In the past 12 months, retailers have lost £25 million from their tills, due to margin cuts by News International on the Sun and Sunday Times and Northern & Shell on the Daily Star.
In addition to that, Smiths News increased its carriage charges by 4.78% and, on October 1, the day that the National Minimum Wage goes up another 2.24% to £5.93 per hour, Menzies Distribution is increasing its carriage charges by 4.68%.
In a market where newspapers and magazines are in progressive decline, is there any wonder that traditional newsagents are having the life squeezed out of them? Is that really what the Office of Fair Trading had in mind when it decided to ignore retailers’ pleas and refused to refer the news industry to the Competition Commission for a full market investigation? One struggles to see where consumers are benefiting from the current arrangements whilst black holes, where newspaper home delivery is no longer available, expand and grow because retailers are being starved of revenue and can no longer afford to maintain these services in areas of marginal population.
Clearly, something has to give. If publishers and wholesalers continue their assault on retailers’ revenue the outcomes are very predictable. Retailers will either give up selling news for something that offers a more reliable income without all the hassle, or they will go out of business, resulting in fewer retailers and reduced availability to consumers. In a trading environment where publishers need to capture every copy sale against the on-rushing threat of digital media, is the current path sustainable or even sensible? We suggest not.
At the same time, what is the point in publishers and wholesalers making overtures to us to join them and work together in the newly formed Press Distribution Forum (PDF)? Based on their recent actions, the NFRN feels that it needs to choose its friends carefully and work with those that it can trust to support its members. The NFRN is less certain about sitting in a room with others to talk about cross industry issues when it cannot be certain that one or more of them may be poised to stick another knife in its members’ back.
Whilst supermarket chains like Asda are able to delist the Sunday Times because they are not prepared to take the cut in margin, just two or more independents are prevented from taking collective action.
So what’s the answer? Do we need a change to Competition law that gives micro business representatives the opportunity to negotiate on behalf of its members? Do we need a full market investigation, knowing that the outcome might be painful? Or should newspaper publishers and wholesalers start supporting the independent newsagents who provide the route to market?
