EXCLUSIVE: Shareholders blamed for Reach plc margin cuts
Reach plc’s chief operating officer (COO), Neil Jagger, defended the company’s recent cut to retailer percentage margins, stating: “Whatever the shareholders want, we have to follow.”
The company had refused to explain last month’s price increase, which cut terms on its Sunday titles, but Cambridgeshire HND agent Brian Webb told betterRetailing the COO had blamed shareholders in a call.
This was confirmed by Jagger, who later told betterRetailing: “Reach is a public limited company, unlike almost all of its national newspaper counterparts, which are privately owned. This brings different pressures on profit expectations and brings into play actions that in a perfect world we would not have to take.
“Of course, it would be lovely not to increase cover prices at all, but then retailers’ profit per copy would not increase, either, whereas every retailer earns more per copy with each cover-price increase.”
The call followed what Webb described as a “threatening” letter by Jagger, relating to the HND agent’s refusal to include unpaid inserts in delivered copies of the Sunday Mirror.
A photo uploaded to Twitter by the roundsman showed a stack of Legal & General (L&G) advertising inserts removed from the Sunday Mirror before delivery. “They paid Reach plc a fee to enable this letter to go country wide, the trouble being, newsagents will no longer work without payment,” said Brian Webb in the tweet sent on 26 May.
Jagger than sent a letter to Webb, seen by RN, which warned: “When they [L&G] contacted us with their concerns, we stressed that your action was a one-off and previously unheard of.
“However, if L&G ever decided to reconsider this form of advertising and cited this episode as a reason, then Reach would have to ask you some serious questions. I sincerely hope this outcome never comes into play.”
Other news sellers confirmed to betterRetailing they, too, regularly remove unpaid commercial inserts from newspapers.
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