TERRY McDonell, group ed itor of Sports Illustrated, may have a big headache on his hands as he gets ready to publish SI’s swimsuit issue, his biggest issue of the year, next week.
That’s because unless things change dramatically, copies of the popular issue won’t go on sale in more than 3,000 Wal-Mart stores as a result of an ongoing battle between magazine publishers and wholesalers.
The Wal-Mart stores, along with grocery-store chains Kroger and Safeway, are getting caught in the crossfire over two wholesalers’ demand that publishers pay a 7-cent per copy surcharge for delivery of their magazines to retailers.
“It’s a nightmare, an absolute nightmare,” said one industry executive.
Ron Burkle‘s Source Interlink Cos. and Charles Anderson‘s Anderson News three weeks ago informed publishers that they wanted the surcharge to help shore up a business both firms say is a money loser.
Three publishers – Time Inc., Bauer Publications, and American Media – told them to take a hike.
In the latest twist of this ongoing story, Source Interlink says it has rescinded the surcharge, and now claims the publishers are colluding in refusing to ship their copies to Source Interlink and Anderson News, which control about 50 percent of national retail sales.
“They characterized this as a dispute over 7 cents, but they really used that as a cover to roll out their scheme,” claimed Source Interlink CEO Greg Mays in a letter to retailers.
The stalemate effectively locks out People, the National Enquirer, Star, In Touch and Life & Style from thousands of stores that were expecting to make issues available for sale today.
Only OK! and Us Weekly are among the celebrity weeklies that will reach retailers because they are distributed by Comag, a wholesaler owned by Hearst and Condé Nast, that continues to ship issues.
Industry sources said that Wal-Mart yesterday was talking with publishers and distributors, trying to get them to ship copies.
The retail giant is officially standing behind Source Interlink and Anderson News, which ship magazines to about 700 and 2,300 stores, respectively. But sources say Wal-Mart also doesn’t want to be without items that customers want, and while magazines account for only a tiny fraction of Wal-Mart sales, they are a high-margin item for the company.
Cuts
The Wall Street Journal yesterday announced it was cutting 14 jobs.
“Over the past couple of months, teams have been reorganized at The Wall Street Journal and we have lost 11 journalists through attrition,” said Editor-in- Chief Robert Thomson in an e-mail to staff. “Unfortunately, it has been necessary today to restructure several other teams at the cost of an additional 14 positions.
“The number, while regret table, has been kept to a min imum because department heads have been vigilant in controlling costs and in maximizing our use of existing resources,” he wrote.
News Corp. owns The Journal and The Post.
As part of the cuts, The Journal will close its New York-based fashion and retail group, though it stressed it would continue to cover that beat. Bureaus in Los Angeles and Boston each will lose a position, as will the legal news, health and real-estate groups.
Muscle
Condé Nast is trying to give new muscle to its recently created Condé Nast Digital unit by dispatching Drew Schutte, the current publisher of The New Yorker, to the division as a chief revenue officer and a senior vice president.
Schutte moved to the job piloting ad sales on The New Yorker only in January 2008, back when S.I. Newhouse timed his January surprises for early January. This year, he changed it up and tossed out one surprise in late January – the folding of Domino magazine – and another in early February – the news about Schutte.
Lisa Hughes, the long-time publisher of Condé Nast Traveler, and a one-time protégé of Ron Galotti when she began her career at Vanity Fair, is moving to The New Yorker as Schutte’s replacement.
Schutte had been publisher of Wired when it returned to advertising health, but sources said he was never completely comfortable in the top ad-sales job at The New Yorker, a job made even more difficult because the entire weekly category has been imploding.
Condé Nast officials strenuously deny that The New Yorker’s 27 percent decline in ad pages last year has forced the title back into the red. Nevertheless, the title’s early-season woes this year clearly make an unprofitable New Yorker a very real and worrisome topic at the company.
In the past, new media was seen as primarily an add-on sweetener to get print advertisers; it has never been a standalone profit center for Condé Nast.
However, Condé Nast CEO Charles Townsend is now trying to change that, and must break down internal resistance to embracing the Web.
The company had intended to make an announcement about the changes on Monday, after Schutte returned from the tech-heavy TED conference.
But Townsend was forced to confirm the news in an announcement that went out around 2:32 p.m. yesterday, shortly after The Post broke the news on its Web site at 1:04 p.m.
Of course, that meant that Townsend didn’t yet have a replacement publisher of Condé Nast Traveler lined up.
That position is expected to go to a Condé Nast insider in the next few days.
Sommer’s end
New York Observer Media President Bob Sommer has resigned from Jared Kushner‘s salmon-colored weekly to join the holding company that owns the New Jersey Devils and their Newark arena.
Christopher Barnes, a co-founder of the free daily AM New York, will replace Sommer.
Sommer ran his own p.r. agency before being tapped to join Kushner two years ago to run the weekly newspaper that Kushner bought from Arthur Carter in the summer of 2006.
Kushner, the Observer’s publisher and owner, said that Sommer “has been invaluable in helping us to grow our revenue over the past two years, but I think Christopher is gong to take us to the next level.”
Kushner, the scion of the Kushner Cos. real-estate empire that owns 666 Fifth Avenue, said he has no intention of abandoning the media business.
“We’re in this for the long haul,” he said.
Kushner said he ex pected his company, which recently shut down a string of mon ey-losing political Web sites, to be in better financial shape in 2009 than it was in 2008, though he isn’t expecting to be in the black for another few years.
“We’re going to get closer to profitability this year than we were last year,” he said.
The search
A week after the big shake-up at the US version of OK! magazine, Richard Desmond, the CEO of magazine owner Northern + Shell, decided not to come to New York this week and instead will stay in London and send his top editorial honcho Paul Ashford to find a replacement editor for the money-losing magazine.
The cigar-chomping Desmond last week bounced Editor-in-Chief Susan Toepfer and General Manager Kent Brownridge.
The magazine, which was bleeding red ink before Brownridge arrived last September, posted even steeper losses as newsstand sales slumped across the celebrity category in the fourth quarter.
Vincent Ohanyan, the magazine’s chief financial officer, has now added Brownridge’s old job as general manager to his job description. Sarah Ivens, who left OK! shortly before Brownridge arrived, was recalled to serve as acting editor until a replacement is named.
And sources say that could be a long process. Desmond and Ashford are “having a very hard time finding a replacement,” said one person.
Two obvious candidates, Rich ard Spencer at In Touch, and Dan Wakeford, Spencer’s former deputy who now runs Life & Style, both have six-month non- compete agreements in their contracts with Bauer Publications, which owns both titles.
Sources said Ashford has tried reaching out to top editors at People who rank below Managing Editor Larry Hackett, but no one has bothered to return his call.
Ivens, for her part, is said to not be interested in returning to the fold. keith.kelly@nypost.com