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Price-fixing lawsuits were filed in the U.S. District Court for the Middle District of Pennsylvania last week naming all of the major magazine publishers in the United States, alleging that they have conspired to prevent any of their number from selling subscriptions for anything less than 50 percent of the “list price.” Attorneys Dianne M. Nast, Daniel N. Gallucci and Brian D. Long of Lancaster, Penn.-based Roda & Nast filed one of the suits. A second suit was filed by attorney Kenneth A. Jacobsen, along with three sole practitioners – Francis J. Farina, Peter A. Lennon and Robert W. Sink – and Joseph A. O’Keefe of O’Keefe & Sher. According to Nast’s suit, “the heart of the defendants’ conspiracy is an agreement not to offer or sell magazine subscriptions at more than a 50 percent discount to the magazine’s ‘basic’ or list price.” The suit says publishers compete in two main areas — for revenue from single-copy and subscription sales, and for revenue from advertisements. Subscription agents, such as the Publishers’ Clearing House and American Family Publishers, typically sell the same magazines, the suit says, and therefore compete against one another for subscribers. While the competition among agents should produce price cuts, the suit alleges, competition has been stifled by the publishers’ price-fixing conspiracy. Since higher circulation leads to increased ad revenues and since the cost of adding an additional subscriber is low, the suit says, publishers would ordinarily be expected to cut subscription prices to generate higher circulation. “However, this incentive to lower prices has been removed because of the price-fixing agreement, and consequently magazine consumers are paying too much for their magazines,” the suit says. The suit says magazine publishers have “created an industry-wide illegal and artificial restraint on trade.” The agreement, the suit says, centers on the publishers’ jointly established definition of the term “paid circulation,” which prohibits publishers from including in their circulation figures any consumers who pay less than 50 percent of the magazine’s list price. “This artificial definition has removed the publishers’ principal incentive to engage in substantial discounting because subscriptions sold at less than 50 percent of the list price will not be considered for purposes of selling advertising,” the suit says. The definition is part of the by-laws of the Audit Bureau of Circulations, a self-regulating arm of the publishing industry headquartered in Schaumberg, Ill., the suit says. Membership in ABC is “essential,” the suit says, because most advertisers insist on circulation figures audited by ABC. “The consumer magazine industry has used the ABC definition of ‘paid circulation’ to artificially restrain subscription agents by collectively requiring all agents to sell at no less than 50 percent off the publication’s ABC-determined list price,” the suit says. Named as defendants in the suits are The Hearst Corp. (publisher of Cosmopolitan and Esquire); Time Inc. (publisher of Time, People and Sports Illustrated); Newsweek Inc. (publisher of Newsweek); and Conde Nast Publications Inc. (publisher of Vogue and Vanity Fair). Also named are The Reader’s Digest Association Inc. (publisher of Reader’s Digest); TV Guide Inc. (publisher of TV Guide); Meredith Corp. (publisher of Better Homes & Gardens and Ladies’ Home Journal); Gruner & Jahr Printing & Publishing Co. (publisher of Family Circle and McCall’s); Rodale Press Inc. (publisher of Men’s Health and Prevention); Ziff-Davis Inc. (publisher of PC Magazine and PC Week); International Data Group Inc. (publisher of PC World and Gamepro); and Primemedia Inc. (publisher of Seventeen and New York).

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