'Anderson and Source Have Cost us Tens of Thousands of Dollars' -- The Publishers' Side of a Distribution Crisis
How many publishers found their magazines trapped in nondescript warehouses when Anderson and Source Interlink ceased wholesale distribution last month? For Wizard Entertainment, a consumer magazine publisher of several monthly pop-culture titles including Anime Insider, Toyfare and Wizard Magazine, it meant one more expensive setback in a year of grinding recession. Vice President of Production and Circulation Darren Sanchez offered details on how his publishing house is weathering the downturn, rising costs, and a recent 15-percent circ hit that was completely out of his hands.
INBOX: How have you been handling this recession?
DARREN SANCHEZ: The recession has definitely been felt here. Most of the impact has been on ad sales. Our sell-through on newsstand copies has maintained its numbers better than most magazines from what I've seen through research. I think our titles have a strong following and our product has a history of being entertaining, so our fans continue to pick it up. The fact that comic book movies have been hot, with successful franchises like Iron Man, Batman, and now Watchmen, doesn't hurt either. We work very hard to be the place to go if you're into that sort of thing.
INBOX: Postage rates and paper costs have risen for nearly all publishers. How have those factors affected Wizard's publications?
SANCHEZ: We purchase our own paper, so I have managed to minimize the increase through direct dealings with paper manufacturers. Buying from the plant can add significant markups. Paper costs have come down recently, so we're finally beginning to get back to where we were a few years ago on that. As for rising postage rates, our subscriber postage costs have definitely gone up in the past few months. It has affected my thought-process on what to include in sub copies with regard to ride-alongs and polybag inserts, as I don't want to drive my postage rates even higher.
INBOX: Magazine distributors Source Interlink and Anderson News were attempting to collect from publishers a $.07 surcharge per magazine distributed, and have since ceased wholesale distribution. Have these developments had any impact on Wizard's publications?
SANCHEZ: I am actually dealing with that now as the new circulation director. Anderson and Source have cost us tens of thousands of dollars with their abrupt closure, which we are reluctantly absorbing. The $.07 charge is something we have not decided if we're going to do. I simply can't answer that right now.
INBOX: Why was it so costly?
SANCHEZ: We were informed initially that we may have a one-month hit of some kind when this happened. But our distributor also vowed that they could reroute 85 percent of the affected books through means other than Anderson/Source. What actually happened was that our allocation of Anderson books for two titles this month went undistributed. They were stuck in a warehouse somewhere. We had an offer to have a company come in and “try” to get them out, but they couldn't tell us what it would cost. And they also couldn't promise us that the books would ever make it to a shelf at all. We declined. The effect of lost circ caused a one-month hit of lost sales, for two February titles, on all Anderson outlets. That money, at this point, seems unrecoverable.
INBOX: Where does that situation stand now? Can you tell me about the options you're weighing at this point?
SANCHEZ: Our distributor is working feverishly on finding new distributors for those copies. I imagine the 15-percent loss of distribution mentioned initially will apply to this first month, in that only 85 percent of our quantity will find a home. After this month, though, they should have that down to maybe a 5-percent reduction. This is all crystal ball stuff, as it is all happening outside of my control. We speak to [our distributor rep] daily and try to stay on top of things. But at the moment, we're trusting our information rather than pursuing other options.