Anderson Suspends 'Normal Business Activity'
CEO Charlie Anderson: 'This is a mess for us all.'
UPDATE: Anderson Files Antitrust Lawsuit
Mega magazine wholesaler Anderson News has suspended â€śnormal business activity,â€ť the company announced Saturday.
The decision comes roughly three weeks after the Knoxville, Tennessee-based Anderson, along with fellow wholesaler Source Interlink, threatened publishers with separate 7-cents-per-copy price hikes.
Publishers largely balked at the 7-cents-per-copy surcharge and refused to pay, upset at the wholesalers' sudden and "unilateral" decision to boost costs.
CEO Charlie Anderson said the 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, he strongly implied that Anderson would exit the business if publishers didn't get on board.
In a statement announcing the suspension, the company said it will â€ścontinue to hold discussions with publishers and retailers, trying to develop a viable model that allows it to remain in business.â€ť Anderson said the situation is â€śa mess for us all.â€ť
â€śI have been told by our two largest publishers that any interruption of service should last only a few days,â€ť he said. â€śI am not quite sure if they really understand the situation.â€ť
Only a 'Skeleton Crew' Will Remain
Anderson staffers were notified of the decision during a recorded conference call Saturday. â€śWe aren't reporting to work Monday since we aren't delivering magazines,â€ť one affected employee, who wished to remain anonymous, told FOLIO:.
The employee said the news affects Anderson employees at Anderson News, Prologix East, Anderson Services and Twin Rivers Technology. In the meantime, a â€śskeleton crewâ€ť 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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