Mr. Magazine

Mr. Magazine™ Presents… Conversations With Magazine and Magazine Media Leaders…

Building on strong partnerships with retailers, publishers and consumers, the American News Company (ANC), is looking positively toward 2020 and the future of the distribution business and the magazine industry. David Parry is president and CEO of ANC and spoke with me recently about the mergers, acquisitions and overall health of the business.

David was excited about the amount of retail space and placement of magazines that ANC has been able to retrieve and the reformation of his organization. And in his words, while the retail changes might not be gargantuan: “Major changes, probably not, that’s maybe too strong a statement. But I would say a significant change. We have gotten a lot of positive traction at retail in regards to space.” So, that is good news.

With a new, more efficient program called “Drive,” which stands for Distribution Reinvented, about to be in place, David is ready to face 2020 head-on and with clarity.

So, please enjoy this informative conversation with David Parry, president and CEO, ANC, as Mr. Magazine™ brings you the next in his series with the magazine and magazine media executives that make the industry world go-round.

But first the sound-bites:

On his assessment of the future of magazine distribution: That’s a great question. Interestingly enough, the last 12 months have seen, obviously, a lot of change going on within American News Company (ANC) and the reformation of the organization.

On whether he thinks publishers will see a major change in retail space allocation and placement for 2020: Major changes, probably not, that’s maybe too strong a statement. But I would say a significant change. We have gotten a lot of positive traction at retail in regards to space.

On important accomplishments ANC had for 2019: There’s been a lot, however, successes to us may not be successes to the masses. We’ve had the integration of CMG, Genera, MagNet, RS2, and TNG all into one organization, including the Curtis integration, and now including Cowley Distributing.

On the biggest challenge the company faced in 2019: I think, yet again, like a broken record, it’s sales declines. We’re still facing pretty large sales declines and in a business that is a fixed cost business, which is what we have as it relates to warehousing, trucking and so on, it’s very difficult to cut your expenses at the rate of your margin decline associated with the decline of magazine sales.

On whether he thinks there is a need for both a magazine distributor and a wholesaler or are they now one and the same: That’s a great question, a sensitive question, but I’ll do my best to answer it in the proper way. I think we are evolving into a hybrid system. The national distributor’s functions are critical.

On whether he thinks the future of single copy sales will be the high cover-priced bookazines and other higher-end magazines: If we can use history as our guide, and we can see in current history, with this evolution and going back to these bookazines, to these single topic, non-subscription-based products and their success, I think there’s a real place for them.

On if the honeymoon period during all the mergers and acquisitions is over now and he has his own team fully in place: In my opinion it’s never over. It will continue to just transition.

On what keeps him up at night: As it relates to this discussion, what keeps me up at night is trying to figure out the way to mitigate the sales decline and right size the infrastructure to make our segment of the business more variable and less fixed so that we can drive a healthier P&L.

And now the lightly edited transcript of the Mr. Magazine™ interview with David Parry, president & CEO, American News Company (ANC).

Samir Husni: What is your assessment of the future of magazine distribution in 2020?

David Parry: That’s a great question. Interestingly enough, the last 12 months have seen, obviously, a lot of change going on within American News Company (ANC) and the reformation of the organization. But one of the big initiatives that we’ve had as a company has been working with our retail customers to right-size the space that we have. To make sure that we have adequate space for magazines in a proper location.

Samir Husni: Do you think retailers will see a major change in retail space allocation and placement for 2020?

David Parry: Major changes, probably not, that’s maybe too strong a statement. But I would say a significant change. We have gotten a lot of positive traction at retail in regards to space. We welcomed our new publisher clients from Curtis at our publisher summit a month ago, and presented key departmental updates, including the significant traction that our sales team has gained in recapturing checkout space across several key chains.

ANC/CMG has gained traction with Walmart to add 7 ‘B’ sized magazine pockets at the self-checkout area of the store, in 1,500+ stores.  When approved, the self-checkout display will represent a significant enhancement for magazines in this high traffic area, which represents 60% of all Walmart transactions.

Samir Husni: What are some important accomplishments ANC had for 2019?

David Parry: There’s been a lot, however, successes to us may not be successes to the masses. We’ve had the integration of CMG, Genera, MagNet, RS2, and TNG all into one organization, including the Curtis integration, and now including Cowley Distributing. So, I think if you’re looking at a single accomplishment it would be to integrate all of those companies and drive out as much inefficiency as possible and build a stronger base in which to operate from through 2019 and then focusing and going forward into 2020. That was a Herculean effort by our team, to be able to pull that off.

Samir Husni: What was the biggest challenge the company faced in 2019?

David Parry: I think, yet again, like a broken record, it’s sales declines. We’re still facing pretty large sales declines and in a business that is a fixed cost business, which is what we have as it relates to warehousing, trucking and so on, it’s very difficult to cut your expenses at the rate of your margin decline associated with the decline of magazine sales. So, yet again, the biggest hurdle we had to overcome in 2019 was really mitigating those margin reductions from the sales loss and producing a positive result for the organization.

Samir Husni: Do you think there is a need for both a magazine distributor and a wholesaler or are they now one and the same?

David Parry: That’s a great question, a sensitive question, but I’ll do my best to answer it in the proper way. I think we are evolving into a hybrid system. The national distributor’s functions are critical. There are many things that they do and have expertise in that we have not done and don’t have expertise in, and quite candidly, we’re learning from each other as we go through this process.

 Samir Husni: Do you think the future of single copy sales will be the high cover-priced bookazines and other higher-end magazines?

David Parry: If we can use history as our guide, and we can see in current history, with this evolution and going back to these bookazines, to these single topic, non-subscription-based products and their success, I think there’s a real place for them. And I think you’re right, magazines may become more of a specialty product like they have somewhat done on the book side with the move from mass market to higher priced trade.

Samir Husni: Is the honeymoon period during all the mergers and acquisitions over and do you have your own team fully in place?

David Parry: In my opinion it’s never over. It will continue to just transition. It’s still a challenging business. Certainly, there’s a Darwinism effect in all of this from all sides: Distribution, Retail and Publishing. We’re just going to continue to see that.

Samir Husni: What keeps you up at night?

David Parry: As it relates to this discussion, what keeps me up at night is trying to figure out the way to mitigate the sales decline and right size the infrastructure to make our segment of the business more variable and less fixed so that we can drive a healthier P&L.  Our ultimate goal is and has been to build a sustainable distribution company for the industry. That’s what really keeps me awake at night, that’s the genesis of everything for us. It doesn’t matter about changing or diversifying our business model as it relates to this discussion and our overall business strategy. We want to get the primary business right, and that’s the magazine distribution business.

Samir Husni: Thank you.

Next up, Krifka Steffey, Director, Merchandise & Newsstand, Barnes & Noble.