Time Inc. Back With Source; Others Likely to Follow

The weeks-long magazine distribution scuffle appears near a resolution now that Time Inc. is back in business with wholesaler Source Interlink, and smaller publishers are expected to follow the publishing juggernaut’s lead in patching up their relationship with Source.

Big newsstand sellers like People, Sports Illustrated’s swimsuit issue and Bauer’s In Touch have been missing from some retailers as a result of the delivery spat. Source and Anderson News represent an estimated 50 percent of the nation’s magazine retail sales.

A Time Inc. representative said that its newsstand disruptions have been minimal and that it hoped for deliveries to be restored by the week of Feb. 23. Still, the disruption is ill-timed, with the soft economy already cutting into newsstand and ad revenue. One publishing source close to the situation estimated that industry single-copy sales could take a 20 percent hit in February alone.

Time Inc. and Source settled Source’s antitrust lawsuit that stemmed from the publisher’s refusal to comply with the wholesaler’s demand for an extra 7-cent per-copy fee to distribute its magazines. Under a new pact, Time Inc. will start sending magazines to Source again without paying the per-copy fee.

Fellow wholesaler Anderson asked for a similar per-copy fee but shut down after it got no takers. Another source close to the situation said that once Wal-Mart gave former Anderson-supplied stores to Source, Time Inc. had no choice but to resume deliveries to Source. Source added 662 new stores, including 390 Wal-Mart locations, for a total of 18,200 outlets.

In addition to single-copy sales of People, Time Inc. relies on Wal-Mart as exclusive distributor of its women’s service magazine All You. All You sells more than 400,000 copies per month at Wal-Mart stores.

“Once Time Inc. folded, everybody else will,” the source said, adding, “I don’t see how they can not settle, especially due to the fact that Wal-Mart has assigned additional stores to Source.”