As was widely speculated following the news that Time Inc. dropped its wholesale services, Source Interlink Distribution has announced that it’s shutting down.
A letter from the company’s CEO, Michael Sullivan, obtained and circulated by Bob Sacks, states that the company will be "discontinuing all operations in the near future."
That, says the letter, is mostly a result of the loss of Time Inc.’s business, which the publisher announced earlier this week.
Source moves a significant amount of magazines to retailers, especially WalMart, and the company will remain operating as it reaches agreements with publishers, national distributors and the wholesalers that will be picking up its business.
The letter follows:
As I am sure you are aware, over the course of the last five months, Source Interlink Distribution Company has been vigorously engaged in discussions with publishers and national distributors across our business in an effort to correct the inefficiencies and unnecessary redundant costs that currently plague the wholesale distribution channel.
In conjunction with that effort we:
• Circulated a Summary of Terms to each national distributor in mid-March as a basis to begin that dialogue, and
• Met with each of the national distributors and certain publishers on multiple occasions throughout the last two months in an effort to reach common ground.
While we have made significant progress in finding mutually agreeable solutions with publishers and national distributors alike, one of our largest suppliers has recently decided to cease supply and move in a different direction. As such, it’s with a heavy heart that I am writing to advise you that Source Interlink Distribution Company will be discontinuing all operations in the near future.
In light of this unfortunate turn of events, we are willing to discuss arrangements for an orderly transition of our retail customers to successor wholesale distributors as part of an industry solution sponsored by one or more publishers and national distributors and which may include Source’s continued operation on a cost-recovery basis for a short period of time. This transition would be predicated upon reaching, with participating publishers, national distributors and successor wholesale distributors, financial arrangements that are acceptable to Source and its key creditor constituencies. We firmly believe that such an orderly transition is in the best interests of our retailers, the publishers and the national distributors…as well as the industry as a whole.
While this is truly a sad day for Source and its roughly 6,000 employees, we are hopeful that we will be afforded the opportunity to wind down our operation in a smooth and orderly manner. In the coming days, we will do our best at keeping you informed as things progress.
We wish you the best of luck in your future endeavors and thank you for the support you’ve shown our business over the last 20 years.
Michael L. Sullivan
Chief Executive Officer | Source Interlink Distribution