Conde Nast, Hearst Partnering to Form New Marketing, Distribution Organization - joint venture between publishers - Brief Article

Circulation Management, Nov, 1999

At press time, The Conde Nast Publications, Inc. and Hearst Magazines had agreed in principle to form a new single-copy sales, marketing and distribution company. The publishers declined to comment until a deal was finalized. The partnership, which is expected to go into effect in January, will create a formidable new presence in the newsstand arena, greatly increasing the publishers' already significant clout with wholesalers and retailers. Together, the publishers' lineup of leading monthlies--which include many leading women's, fashion and home titles, several of which compete with one another--represented $400 million-plus in annual retail sales last year. (Hearst's roster includes Cosmopolitan, Good Housekeeping, Redbook, Country Living, Country Living Gardener, Marie Claire, Victoria, Harper's Bazaar, House Beautiful, Smart Money, Worth, Popular Mechanics and Esquire; Conde Nast majors include Glamour, Mademoiselle, Vogue, Se lf, Bride's, Allure, Architectural Digest, House & Garden, Vanity Fair, Details, The New Yorker, Wired, Gourmet, Ron Appetit, and Conde Nast Traveler. Both stables have also grown this year--notably, with Conde's acquisition of the Fairchild titles.) The new organization will combine the resources of the Hearst Distribution Group and Conde Nast's significant field force and internal account and product management team. The publishers, which already have a successful, existing international newsstand joint venture based in England, COMAG, have been exploring the domestic partnership for several months.

Conde Nast, which currently uses the billing/collection services of Warner Publisher Services and gets sales and marketing support from Time Distribution Services, "probably wants the kind of influence in its distribution that only ownership can bring," comments one circulation executive. Several single-copy executives say they believe that HDG, which has in recent months been beefing up its executive team with veteran distribution executives with strong retail connections, is determined to redefine itself by moving away from the traditional ND model and toward a broader sales and category management role. "As a few wholesalers continue to become bigger and more powerful, the major publishers and national distributors are bound to be looking at strategic alliances and stronger retailer relationships to protect their own interests," comments one consultant. "They would rather work with the big wholesalers, but they want the leverage to be able to negotiate effectively with them--or if necessary, be able to lo ok at other alternatives." Sources speculated that some of HDG's key outside publisher clients might get a "trickle down" benefit from the new organization's market power, but added that it's likely that Hearst and Conde Nast will concentrate on dominating the front end. "If I were a front-end player--a Murdoch or a TDS--I might be concerned about this alliance," says one VP, single-copy sales.