The New York Post reports that in addition to falling advertising revenues, magazines must now deal with an added seven cent surcharge from their newsstand distributors:
Anderson News earlier this week informed publishers that it would impose a 7-cent charge for each copy of a magazine that it delivers to stores, and warned that any publisher that refuses to pay the fee could no longer count on Anderson to distribute its magazines.
CEO Charles Anderson insisted the new charge would help the company make up lost ground on a business that he said is losing money. The hike would add 3.5 percent to distribution costs, which translates into $200 million more for Anderson News.
“The last thing we want to do is exit this business, but why should we continue in a business where we are not making any money?” Anderson asked publishers on a conference call yesterday to discuss the new fee.
The move comes just after The Publishers Information Bureau announced that ad spending on magazines had fallen 11.7 percent from 2007 to 2008. Already cash-strapped, magazine publishers are fighting the charge which would take effect February 1 and could subtract millions from their bottom lines. People, for instance, would have an additional $15 million in costs, as the charge would apply to both sold AND unsold copies of magazines.
Michael Sullivan, president of Comag, a national wholesaler that is jointly owned by Hearst Corp. and Condé Nast, said his clients have no intention of paying.
“As we understand it, Anderson’s proposal is a unilateral effort to shift substantial costs to magazine publishers and does nothing to address the fundamental inefficiencies in the newsstand-distribution channel.”
With the newspaper business in freefall and bookstore chains teetering on the edge — Barnes & Noble announced 100 layoffs from their HQ yesterday — the print media can ill afford another branch going down in flames.