Monday, January 4, 2010

2 Major Magazine Publishers Reportedly Join Forces To Buy Paper

Two of America's largest magazine publishers, Time Inc. and Meredith, have reportedly joined forces to buy paper.

The two companies issued joint requests for proposals to potential paper suppliers late last year, according to several sources.

Together, the two probably buy several hundred thousand tons of paper annually -- enough to keep at least a couple of good-sized paper machines busy. The majority is probably coated groundwood (mechanical), but supercalendered, coated freesheet, and reply card are also in the mix. It's not clear how much of their paper the two publishers are planning to buy via the joint arrangement, but it seems to cover at least a major portion of their North American needs.
The two companies -- along with Conde Nast, Hearst, and News Corp. -- are part of a much ballyhooed joint venture to develop a publisher-friendly digital-publishing platform.

With such weekly magazines as People and Sports Illustrated, Time is a major buyer of lightweight coated (LWC) for offset printing, much of it apparently in the range of 29# to 32# (43 to 48 gsm). Meredith's focus on such high-circulation monthlies as Family Circle and Better Homes and Gardens means it is more geared to rotogravure papers and higher basis weights.

An executive from another magazine publisher said his firm has discussed the formation of a paper-buying consortium from time to time but held off because of anti-trust concerns. Another industry veteran, however, said that wasn't the major problem with joint buying efforts.

"We looked into this years ago and found that there were no anti-trust problems as long as we were talking about buying things together rather than, say, selling ads. We had some brief discussions with another publisher, but we both decided it wouldn't work because many potential suppliers were a good fit for one of the partners but not for both," the source said.

"Newspaper companies have had buying co-ops for years. The concept works well for newsprint, which is a commodity where more volume means lower pricing. But with coated paper, so many other factors can influence pricing, and the biggest buyers don't necessarily get the best deals."

Magazine publishers for years have debated whether others in the industry should be viewed primarily as competitors or collaborators. But with the toughest competition coming increasingly from other media, often powered by such goliaths as Google and Amazon, the pendulum is definitely swinging toward collaboration.

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1 comment:

Thomas Carney said...

The comment that in periodical stock, bigger quantity buyers don't necessarily receive a better deal is misleading. More accurately, such purchases are fairly priced based on options which can be considered a competitive advantage differentiating one publication from another by offering a more pleasing look, feel and weight. Apples to apples, quantity will still rule.