At the 2009 MPA Retail Conference in Miami Monday, News Group president David Parry outlined the company’s acquisition of assets belonging to wholesaler Anderson News, which was forced to shut down its magazine distribution operation in February.
Anderson, which co-owned the Prologix distribution service with News Group, shut down its operation on February 7. Two weeks later, News Group made the decision to buy Anderson’s assets.
Anderson’s exit from the market created a distribution nightmare that the supply chain is still digging out of. In the footsteps of fellow wholesaler Source Interlink, Anderson filed its own antitrust lawsuit against several publishers and distributors.
Conditions Were ‘Dire’
Parry said the News Group wanted to find a way to get business back up and running in a responsible fashion. “We could have easily taken our time and opened new centers, or we could acquire assets from Anderson,” he said. “It wasn’t until February 20 that we decided to take possession of most of their assets and begin the process of interviewing employees.”
According to Parry, conditions were dire when they walked into Anderson’s warehouses. “It was about finding product inbound on trucks and in warehouses, in return processing rooms,” he said. “There was product outbound, too. And about 20 percent of that product was encumbered and we could not find a distributor to do anything with it. So we had to process all of the product out, and return it using specific standards in order to get the distribution system to where it was able to report. It was a major undertaking.”
In order to accommodate the acquisition of distribution centers from Anderson, Parry said that News Group interviewed and hired 3,800 people, purchased 1,300 trucks and acquired 15 distribution centers and 50 depots to serve its retail customers and suppliers. It was not immediately clear how many of the new hires, if any, were former Anderson staffers.
With a new infrastructure, News Group now has 27 distribution centers, 8,600 employees, 2,500 trucks and 120 depots between its five separate ownership groups. Those groups, Parry said, operate in markets representing about 90 percent of the population of the continental U.S. and Alaska.
“That claim is a little high since they don’t have locations in the population dense Northeast,” New Single Copy newsletter publisher John Harrington wrote in an e-mail to FOLIO:. Harrington estimated that the News Group now has roughyl 40 to 45 percent of the magazine market share. He said it would be a while before the company’s market share could be accurately measured.
According to Parry, the News Group will focus on investing in category management, the professional development of its employees and getting product to flow. “We need to get product flowing,” he said. “We’re 100 percent up and ready to go, but we need to the right product shipped out to the right places as soon as possible. Our retail customers have suffered heavily since February 7. Consumers have come in expecting to find their favorite magazines, and retailers have been unable to deliver, so we need your help.”