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Associated Relents Over £100m Deal Following WHS U-Turn

News, 04 January 2001


The about-turn performed earlier this week by W H Smith, the dominant force in UK newspaper and magazine distribution [WAMN: 2-Jan-01], has had the desired effect.

In the face of intense pressure and threatened loss of business from the publishing industry, WHS announced on Tuesday that it had dropped plans to set-up a new national distribution system.

Whereupon Associated Newspapers, publisher of the Daily Mail and The Mail on Sunday, promptly withdrew the termination of its contract, said to be worth around £7 million annually in operating profits to WHS. Other publishers, including magazine group Emap, are expected to follow suit and cancel their threatened pull-outs.

But WHS chief executive Richard Handover is eager that the scuttling of the plan is not seen as a climb-down: “From the outset we clearly stated that there were a number of key principles within the current magazine supply chain that need to be addressed,” he said. “Namely, high administrative costs, inefficient distribution and the lack of direct commercial relationships between retailers and publishers. We believe that significant progress has been made towards resolving these issues.”

Analysts, however, displayed their usual cynicism: “It’s a climb-down,” insisted one. “And from the outset it was clear there would be problems because of the resistance from everybody else.” W H Smith shares fell 12.75p to 432p.

Humble pie is clearly the convenience food of the month!

News source: The Times (London)