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Publishers can’t be trusted

Retail newsagents are fed up being treated as the poor relation in the news supply chain and want action taken. The NFRN’s Kieran McDonnell explains why.

By Kieran McDonnell

Whilst there has justly been a great deal of public indignation at the revelations over the News of the World’s phone tapping scandal, leading to the closure of the newspaper, independent retail newsagents were, perhaps, a little less surprised than the general public.

The reason for this is that independent retail newsagents regard this episode as merely the tip of the iceberg in terms of how these too powerful publishers use their almost omnipotent control over the news industry to unethically exploit it through cover price and margin control and through the creation of exclusive monopoly distribution arrangements that ensures that the lion’s share of revenue generated by the industry is siphoned off by publishers, whilst wholesalers have to rely on their ability to extract delivery (carriage) charges from captive retailers, who are left to struggle on the crumbs that remain.

A typical example of how this exploitation is applied is the decision of the Sunday Express to reduce its cover price from £1.35 to £1.00 (in its efforts to win former News of the World readers) whilst slashing retailers’ margins by more than a quarter, from 28.6p to 21.2p to pay for it. This is just one of a long history of examples of how publishers and monopoly wholesalers (there are just two of them to cover the entire UK mainland, each enjoying huge geographic territories and leaving retailers with no choice of newspaper supplier) use and abuse independent news retailers who are regarded as a cash cow, rather than as a business partner and important interface with consumers.

The National Federation of Retail Newsagents (NFRN) that represents 16,500 independent retail newsagents across the British Isles and the Island of Ireland, has a long history of defending the cause of independent newsagents, after what has been a 20+ year war of attrition against continual attacks on their livelihood from both publishers and wholesalers.

My members are seeking no special favours from anyone. Given a reasonable degree of support and quality service that any retailer is entitled to expect from his supply chain, my members can compete effectively with anyone. However, to achieve this they need a level competitive playing field, not second division service whilst the supermarkets are pampered, not unreasonable delivery costs being imposed on them whilst large stores get the bulk of their delivery for free, and a fair share of the availability of all titles – not just the rubbish whilst the big players get first call on the better selling titles.

My members are sick and tired of being poorly supported and exploited by their supply chain and have had enough. This is why the NFRN has launched its Press for Reform Campaign in which it is urging that the news industry is referred to the Competition Commission for a full market investigation.

The NFRN is not a militant organisation by nature. But we had tried to make approaches to publishers and wholesalers on a bilateral basis, and we have sat through Joint Industry Group meetings ad nauseam in the hope of achieving change by self-regulation. But all some publishers do is to continually demonstrate that they are not to be trusted and that they are incapable of self-control, let alone self-regulation. So our Press for Reform Campaign is the next step in our endeavours to seek what our members need, which, put simply, is nothing more than a fair deal that enables them to provide a first class service to consumers of newspapers and magazines across the UK.

In addition to its submission to the Office of Fair Trading, the NFRN has also produced its own Charter for the News Industry that comprises a News Industry Code of Practice (NICP) for New Retail Entrants, Minimum Service Standards (MSS) from wholesaler to retailer, Specimen Terms and Conditions of Business to Retailers, and a proposal for an alternative method of funding publisher-wholesaler contracts.

Sam Whiteside, Chairman of the NFRN’s Newstrade Operations Committee said: “Our intention, first of all, is to present the Charter to the Senior Directors of publishers, distributors and wholesalers, with a view to further discussion, either bilaterally, or as a cross industry group. It is also our intention to include a copy of the Charter in our submission to the OFT, calling for a referral to the Competition Commission. This is in case the OFT is minded to seek legal undertakings in lieu of a referral, and providing it with a template for further debate and potential agreement.”