PMP distribution arm Gordon & Gotch will participate in trials of a controversial new magazine distribution arrangement newsagents say still disadvantages them.

The trial, which begins next month at 20 newsagents, is intended to address the competitive disadvantage newsagents face against supermarkets and petrol stations and give them more control over what stock they get.

Newsagents have long received more copies than they can sell and titles they do not want, and only get credit for unsold titles months later – while they pay to hold onto them.

Supermarkets, convenience stores and petrol stations are not subject to these restrictions and, according to newsagents, often have sweeter deals with publishers and distributors.

Gordon & Gotch sales accounted for $132m of PMP’s $427.3m revenue in the last six months of 2014, down 11.8 per cent with 6.5 per cent lower volumes.

If the plan works as intended, limits on distributing magazines are likely to further depress Gordon & Gotch’s volume, as well as PMP’s magazine printing operations.

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While the Australian Newsagents Federation supports the plan, Mark Fletcher, director of newsagency marketing group newsXpress, says the peak body ‘has not done its research’ as the plan ‘has not been constructed to meet its stated objective’ and will not bring substantial changes.

He says a conference was convened when the trial was first put to the ACCC and attended by publishers, distributors, and newsagents.

“The conference was the first time newsagents were heard directly by the ACCC on the issue of magazine supply. Every newsagent participating in the conference said the rules are problematic,” he says.

Fletcher told ad industry website Mumbrella that it is in distributors’ interests to continue undermining newsagents so they can give better deals to supermarkets.

“I suspect that competitors of newsagents receive magazines through a set of rules, processes and commercial arrangements that competitively advantage them and that this could not be achieved if newsagents were treated the same,” he says.

“I suspect the treatment of newsagents enables publishers and distributors to treat newsagent competitors more favourably. I think there is data available from within magazine distribution businesses to support this claim.”

Magazine Publishers of Australia has applied to the ACCC to expand the trial to 40 newsagents but has decided to press on with the first 20 in the meantime.

According to Mumbrella, the ACCC says the expansion is likely to be approved and it was up to the industry ‘to make its own call’ on how distribution is arranged.

“Our role is to mainly make sure that exemption from the Act is covered. We don’t think it’s our role to sit down and say the newsagency industry should work in this way,” a spokesperson says.

The trial will see distributors:

• cease distributing a title if it has experienced consecutive nil sales for a period of time;
• limit the number of copies of each magazine title sent to them to a certain percentage above the number of the title generally sold by the newsagent;
• in most cases not require pilot participants to provide returns of full copies of unsold magazines, but instead accept front covers, headers etc as evidence of unsold copies;
• adhere to certain restrictions on the redistribution of issues which have already previously been distributed, to the distribution of new magazine titles, and to split deliveries of magazine issues during the period the issue is on sale;
• restrict the period for which the pilot participants are required to display magazine issues for sale to 12 weeks or less, except in certain circumstances.

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