The dustup over new per-copy charges by magazine wholesalers Anderson News and Source Interlink, which led to litigation and the shutdown of Anderson (see “Mag Wholesaler Goes to War”) appears to be stabilizing, with magazine customers formerly serviced by Anderson absorbed by other wholesalers. Significant assets owned by Anderson were acquired by News Group, and Source Interlink also reported picking up some 600+ new accounts recently.
In the wake of Anderson’s demise the ranks of traditional magazine wholesalers, which once included hundreds of local ID wholesalers, have shrunk to three remaining companies: Source Interlink, News Group, and Hudson News.
The relatively massive shift does not appear to have disrupted distribution in a significant way. One comic circulation exec told us that “copies have been released and will reach their destinations a couple of weeks later than they should have. Other than that, we haven’t been affected.”
Source Interlink has settled with half of the ten defendants in its antitrust lawsuit alleging that publishers, Hudson News, and News Group were conspiring to divide up the country between the two wholesalers. According to Folio Magazine, settlements have been reached between Source Interlink and Time Inc., Time Warner Retail, American Media Inc., Distribution Services, Inc., and News Group. The remaining defendants are Bauer, Curtis, Hachette, Hudson News, and Kable Distribution. Source Interlink was awarded a temporary restraining order prohibiting publishers from refusing to ship to the company.
On the Anderson front, four major publishers, Hachette Book Group, Harper Collins, Simon & Schuster, and Random House, have filed suit against the Knoxville, Tennessee-based Anderson News. The suit by the four publishers, who claim they are owed some $37.5 million, seeks to force Anderson into an involuntary Chapter 7 bankruptcy.
But even if the suit is successful there is certainly no guarantee that the publishers will be able to recover their money. Their $37.5 million debt is unsecured, and Anderson’s secured creditor SunTrust is allegedly owed $60 million that must be paid first, according to a report in Publisher's Weekly. Writing in PW, Judith Rosen points out that the reason that the four publishers decided to sue was that “other trade creditors have claims that combined with theirs total at least $200 million.” And sadly (especially for the company’s more than 7,000 employees), even if the publishers’ suit is thrown out, Anderson News is out of business and apparently well beyond any form of resuscitation.
Anderson is also being sued by a former employee seeking class action status, who charged that the company failed to provide 60 days notice of closure as required by law.
So the end result of these modern “mag wars”—no extra per copy charges and the demise of Anderson News, which served some 40,000 retail customers in 45 states.
