MEDIA FORUM: What can we expect if WH Smith turns publisher? - So WH Smith now wants to publish magazines, does it? Should advertisers welcome this extra competition or question the retailer's motives behind this decision? Alasdair Reid investigates

Blimey. Whatever next? Someone put extract of monkey gland in WH Smith's cocoa a year ago and it's been one thing after another ever since.

Blimey. Whatever next? Someone put extract of monkey gland in WH Smith's cocoa a year ago and it's been one thing after another ever since.

Hardly a month has passed when WH Smith hasn't been involved in one 'delisting' dispute or another. For instance, in the week before Christmas last year, it kicked Bauer's listings title, TV Choice, off its shelves because it wasn't selling quickly enough and was, therefore, deemed to be a waste of space.

But right from the start, it's been clear that there was more on the agenda than the unpalatable effect that slow-moving titles can have on margins. This had far more to do with the politics of the wholesale distribution business - WH Smith is, of course, a distributor as well as a retailer.

So in hindsight, it shouldn't have been a huge surprise when a few weeks back, it moved to rewrite the rules of the wholesale business by seeking to launch a national magazine distribution network in partnership with Tesco.

But last week's news caught everyone on the hop. WH Smith now plans to become a publisher. In January, it is to begin publishing 24 one-off WH Smith-branded publications on a range of lifestyle and special interest subject areas ranging from health and fitness to home computing. They are to be stylish and high-quality, carrying advertising and produced by John Brown Contract Publishing.

The model here is believed to be the customer magazine that John Brown produces for Waitrose. Sources at WH Smith insist that the new titles will not be competing with existing titles and it does not intend to remove existing ones from its shelves to make way for the new publications.

What does the rest of the industry think? Ian Locks, the chief executive of the Periodical Publishers Association, points out that the magazine industry is feeling very bruised by WH Smith. He adds: 'Some people might question the presence in the market of a company that had an 18 per cent retail share and a 40 per cent wholesale share and now wants to be a publisher as well.'

But Locks concedes that this development puts the PPA in a philosophically difficult position. 'It is the PPA's role to battle to protect the supply chain for magazines and, indeed, newspapers. It is a free world and we also fight for diversity, and this is clearly a case where the consumer might be offered more choice and diversity. Where other publishers may take issue is if WH Smith reduces the space available to them in order to sell its own magazines. There are those who feel that to use your position as a retailer to drive business through your wholesale arm is very short-sighted and could do long-term damage to the industry as a whole - to publishers, retailers, wholesalers and consumers. So my overall immediate feeling is that this is a strange strategy for them to adopt.'

Laura James, the director of press at New PHD, has fewer qualms. She says: 'On the face of it, this seems like a good opportunity and it's surprising that it hasn't happened earlier. As a strong, well-liked brand, WH Smith is well placed and it obviously has no major distribution problems.

John Brown Contract Publishing has proved its worth in the glossy customer magazine market with Waitrose and has made some forays into the consumer paid-for sector with the likes of Bare - although the jury is still out on that one - and Bizarre. The specialist sector is buoyant but fiercely competitive. Quality of content will be the key and this does not come cheap. It is inevitable that these titles will go head to head with the regular monthly offering when on the shelf. This could lead to an aggressive promotional or spoiler strategy from the competition.'

The sentiment about quality of content is one that Terry Mansfield, the managing director of the National Magazine Company, is keen to pursue.

He says: 'The thing about having own brands is that you have to have existing strong brands in the market. If WH Smith does enter existing sectors, the question is whether it or, rather, John Brown publishing has the sort of creative resource to match the sort of titles that are already in existence.

It comes down to a question of whether it is able to produce stunning magazines. We have a track record of investment in creative talent. Can it match that?

'Of course, you can argue that this involves the distribution issue and the possible exercise of power in that respect, but Sainsbury's, for instance, sells a lot of branded magazines in its stores even though it has its own brand. And to me, the real question is about brands. If a magazine - any magazine - becomes an also-ran, I think it can expect to be off the shelves. The question is whether any own brand can ever have the right badge values.'

But Caroline Simpson, a managing partner of Zenith Media, says that if she were feeling really callous, she might make some flippant comment about how the magazine publishers will now have to swallow the bitter pill that many of her clients have had to take in recent years - namely, the escalation of own-label brands. But she doesn't want to do that.

However, she's not convinced by the rhetoric emerging from WH Smith.

'Despite its protestations to the contrary, there is no question that its new magazines will compete with the regular brands on its news-stands.

Unlike other retailer contract publications produced by John Brown, the WH Smith titles, far from promoting in-store goods, will, in effect, be competing directly with a number of them,' she says.

On the other hand, Simpson argues, agencies and their clients should perhaps accept the principle that the industry should embrace new titles that bring greater choice and increased competition. She concedes that this may be painful for existing publishers.

And there may be other costs. 'The publisher in this case happens to be not only a retailer but also a very strong magazine distributor which, coincidentally, is aggressively seeking to expand that distribution base further,' she says. 'It doesn't take too great a leap to imagine the consequences of a disproportionately powerful player within the magazine industry.

Competition and therefore choice and value, for both advertiser and consumer, are threatened. WH Smith needs to ask itself what business it is in.

If the answer is that it seriously intends to develop a publishing arm and achieve vertical integration within the magazine industry, then we should all be concerned.'



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