MEDIA: FORUM - Is WH Smith right to delist Heat over Frontline row?/Is WH Smith right to make Heat a victim of its dispute with the Frontline magazine distributor? Should it not be doing its best to help nurture new magazines, especially those of a fragil

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 Smith’s had delisted Heat, Emap’s struggling weekly entertainment title. The title 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’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 Smith’s had delisted Heat, Emap’s struggling weekly

entertainment title. The title 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’s publisher, Haymarket.



Smith’s 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 new

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 some of

those steroid-enhanced body building magazines that should by rights be

restricted to the top shelf. This isn’t the first time that 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 possibly, 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 comments: ’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 - relationship breakdown should be

avoided at all costs. She adds: ’It’s a symbiotic relationship - WH

Smith needs Frontline and Frontline needs WH Smith. Thus 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. Retailers have never been more focused

on their margins.’



Laura James, the media director of New PHD, tends to agree with that

analysis. She comments: ’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.



The analogy isn’t exact but if WH Smith feels it isn’t going to suffer

then it’s well within its rights to do this. 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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