Newsagent deal sounds 'death knell'

The carve-up of magazine and paper distribution hurts retailers. But the alternative would be worse, they tell Clayton Hirst

MPs have been warned that proposals to overhaul the wholesale newspaper and magazine distribution system could "sound the death knell" for two-thirds of Britain's independent newsagents.

MPs have been warned that proposals to overhaul the wholesale newspaper and magazine distribution system could "sound the death knell" for two-thirds of Britain's independent newsagents.

The warning comes from Ian Locks, the chief executive of the Periodical Publishers Association (PPA), after 93 MPs signed an early day motion last month calling for the industry rule book to be torn up.

In a letter to the MPs, Mr Locks says: "I am sure that you believe that this will benefit the country's smaller independent newsagents. I am sorry to have to tell you that the reverse is the case. The motion you have signed will in fact sound the death knell for up to 20,000 of the outlets."

The news is the latest development in a year-long dispute between retailers, wholesale news distributors and publishers.

At present, newspapers and magazines are distributed on a regional basis though exclusive contracts. However, the Government plans to amend competition law in a way that would threaten this distribution system.

Publishers and wholesalers are worried that if the current system is scrapped, it will be uneconomic to deliver publications to smaller newsagents.

But the newsagents themselves have dismissed these claims and called for an overhaul of the current system which they claim is inflexible and skewed in the wholesalers' and publishers' favour.

Stefan Wojciechowski, the head of news and magazines at the National Federation of Retail Newsagents, said: "The issue is how we get better service levels and still have a universal supply. We want more control of the product so we can respond to the needs of the consumers. The issue is getting a better deal from the wholesalers."

The PPA - with backing from the Newspaper Publishers Association and the wholesalers - will on Tuesday offer the possibility of a truce in the row. The PPA plan, A New Deal for Retailers, will propose to maintain the regional distribution system but offer a number of concessions to retailers, industry sources said.

These are expected to include a new set of performance targets for publishers and wholesalers, with the potential for compensation for under-performance. The PPA's deal will also include new limits on proposed increases in wholesale news distribution charges to retailers.