Tesco newspaper threat recedes

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Tesco's threat to shake up the newspaper and magazine distribution industry receded yesterday after distributors and wholesalers agreed to put their own house in order.

The prospect of peace increased after the two sides met at a specially convened meeting of the Association of Newspaper and Magazine Wholesalers in London. Those present included the big newspaper and magazine distributors such as WH Smith and John Menzies as well as supermarket groups Tesco, Safeway and Asda, which are keen to sell more magazines though their stores.

Tesco had threatened to launch its own distribution service if the existing system was not made more flexible. Tesco's chairman, Sir Ian MacLaurin, launched a fierce attack on the industry last month, claiming it was uncompetitive and outdated. He complained that supermarkets were unable to obtain sufficient supplies of big-selling magazines while smaller newsagents were often sent more copies than they needed.

The wholesalers have agreed to improve the service they offer and make it more appropriate for the needs of high- volume customers such as the supermarkets.

Central to the discussions were proposals to cut costs and ease the burden of administration on the supermarkets. These include quicker supply of newspapers and magazines, the standardisation of documents to make administration more efficient and a limit to increases in carriage and service charges to an agreed formula. This refers to the cost of delivering newspapers and collecting unsold copies.

Although the proposals are seen as only a first step towards a formal agreement, Tesco said it was satisfied with the outcome of the talks. "We welcome any moves that make the system more flexible. These are encouraging signs and we are pleased that a debate is now going on."

Christopher Stupples, director of the Association of Newspaper and Magazine Wholesalers, said: "Ultimately, our aim is to ensure the public gets the titles they want when and where they want them. This is not something that wholesalers can guarantee by themselves. It is up to the industry as a whole. We are now looking to retailers to help us build on the very important progress we have made today."