Leading Magazine Wholesaler Anderson Calls It Quits

In the latest twist in the growing magazine delivery squabble, leading distributor Anderson News said that it would suspend business operations immediately.

Anderson announced Feb. 7 that it would continue talking with publishers and retailers to find a way to stay in business, but that it had no choice but to cease operations to staunch years of financial losses.

“I have been told by our two largest publishers that any interruption of service should only last a few days,” Anderson CEO Charlie Anderson said in the announcement. “I am not quite sure if they really understand the situation. This is a mess for all of us.”

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.

Together, the two wholesaler giants represented an estimated 50 percent of the nation’s magazine retail sales.

Observers estimated that the proposed fees would have cost the magazine industry–already weighed down by weak ad revenue and newsstand sales–more than $150 million annually.
As for Source, which is controlled by investor Ron Burkle, it has denied rumors that it would shut down, maintaining that it has adequate resources to stay afloat. But just days after demanding the 7-cent fee, the company rescinded it.