I’ve just completed a study into the cash-flow impact of magazines in Australian newsagencies. Once you account for the cost of stock, labour and real-estate and balance this with credits for unsold stock and revenue from sales, I’ve found that, on average, 65% of all magazine titles carried by newsagents are cash-flow negative. None of the cash-flow negative titles is in the top 100 and none is carried by petrol, convenience or supermarket outlets.
The magazine supply model was created back when newsagents had an authorised monopoly. It needs to be modified to reflect today’s circumstances. If this is not done newsagents will continue to bleed cash in the magazine department to the gain of their competitors. Cash-flow negative titles take money and resources which could otherwise be spent in newsagencies to promote the successful titles. This is the advantage supermarkets and others have over newsagents.