UPDATE: Anderson Files Antitrust Lawsuit

Mega magazine wholesaler Anderson News has suspended “normal business activity,” 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 “continue to hold discussions with publishers and retailers, trying to develop a viable model that allows it to remain in business.” Anderson said 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,” he said. “I am not quite sure if they really understand the situation.”

Only a ‘Skeleton Crew’ Will Remain

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,” 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 “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.