Pressure from newspaper publishers has finally crushed WH Smith News' plans to operate a national distribution system to supply magazines. The wholesaler announced that it would back an "industry solution" to providing efficient magazine distribution. The announcement was part of deal hammered out with Associated Newspapers, which last month gave WH Smith notice that it was terminating its distribution contract with the wholesaler ­ a move analysts predicted could have cost WH Smith £7m profit. As part of the deal WH Smith said it would suspend its national distribution operation ­ which had begun for its own stores ­ by the end of the month. WH Smith agreed national magazine distribution deals with Tesco and Safeway last year, and was investigating a similar arrangement with c-store chain T&S Stores. The deals would have provided the multiples with a single point of contact rather than dealing with a plethora of wholesalers on a regional basis. It would also have allowed the multiples to control their supplies of magazines ­ currently they are controlled by the wholesalers ­ and operate computerised replenishment systems. However, publishers and other wholesalers claimed the arrangement would increase the cost of distribution to smaller stores, which could make magazines unviable for more than 10,000 outlets. Other news wholesalers, backed by the Periodicals Publishers Association offered to set up a national system which would provide the multiples with the same benefits, and Tesco and Safeway agreed to investigate the proposals as part of the British Retail Consortium. Commenting on the deal with Associated Newspapers, WH Smith chief executive Richard Handover said: "We stated that there were a number of key issues which needed to be addressed, namely high administrative costs, inefficient distribution and the lack of direct commercial relationship between retailers and publishers. We believe that significant progress has been made towards resolving these issues." {{NEWS }}