Anderson News Suspends ‘Normal Business Activity’
CEO Charlie Anderson: “This is a mess for us all.”
Knoxville, Tennessee-based magazine wholesaler Anderson News has suspended “normal business activity,” the company announced Saturday.
The decision comes roughly three weeks after the company, along with fellow wholesaler Source Interlink, threatened publishers with separate 7-cents-per-copy price hikes.
Publishers balked at the 7-cent surcharge and refused to pay, upset at the wholesalers' sudden and "unilateral" decision to boost costs.
For Anderson, the 7-cent surcharge, along with shifting $70 million of scan-based trading inventory cost to publishers, was the only way out of a money-losing magazine distribution business. In his original conference call announcing the new cost structure, Anderson CEO Charlie Anderson strongly implied that Anderson would exit the business if publishers didn't get on board.
Anderson said it will “continue to hold discussions with publishers and retailers, trying to develop a viable model that allows it to remain in business.” According to Charlie Anderson, the situation is “a mess for us all.”
“I have been told by our two largest publishers that any interruption of service should last only a few days,” Anderson said in a statement. “I am not quite sure if they really understand the situation.”
Anderson staffers were notified of the decision during a recorded conference call Saturday. “We aren't reporting to work Monday since we aren't delivering magazines,” said one affected employee, who wished to remain anonymous.
The employee said the news affects Anderson employees at Anderson News, Prologix East, Anderson Services and Twin Rivers Technology. In the meantime, a “skeleton crew” will remain in place.
It was not immediately clear how many employees will be affected or how long the shut down might last. CEO Anderson did not immediately return an e-mail seeking comment.
Anderson distributes books and magazines to approximately 40,000 retailers in the U.S. Combined, Anderson and Source account for about 50 percent of the magazine market.
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Source Interlink, Anderson News Shut Down Wholesale Ops
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