Updated: Time Inc. Stands Up to Wholesalers
Time Inc. has told a second major wholesaler that it would find alternate distribution rather than give in to the wholesalers’ demands for higher fees to deliver magazines to the nation’s retailers.
The No. 1 U.S. magazine chain, with 24 consumer titles, was the first publisher to stand up to Source Interlink Distribution and Anderson News Co. Those wholesalers, which represent an estimated 50 percent of the nation’s retail magazine sales, recently demanded that publishers pay 7 cents per copy on top of existing financial arrangements by Feb. 1 to deliver their product.
The wholesalers said they needed the money to stay in business. It’s estimated that the fees would add more than $100 million in costs to a magazine industry already battered by significant drops in ad revenue and single-copy sales.
At stake in the standoff are publishers’ newsstand sales in retailer juggernauts like Wal-Mart and Kroger. A Time Inc. rep said that it would use other, unnamed wholesalers to deliver next week’s copies of its weeklies, including Time magazine and People.
Patrick Bowman, vp, category management for Anderson, said of the Time Inc. pronouncement, “I haven’t seen or heard anything official.” He declined further comment.
There’s no word yet on whether other publishers will follow Time Inc.’s lead.
Industry watchers have doubted whether magazines could replace a major wholesaler’s place in the distribution chain. They point out that competing wholesalers would face the same financial challenges that led Source and Anderson to demand the 7-cent fee and that retailers are bound to contracts obliging them to use specific wholesalers for their magazine deliveries.
One longtime observer close to the situation questioned whether Time Inc.’s move was nothing more than a negotiating ploy to get the wholesalers to blink.
“They’re getting them back to the table,” the source said.
