Murdoch turns the screw on wholesalers

News International is hatching a radical three-year blueprint to ditch its distributors, and deliver titles direct to the nation's retailers
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The Independent Online

Media tycoon Rupert Murdoch is planning to shelve a series of newspaper distribution contracts in the UK and expand News International into wholesaling.

It is understood that senior executives at News International are working on a three-year strategy to deliver its newspapers directly to retailers and newsagents. The plan will be trialled in London and in the West Midlands and if successful could be rolled out in other regions of the UK.

The company publishes the Sun, the UK's top selling national newspaper, as well as the News of the Word, the Times and the Sunday Times.

This move would see News International, that already has a small wholesale operation, ditching contracts with newspaper wholesalers, including WHS News, owned by WH Smith, as well as scores of independent wholesalers.

Such a move would give the publisher control of the entire newspaper supply chain from writing, printing and distribution.

Ian Jackson, News International's director of sales and circulation, said: "We have proven that we are a willing and able wholesaler. There will be more to come."

The publisher has developed a two-pronged strategy to achieve its wholesale ambitions.

Firstly, it already owns NRSL, a small newspaper wholesale business in the West Midlands. News International plans to use this as a springboard into other geographical markets. In particular, the company wants to expand into Wolverhampton and Worcester.

News International currently uses WHS News to distribute its papers in these areas.

Secondly, News International hopes to buy a site in London's King's Cross as a base to distribute newspapers within London's M25 motorway region.

But News International is not planning to distribute to all regions of the UK. One problem could be Scotland, that is dominated by wholesaler John Menzies. One source close to News International said: "There is no way they can march up to Scotland because Menzies is so powerful. Because of this News International must also be careful about stepping on Menzies' toes in England."

News International is thought to have held informal talks with other newspaper publishers – including Trinity Mirror and Daily Mail & General Trust – about jointly delivering newspapers directly to retailers. However, serious discussions never got off the ground.

News International is also considering moving its printing operation away from its infamous Wapping site in east London, the scene of violent battles with striking print workers in 1986. The printing presses are thought to be out of date and Mr Murdoch is considering a move outside central London.

It is understood that News International executives have visited a series of sites within the M25 in the last two months, most recently in Essex. Moving its print works outside the traffic-choked central London would aid its distribution plans.

If News International does uproot from Wapping then its site would be worth millions, according to property experts. A site near the company's print works was recently sold for £100m.

When Mr Murdoch moved his publishing business to Wapping in the mid-1980s, the site was in the middle of an industrial wasteland. But over the last 15 years, London's Docklands has been regenerated and property values have soared as companies scramble for square footage in the overcrowded capital.