WH Smith faces losing a big part of its contract to handle newspapers as its row with publishers over magazine distribution escalates. Associated Newspapers, publisher of the Daily Mail and the Mail on Sunday, has given WH Smith News six months' notice that it will end distribution contracts for about 66% of the business it gives to the group. Associated's deputy circulation director Graham Thomson told The Grocer: "In areas where we have given notice we will make alternative distribution arrangements, and discussions will take place with companies such as Surridge Dawson and John Menzies as well as a number of independents." The action is expected to cut turnover in WH Smith's wholesale arm by more than £100m a year, and could cut profits by £7m a year. Associated's decision comes as the wholesaler attempts to set up national magazine distributors for large retailers such as Tesco and Safeway. The newspaper industry is concerned that WHS will extend national distribution to newspapers and has completed research that shows the increased cost of that distribution could force up to 12,000 local newsagents out of business. Associated's action is expected to prompt other newspaper groups to review their position with WH Smith. Managing director of the Telegraph Group Jeremy Deedes said: "We are always reviewing arrangements to ensure that our readers get the best possible service. We are always examining ways of ensuring efficient delivery and this would be a good time to have another look." {{CTN }}