WH Smith-Tesco deal could cost 15,000 jobs

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The Independent Online

The country's largest newspaper publishers will tomorrow wade into the row over magazine distribution by warning that a deal between WH Smith and Tesco could cost up to 15,000 jobs.

The country's largest newspaper publishers will tomorrow wade into the row over magazine distribution by warning that a deal between WH Smith and Tesco could cost up to 15,000 jobs.

The claim will be made in a report commissioned by the Newspaper Publishers' Association, which will be used as part of a government lobbying campaign.

The report argues that if an exclusive deal between Tesco and WH Smith is extended to newspapers, this would force up to 12,000 retail stores to stop selling news media as wholesale costs soar by £20m a year.

The NPA, whose members include Independent Newspapers, publisher of the Independent on Sunday, News International and Trinity Mirror, claims consumers will be hit.

The report, written by Professor Paul Dobson of Loughborough University, says: "The net result will ... not only be increased costs for the industry but ... increased costs for the consumer. Particular groups of consumers will be hard hit - notably less mobile, perhaps elderly ones, and people living in rural communities."

The NPA is planning to use political lobbyist Westminster Strategy to make its case. "Three targets - DTI, DETR, Group of 100 Labour MPs - consist of a good line of initial attack," says an a internal Westminster Strategy memo seen by the Independent on Sunday. It added that the loss of rural newsagents would be a good angle to press the Government on.

The move comes two weeks after magazine publisher Gruner & Jahr wrote to Tesco threatening legal action. The letter was triggered by Tesco's decision to delist all G&J magazines, including its best-selling Prima and Best titles, from its shelves because the publisher refused to supply magazines under the new system.

G&J's cause is backed by a trade association, the Periodical Publishers' Association, which set up a "fighting fund" last month to fund action against the new system.

Last week Tesco lost its rag with the magazine publishers and reported the matter to the Office of Fair Trading. However, this move was welcomed by publishers and distributors.

David Garratt, managing director of Comag, a wholesale distribution company majority- owned by National Magazines, said: "Tesco's decision to take the matter to the OFT is the best thing that could have happened. It will give everyone the opportunity to get the whole issue carefully examined."

Last month National Magazines bought G&J. Mr Garratt confirmed that when the deal completes on 31 August, Comag will take on G&J's legal action.

The dispute centres on the way magazines are distributed. Publishers fear that an exclusive deal between Tesco and WH Smith will make geographical distribution expensive as economies of scale are eroded. However, both companies maintain the plan is good for consumers.

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