Magazine distribution changes on hold as ACCC investigates whether they are uncompetitive
Fletcher
The competition watchdog is looking into proposed changes to magazine supply models after newsagents claimed they still leave them at a competitive disadvantage against supermarkets.
A proposed pilot program to test changes to the distribution model has been put on hold while the Australian Competition Consumer Commission (ACCC) looks at whether the new rules maintain different standards between what newsagents are allowed to do and what supermarkets are permitted to do.
The planned changes are the first since the newspaper and magazine industry was deregulated in 1999, allowing supermarkets, petrol stations and convenience stores to sell newspapers and magazines. However, they are not bound by the same restrictions as newsagents when it comes to selecting which titles they sell and how much stock they get.
Mark Fletcher, director of newsagency marketing group newsXpress, told Mumbrella: “For us to be competitive we need to have trading terms that are equal with our competitors instead of trading terms that deny us the chance to compete.”
He said distributors such as supermarkets had been able to pick and choose the content and the volume they were to sell since deregulation in 1999, however newsagents have not been given such freedoms.
“Magazine publishers went direct to supermarkets, convenience stores and petrol stores. Those three channels control the volume and they control what they get,” he said.
“In 2015 newsagents on the one hand have no control over what they get in terms of title range and volume, but our competitors do have control.”
The pilot program, organised by the Magazine Publishers of Australia who’s members include Bauer, NewsLifeMedia and Pacific Magazines, would only apply to newsagents.
Under the plans distributors would:
- cease distributing a title if is has experienced consecutive nil sales for a period of time;
- limit the number of copies of each magazine title sent to them to a certain percentage above the number of the title generally sold by the newsagent;
- in most cases not require pilot participants to provide returns of full copies of unsold magazines, but instead accept front covers, headers etc as evidence of unsold copies;
- adhere to certain restrictions on the redistribution of issues which have already previously been distributed, to the distribution of new magazine titles, and to split deliveries of magazine issues during the period the issue is on sale;
- restrict the period for which the pilot participants are required to display magazine issues for sale to 12 weeks or less, except in certain circumstances.
Approximately 20 newsagents, representing a national cross-section of all store-types and all regions, were set to participate in the pilot program for between three and six months.
The MPA argues the program is intended to increase the sustainable return on investments for newsagents, publishers and distributors.
However Fletcher believes if the rules go ahead it will “result in news agencies reducing the space they give to magazines”.
“Newsagents want to be magazine specialists, they want to be the go to place for all your special interests. That is only going to continue if we can find a way for that to be economically viable,” he said.
Fletcher said the Australian Newsagents’ Federation (ANF), which has supported the trial program, has not researched the matter.
“The ANF has a track record for agreeing things it hasn’t researched. It has not researched this,” he said.
In its supporting submission to the ACCC the ANF said: “The problem for newsagents is that they cannot manage their stock of titles and also that oversupply has major cash flow consequences for newsagents.
“Newsagents receive more stock then they can sell or even titles that did not sell at all yet they are billed for all titles supplied and eventually get a credit for stock unsold.
“In the meantime the stock holding costs are borne by the newsagents. Newsagents also bear the cost of return the oversupplied and unsold stock. The ANF is hopeful that the proposed trial will deliver these desired outcomes.”
A conference was convened at the end of last month, at the request of newsXpress, following the ACCC’s draft determination to authorise the pilot program.
According to Fletcher the conference was attended by major magazine publishers along with the MPA, the ANF, The Victorian Association for Newsagents and The Newsagents Association of NSW & ACT along with several newsagents and a representative from POS Solutions.
“The conference was the first time newsagents were heard directly by the ACCC on the issue of magazine supply. Every newsagent participating in the conference said the rules are problematic,” said Fletcher.
Mumbrella understands the pilot program has been postponed until a decision from the ACCC.
The ACCC spokesperson on the issue was unavailable to comment. The MPA and ANF have been approached to comment.
Miranda Ward
Miranda Ward worked for Mumbrella from 2013 to 2017, eventually becoming deputy editor. Miranda joined Mumbrella in September 2013 from Sky News.
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There is no logic in not giving newsagents every chance to make as much as they can when selling newspapers and magazines.
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Why don’t give more margin for magazines they sold.
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