Condé Nast & Hearst Divest Themselves of the U.K. Distribution Business; Comag U.K.’s Future Is Uncertain
There isn’t much to say about the latest upheaval hitting our industry, because apparently not a lot is, as yet, known. Just this: Hearst and Condé Nast have “pulled out” from Comag, their joint venture U.K. distribution company, as a result, according to the U.K. trade press, of about £4 million (about $5.2 million) in losses last year.
This won’t mean much to those U.S. publishers who don’t have a U.K. distribution; to those who export to the U.K., however, it will probably mean a great deal. The U.K. is one of the largest export markets for U.S. publications; Comag has been the go-to distributor in the U.K. for many (not all) of U.S. publishers. Will the company go down? It’s not a given, although since the two publishers who are bailing own it entirely (Hearst U.K. has 65% and Condé Nast 35%), it does seem, if nothing else, extremely possible.
To U.S. publishers it will mean finding new sources of distribution in the U.K., and there are other distributors who handle U.S. imports. “We liked Comag because they knew us, they connected with us, they were very responsible,” a U.S. publisher with a relatively significant percentage of the publication’s overall sale at Comag U.K. explained. “They found ways to customize programs for us; they created marketing plans and promotions proposals for us. We saw them more often than we see some of our U.S. distribution partners.”
Other publishers were concerned about outstanding payments. “That shouldn’t be a problem for anyone,” a national distributor representative said. “Comag has committed to paying publishers for all sales made in the UK.”
“We don’t know what’s going to happen, whether anyone will pick up the business,” commented the representative of an US distributor. “They are in a period of consultancy. For now, it’s business as usual.” However, Comag reps have canceled their annual meetings with a number of U.S. publishers, originally scheduled for next week.
Several years ago, Hearst and Condé Nast divested themselves of their U.S. distribution business, selling it to the Jim Pattison Group. In 2015, according to printweek.com, Hearst U.K. suffered a £5.4 million loss; most of it was put to Comag’s account. A commenter on the U.K. site pressgazette.co.uk attributed the losses to the squeeze that the important U.K. retailers, primarily WH Smith, have put on publishers’ margins.
Comag represents 23% of U.K. newsstand sales, and it looks as if their clients may be looking for new distribution sources in the near future. That includes, of course, Condé Nast and Hearst.
Linda Ruth, as president of PSCS Consulting (www.PSCSConsulting.com), offers communication companies worldwide the keys to magazine launches, search engine optimization and audience development online and at retail. She is a pioneer in the fields of Online Audience Optimization (OAO) and gamification for content publishers. Her books, "Internet Marketing for Magazine Publishers" ; "How to Market your Newsstand Magazine"; and "Secrets of SEO for Publishers" can be found on Amazon. Find her online at Google Plus, Magazine Dojo, LinkedIn, and Twitter @Linda_Ruth.