On Feb. 7, Anderson News said it was suspending business operations, adding that it would probably go out of business unless it was able to reach an accommodation with publishers and retailers over the costs of magazine distribution. Anderson had asked publishers to pay 7 cents more per copy, but was met with flat refusal from big players, including Time Inc. and American Media.
In the past, publishers have criticized Anderson for threatening this kind of action as a negotiating tactic. But this time Anderson wasn't bluffing, citing several years of losses and the economic downturn as it halted operations.
Separately, Source Interlink Cos., which joined Anderson in asking for the 7-cent-per-issue increase, on Monday filed suit against publishers and competing wholesalers in the U.S. District Court in Manhattan for cutting off its supply of a number of titles, including People and Sports Illustrated. Source alleges that Time Inc., American Media, Bauer Publishing and Hachette Filipacchi are colluding with rival wholesalers Hudson and News Group to drive it out of business, violating antitrust and anti-monopoly laws.
Between them, Anderson and Source control about half of American magazine wholesale distribution, with the other half dominated by Hudson and News Group. With Anderson apparently out of the business and Source making unpopular demands for price increases, Source says the publishers and competing wholesalers aim to split up the market between themselves. That would allow them to push the costs of distribution onto retailers and consumers.