Anderson Plan: Affected Publishers Scramble to Assess Options - Anderson News' decision to create separate distribution arrangements for under-performing magazines leaves the industy in uncertainty - Brief Article

Circulation Management, Nov, 1999

In the wake of the recent Anderson News Co. decision to establish a separate, limited channel of distribution for under-performing titles (October, page 9), affected publishers were left scrambling to weigh the potential impact on their distribution and sales against increased costs for shipping to the wholesaler's new National Production Center in LaVerge, TN. Publishers and their ND's were working to analyze sales patterns and looking at a number of possibilities, including using secondary wholesalers, expanding nontraditional and direct distribution, and coming up with special in-store programs to convince individual retailers to request titles and thereby get them back in Anderson's regular distribution channel. Some said they were meeting with Anderson to make a case that their titles should be in the mainstream system. (Anderson, which is encouraging publishers to do this, reported that it had already re-assigned between 200 and 300 titles ba ck to the main channel as of late September.) The deadline for indicating whether or not titles will go through the NPC or discontinue distribution through the wholesaler was supposed to be September 30. The dual system, in which NPC titles will be distributed to a maximum of 2,100 mainstream outlets with room for an expanded title selection, will take effect with December 6 on-sale dates. Despite earlier predictions to the contrary, no legal challenges to the dual system had been filed as of press time. However, in early October, Kable Distribution Services reportedly sent clients a letter stating that the distributor considers the shipping costs involved in the NPC system to be prohibitive, and that the ND is looking for alternate distribution, although it will comply with clients' wishes.

During a presentation at Magazine Publishers of America, Anderson chairman Joel Anderson maintained that the shipping costs incurred under the NPC system would represent less of a financial hit than affected titles would have experienced under the "pricing matrix," or discount plan, that the wholesaler had proposed in late 1997. Anderson also clarified the numbers of titles involved in the two streams. He said that about 2,500 titles (which account for 47.3 percent of the titles Anderson distributes, and contributed 97.4 percent of all sales in the last 12-month period, with a 37-percent sell-through) will retain distribution through all of Anderson's centers, and that another 800 local/regional titles will go through selected centers within the standard system. A maximum of 1,200 to 1,500 titles would go through the NPC. (CM's October report significantly overestimated the NPC title number, because it did not take into account the 800 regionals in the regular system and a large number of one-shots and disco ntinued titles within the approximately 4,700 handled by Anderson last year.) In 1998, the titles now designated for the NPC contributed just 2.6 percent of sales and had a 16.2 percent average sell-through, according to Anderson.

Anderson stressed that the continually growing number of titles simply can no longer be accommodated. Space increases in some larger retailers have been more than offset by a decline in the number of small retailers and by large chains' increasingly aggressive controls on title numbers and display practices, he said. Anderson also said that "there's no way to fix this without pain," but that the marketing attention and targeted distribution provided to NPC titles will improve their sales efficiency and profitability. "Hopefully, sales losses can be reversed," he added.