I am neck deep in magazine related data from six newsagencies. Remember, Australian newsagencies pride themselves on magazine range as their key point of difference. Whereas other retailers who offer magazines carry up to 100 titles, newsagencies carry over 1,000 titles and often more. This cash flow data shows that the range is killing them. Titles which are profitable can be cash flow negative. Take Cosmos for example, this is a new title released last year. Not one newsagency I have looked at shows the title as cash flow positive. Indeed, Cosmos is cash flow negative in one newsagency to the tune of $500.00 over three months. Cosmos is one over 1,000 titles in this newsagency which is cash flow negative.
Another magazine worth looking at is Australian Woodsmith. Wood bloke love it. It sells well. It’s not cash flow positive in one newsagency. This title costs more than it earns. Should we stop carrying it? Maybe. If we do stop does that make us a me too magazine retailer? Maybe. It depends on how we make the transition.
At the distributor level, in one major suburban newsagency, they are $16,000 cash flow negative over the course of a year from just one magazine distribution company.
Our analysis is taking into account paying for stock, banking sales, paying for real estate used for magazines and paying for labour used for magazines. If anything it shows a conservative result with reality being worse.
Magazine distribution is at crisis point for newsagents and urgent action is necessary on the model if newsagents are to survive in the range game. While newsagents complain about the little money they make on magazines, few actually measure the cash flow implications.
Our new research will provide hard evidence and this will cause significant debate when released next month.