Publishers Trying to Avoid Newsstand Meltdowns

Magazine publishers are scrambling to reassure advertisers that falloffs in newsstand sales will be minimal, as an ongoing dispute with wholesalers caused disruptions in deliveries.

Sources said popular newsstand magazines like Time Inc.’s People and Bauer Publishing’s In Touch were missing from Wal-Mart stores last week after those publishers, along with American Media Inc., stopped shipping copies to Source Interlink Distribution and Anderson News Co. rather than meet their demands for a 7-cent-per-copy distribution fee. Time Inc. said it was working to minimize disruptions in deliveries, but its Sports Illustrated has a lot to lose when its Swimsuit Issue goes on sale Feb. 10. The issue sold more than 1 million single copies last year versus the average newsstand tally of 103,637.

Wenner Media’s Us Weekly hopes to get a competitive advantage from being on sale when its rivals aren’t, as its distributor, Comag Marketing Group, has continued to ship to Source and Anderson, noted Us publisher Vicci Lasdon Rose.

Brenda White, vp, director print investment, Starcom USA, said the potential loss of rack space at Wal-Mart “is a big concern for me. Rate-base guarantees are in place and will be honored regardless of what’s going on. And [publishers] have said if they don’t make rate base, there will be rebates.”

Robin Steinberg, senior vp and director of print investment and activation at MediaVest, said that if the newsstand loss is estimated to be 5 percent or under, “using strategically placed copies is not a bad short-term solution.” White took a harder line, explaining, “I don’t think [verified] is the answer. If it is a small amount, they have to come clean, and I need to understand, is that really going to give me the quality of reader that you get from newsstand?”

The disruptions could be short-lived. At first, it was unclear if retailers would accept Time Inc., Bauer and AMI magazine copies from other major wholesalers, presumably The News Group and Hudson News. A source close to the situation said that some major retailers, including Kroger and Meijer, had started to accept them. “Now that The News Group is going to Kroger with Bauer, AMI, Time Inc. product, that solves a problem from the publisher perspective,” the source said. “It appeases the retailer. So now they just have Anderson and Source saying, ‘How long can I continue to just deliver books?’”

In the latest twist, Source has already blinked and rescinded its demand for the 7-cent fee. As for whether Anderson and Source would be forced to shut down without the bulk of its weekly magazine business, the source said, “I don’t think it’ll be long now.”

Anderson didn’t respond to requests for comment. Source president and COO Jim Gillis maintained the company is viable and warned publishers they face sharp dropoffs in sales, with smaller, specialty titles especially vulnerable. “Fifty percent of the U.S. isn’t going to get product,” said Gillis.

The disruption comes at an already fragile time for single-copy sales, whose declines have been worsening amid weak consumer confidence. The wholesalers said they needed the proposed fee hikes to shore up their struggling businesses. The hikes were estimated to cost the magazine industry more than $150 million annually.