smith News and Menzies. While the change will not happen for 12mths some observers are suggesting a duopoly may not be in the best interests of the market.

Dawson Holdings provides distribution for various types of media content including distribution into the UK library market. The company indicated that this contract is worth £116 million and compares to total revenues for Dawson News of £690 million. Since the contract still has 12mths to run the company is in the process of determining its options.

Publishers in many markets are looking for improved efficiency and this situation in the UK is another example of that. As the Guardian writes:

The move is part of an efficiency drive by Frontline, jointly owned by Bauer Media, the FHM publisher, Haymarket, whose titles include the advertising industry bible Campaign, and BBC Magazines. In common with other publishers, they are trying to cut costs by reducing the number of local and regional wholesalers used to deliver titles to the 55,000 retailers in the UK that stock them.

Frontline and its competitors, which include Comag and Seymour, deliver from their printing presses to regional warehouses owned by distributors. The industry used to be dominated by a network of local and regional distributors, many of which had monopolies in certain parts of the country, but in recent years the big magazine companies have tried to rationalise their distribution operations.

In the US, readers will be aware of a similar set of circumstances involving Anderson News and Source Interlink which sought to extract more money from publishers for distribution. With a declining marketplace and increasing costs publishers and distributors are aggressively looking for efficiencies and consolidation -thereby spreading costs across more publications - is a viable option. Whether this places too much market power in the hands of SmithNews and Menzies remains to be seen.