MEDIA ANALYSIS FORUM: WH Smith hammers Heat - can Emap fire back? Dirty tricks or smart business? Alasdair Reid examines WH Smith’s decision to delist Heat

Who would have thought it? WH Smith playing dirty. And choosing to mix it with no less an opponent than Emap - a company not renowned for its caring, sharing management ethos. Last week a row erupted when it emerged that Smiths had delisted Heat, Emap’s struggling weekly entertainment title. The magazine is arguably an innocent victim in a power struggle between the newsagent chain and the magazine distribution company, Frontline, which just happens to be owned by Emap as well as the BBC and Campaign Media Business’s publisher, Haymarket.

Who would have thought it? WH Smith playing dirty. And choosing to

mix it with no less an opponent than Emap - a company not renowned for

its caring, sharing management ethos. Last week a row erupted when it

emerged that Smiths had delisted Heat, Emap’s struggling weekly

entertainment title. The magazine is arguably an innocent victim in a

power struggle between the newsagent chain and the magazine distribution

company, Frontline, which just happens to be owned by Emap as well as

the BBC and Campaign Media Business’s publisher, Haymarket.



Smiths wants better terms from Frontline and has picked on Heat because

it is arguably the frailest cub in the Emap pack. Having failed to meet

its circulation targets since its launch earlier this year, it has just

been through a relaunch and Emap’s management is keen to nurse it

towards health.



Can this really be the rather sleepy newsagent chain we’ve come to know

and love? WH Smith, an outfit that started life running railway platform

bookstalls - think Trevor Howard, think Brief Encounter - has often

seemed keen to retain a steam-age mentality, despite the slick veneer of

its high street stores. WH Smith is Nicholas Lyndhurst in drag,

desperately keen to make grandmothers smile.



Not any longer, it ain’t. Management has obviously been reading those

steroid-enhanced body building magazines that should by rights be

restricted to the top shelf. This isn’t the first time Smiths has

refused to stock a magazine title. But in the past, as with Private Eye,

it has been motivated by the fear that it could, theoretically, be sued

for libel.



Isn’t this latest move a bit below the belt? Tim Kirkman, the head of

press at Carat, doesn’t think so. He has no sympathy whatsoever with

Emap or Frontline. He states: ’There are only really a couple of

companies within the wholesale distribution business. That’s not enough;

together they have a virtual monopoly and people are suffering because

of it. They tend to forget that it’s the big retailers who have the

punters coming through their doors.’



Kirkman argues that there is a business opportunity for someone new to

enter the distribution market, especially if Frontline continues to act

as it allegedly has been. There’s also a case, he says, for publishers

to be a little more creative when it comes to thinking about

distribution.



’If you are a publisher, part of your job is to find the most efficient

route to market. And if you can’t do that, you’ve got to go away and

re-examine your whole business model,’ he states.



Ironically, that’s not an option for Heat. And most people agree that,

though it may not be fatal, the embargo will certainly hit Heat where it

hurts. Theresa Coligan, a managing partner at Zenith Media, argues that

it’s a cynical negotiation ploy. She says: ’The mighty WH Smith may not

be faring that well in the high street but it still accounts for around

20 per cent of magazine sales by value, and can account for up to 50 per

cent on smaller or more specialist titles. Thus it clearly knew what it

was doing when it picked on Emap’s Achilles heel - Heat - only a few

weeks into its new marketing drive. Heat has been desperately attempting

to prove its detractors wrong by reaching that all-important 100,000

circulation mark. Emap must be livid. Equally, however, Frontline is a

pretty powerful force and who knows what drove WH Smith to take this

action?’



Coligan argues that, from her perspective as a negotiator, the whole

episode represents bad practice. She adds: ’It’s a symbiotic

relationship - WH Smith needs Frontline and Frontline needs WH Smith.

Both parties should adopt a less combative stance and attempt to develop

a genuine business partnership. In all negotiations there should be a

win-win scenario; this one strikes me as lose-lose.’



Emap declined to comment last week and rival publishers are equally

reluctant to get involved. One senior publisher states: ’The background

to this dispute is all about the changing nature of the retail business.

The entry of big players like Wal-Mart to the UK and consolidation in

Europe makes it a whole new game.’



Laura James, the media director of New PHD, agrees: ’WH Smith can raise

the stakes if it wants to. It’s WH Smith’s call. After all, we’ve seen

supermarkets threatening to deny shelf space to brands when they don’t

get the margins they want. Of course, Heat stands to be hurt but I can’t

believe Emap will take this lying down.’



Some analysts point out that WH Smith could be on dangerous ground

here.



After all, it doesn’t offer anything unique. It’s all available in other

guises elsewhere and war with Britain’s publishers could rebound rather

badly.



Tim McCloskey, the deputy managing director of BMP OMD, feels there

should be a principle at stake here. He states: ’At a guess, Heat

probably only sells 13,000 through WH Smith. But everyone - publishers,

wholesalers, retailers, advertisers and readers - wants successful new

products. So for Heat to be delisted seems cynical, especially when Emap

has invested so much time and resource in the product and is working

hard to guarantee its very existence. If WH Smith fancied a scrap, maybe

it should have delisted FHM. But that would have cost everyone money and

a principle is only a principle when it costs you money.’



McCloskey is also concerned about the wider picture. He concludes:

’Entrepreneurial publishers, big and small, will be a little

disappointed. It sends a message, no matter how faint, that the

country’s biggest and best magazine retailer may not necessarily help

them nurture the new - and sometimes needy - products that are the

livelihood of publishing. This in itself raises the possibility that

other retail chains, supermarkets and independents may try to build

bridges with Emap in its hour of need.’



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