The Guardian has been warned it faces a ‘militant’backlash from newsagents who claim the paper has cut their share of the cover price.
The Guardian this week increased the price of its weekday edition from £1 to £1.20 but cut its retailer percentage margin from 25 per cent to 24 per cent.
Retailers claim they will lose 1.2p on every copy and that collectively the industry could lose around £250,000 a year because of the move.
The Guardian responded by saying that the 20p price hike meant retailers would receive an extra 3.8p for every copy sold, up from 25p to 28.8p, which it pointed out was ‘substantially higher’than rival broadsheets.
Trade body the National Federation of Retail Newsagents has written to 27 of The Guardian’s key advertisers to tell them its membership was in dispute with the paper, which meant “fewer of their advertisements might reach their intended audience”.
Chief executive Paul Baxter warned that during similar disputes in the past retailers had responded by increasing home delivery charges, reducing copy supply, “providing a less advantageous display” and refusing to insert additional materials into the paper.
While Baxter claimed his organisation would not condone this activity, he added: ‘after publishers have been having regular nibbles at retailer margins for more than 20 years, it is not difficult to understand that retailers are extremely frustrated as they see their livelihood being eroded and under threat”.
In an industry where publishers decide prices and margins, added Baxter, there were ‘few options other than militancy for retailers to defend their livelihood when their margins come under attack by the arbitrary decisions of publishers”.
He continued: ‘This can only happen in an environment of monopoly control and price fixing, demonstrating why a further review of the news industry, followed by a referral to the Competition Commission, is urgently needed.”
The NFRN said it had written to the chief executive of Guardian News and Media and editor Alan Rusbridger urging it to reverse the margin cut but had been met with silence.
The Guardian said a reply was sent yesterday morning. It also claimed GNM’s head of sales and marketing has been in contact with the NFRN.
‘In our letter we outlined the rationale for the move, and emphasised both the desire to work constructively with the retail trade and the fact that retailers will see a net benefit from the change,’said a GNM spokesperson.
‘GNM’s terms still compare very favourably to those available from the rest of the quality daily market.
‘Retailers will now receive an additional 3.8p per copy of The Guardian sold during the week, up from 25p to 28.8p. This margin is substantially higher than others in our market, with the nearest being 25p from The Times.”
Click here to read Alan Rusbridger’s article on why The Guardian increased its cover price.