Source Interlink, one of three remaining magazine wholesalers in the U.S., is shutting down, according to Folio. Source Interlink has roughly 6,000 employees. The shutdown follows the decision by Time Inc. to cut off Source Interlink from new shipments and transfer its business to The News Group, owned by the Jim Pattison Group.
In a regulatory filing, Time said it was taking the step because of $7 million in uncollectible receivables from Source Interlink, according to the Wall Street Journal. As a result of the move, Time will also be unable to recognize $19 million in Q2 sales, will spend $1 million in transition costs, and will lose another $4 million in revenue during the transition.
After Time made its move, Curtis and Comag, two national distributors that sell to wholesalers like Source Interlink and News Group, also stopped shipments to Source Interlink.
The collapse of Source Interlink means there are now only two large magazine wholesalers in the U.S., The News Group and Hudson News, down from 100s in the early 90s. A fourth long-term survivor, Anderson News, shut down in 2009 (see "Mag Wars Shake Out Anderson") after it and Source Interlink tried to force magazine publishers to accept price increases and were unsuccessful. Source Interlink sued Hudson News and Newsgroup, four magazine publishers, and three national distributors that year alleging that there was a conspiracy between its competitors and the publishers and national distributors to force Anderson and Source Interlink to close (see "Mag Wholesaler Goes to War").
Source Interlink eventually settled with its suppliers and continued to operate for another five years. But now the situation it feared has come to pass: News Group and Hudson News control the magazine wholesaling business in the U.S.
With 6,000 Employees
Posted by ICv2 on June 2, 2014 @ 12:53 am CT
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