• Folio, Wednesday, February 4, 2009 9:46 AM

Two weeks after threatening magazine publishers with price hikes, a pair of wholesalers that together account for half the magazine market, have ceased operations.

Anderson News and Source Interlink set a Feb. 1 deadline for the new 7% price hike. But publishers and distributors, including Time Inc. and distributor Curtis Circulation, refused to pay. Some of them believed Anderson and Source would back down at the last minute -- but it looks like the wholesalers weren't bluffing.

Magazines with on-sale dates of the week of February 2 will still be distributed. Hudson News and News Group--two other major magazine wholesalers--have been working behind the scenes to pick up the business left on the table. Most major retailers, including Wal-Mart, are negotiating contracts. "It's going to be a mess for a couple of weeks," say a major consumer publisher. Weeklies are expected to be hit the hardest, while others will have time to come up with a new plan before their next issues arrive.

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