Newstrade sources have expressed concern over the future of newspaper and magazine wholesaler Dawson News, which has lost five major contracts in the space of six weeks.
Dawson News revealed last week its £52m contract with Telegraph Media Group would not be renewed in the autumn. It follows contract losses from magazine distributors Frontline, Seymour Distribution and Comag, as well as Associated Newspapers, amounting to £255m in lost revenue. The contracts were picked up by rival wholesalers Smiths News and Menzies Distribution.
Publishers Trinity Mirror and Marketforce are expected to announce their new distribution contracts after Easter. Sources said Dawson was unlikely to retain their business. "I don't think there is a chance," said one senior newstrade source. "They won't keep them. They [the publishers] will follow suit."
Another source added: "I feel sorry for Dawson because, by and large, it offers the best service in the industry."
The contract losses are a major blow to Dawson, which had a 22% share of the newstrade sector. Its parent company Dawson Holdings revealed in December that Dawson News posted sales of £690.2m and operating profits of £10.1m for the year to 27 September. The business makes up a substantial part of Dawson Holdings, which recorded total sales of £775.2m and total operating profits of £12.4m.
Its shares have dropped from 50p at the beginning of March to about 11p and broker Altium Securities has changed its recommendation from 'hold' to 'sell'.
The sources added that Dawson losing the contracts meant there were concerns over the balance of power in newstrade, just five months after a long-awaited OFT investigation concluded there was scope to increase competition for magazine distribution.
In a statement, Dawson Holdings said it was undertaking a detailed review of the implications of the contract losses.
Dawson News revealed last week its £52m contract with Telegraph Media Group would not be renewed in the autumn. It follows contract losses from magazine distributors Frontline, Seymour Distribution and Comag, as well as Associated Newspapers, amounting to £255m in lost revenue. The contracts were picked up by rival wholesalers Smiths News and Menzies Distribution.
Publishers Trinity Mirror and Marketforce are expected to announce their new distribution contracts after Easter. Sources said Dawson was unlikely to retain their business. "I don't think there is a chance," said one senior newstrade source. "They won't keep them. They [the publishers] will follow suit."
Another source added: "I feel sorry for Dawson because, by and large, it offers the best service in the industry."
The contract losses are a major blow to Dawson, which had a 22% share of the newstrade sector. Its parent company Dawson Holdings revealed in December that Dawson News posted sales of £690.2m and operating profits of £10.1m for the year to 27 September. The business makes up a substantial part of Dawson Holdings, which recorded total sales of £775.2m and total operating profits of £12.4m.
Its shares have dropped from 50p at the beginning of March to about 11p and broker Altium Securities has changed its recommendation from 'hold' to 'sell'.
The sources added that Dawson losing the contracts meant there were concerns over the balance of power in newstrade, just five months after a long-awaited OFT investigation concluded there was scope to increase competition for magazine distribution.
In a statement, Dawson Holdings said it was undertaking a detailed review of the implications of the contract losses.
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