Publisher set to sue Tesco

Click to follow
The Independent Online

Gruner & Jahr, the publishing house acquired last week by National Magazine Company, is preparing to take legal action against Tesco after it said it would remove top-selling magazines like Prima and Best from its stores.

Gruner & Jahr, the publishing house acquired last week by National Magazine Company, is preparing to take legal action against Tesco after it said it would remove top-selling magazines like Prima and Best from its stores.

Last week the supermarket giant delisted all five of G&J's titles from its shelves over a long-running row about the way its publications are distributed. On Thursday, G&J's UK board fired off a letter from its lawyers warning that if Tesco didn't back down, it would take the matter directly to the Office of Fair Trading.

G&J executives were unavailable for comment but NatMags' chief executive, Terry Mansfield, confirmed he would take up the fight when the acquisition of G&J is complete on 31 August. "We will certainly take up the action. I am a bit emotional about the [G&J] magazines as I have owned them since Monday." He also warned that if an agreement can't be reached with Tesco, he would consider brokering a deal with Asda to sell the magazines in its supermarkets.

G&J was almost taken over by IPC, the consumer magazine group that was in advanced negotiations a fortnight ago.

IPC's chief executive, Sly Bailey, refused to reveal why the company failed to clinch the deal. But she said: "Any potential purchaser would have to take seriously the delistings when considering the future performance and value of the business."

Tesco delisted G&J's titles in two batches. In June it dropped Your Home Focus and Prima Baby, and last week it delisted Prima and Best.

The row focuses on the way the magazines are distributed. Traditionally, the wholesale magazine distribution has been on a geographical basis. But in the spring Tesco signed an exclusive deal with WH Smith. Publishers fear that because this breaks the existing distribution pattern, the cost of delivering magazines for up to 19,500 independent newsagents will soar to a prohibitive level.

A powerful group of publishers, under trade organisation the Periodical Publishers Association, have teamed up to fight the move and earlier this month created a "fighting fund" to help pay for legal action.

This has angered WH Smith, which fears the publishers are ganging up against it. It is understood that last week the newsagent sent an angry letter to the PPA warning that it would take action if the publishers formed a new distribution arrangement by excluding WH Smith.

Asked why Tesco had delisted G&J's titles, a Tesco spokesman said: "You must understand that it is very difficult to run two or three different distribution systems in tandem. That is why we have started to put new arrangements in place." He added that the traditional distribution system was "inefficient".

Comments