Holy Wholesalers! It's a comic war!


Superman died two years ago, but the latest comic-book news may be even more earth-shaking and, at least for some in the industry, scarier.

The country's two biggest comic publishers have signed exclusive distribution deals, shifting millions of dollars in wholesale business faster than a speeding bullet.

Marvel Entertainment Group Inc., the No. 1 comic company with about 30 percent of the market, fired the first shots two months ago by deciding to use a Marvel-owned distributor for all its shipments to specialty comic-book stores.

The move will strip sales from Marvel's outside wholesalers, among them, Diamond Comic Distributors Inc. of Timonium. Marvel accounts for 25 or 30 percent of Diamond's roughly $200 million in annual revenue, said Roger Fletcher, Diamond's vice president of marketing.

Now Diamond has struck back, signing as exclusive comic-shop distributor for DC Comics, the No. 2 comic publisher with a 20 percent market share.

The deal won't competely fill the hole in Diamond's business caused by the departure of Spider Man and other Marvel titles, Mr. Fletcher said. But it will help. And it will also give Diamond entree into 3,000 of the 6,000 comic shops that it doesn't already have accounts with.

"For the first time in our 13-year history we'll be going to virtually 100 percent of the specialty comic shops," Mr. Fletcher said. "From that standpoint, it's a very significant deal for us."

Specialty shops account for about 75 percent of comic-book sales. The recent deals, effective July 1, don't affect the other quarter of the pie, which is sold through drugstores, discount department stores and other mass merchants. That business is handled by diversified news distributors.

Industry analysts said the DC/Diamond deal obviously is a response to Marvel's announcement March 3 that it would funnel all specialty distribution through Heroes World, its recently acquired wholesaler.

"This will just broaden the distribution for DC Comics at a time when Marvel is trying to control more of their own distribution," said Jill Krutick, who follows Marvel for Smith Barney in New York. "Clearly Diamond has very broad coverage."

The losers are smaller specialty distributors who will have to rely on smaller, lesser-known publishers.

"We regret ending our long-standing relationships with other distributors . . . but we believe this arrangement with Diamond is the right way to lead DC and the entire comics industry into the future," said Paul Levitz, DC publisher. DC, publisher of Superman, Batman and Wonder Woman, is a division of Time Warner Inc.

The effect on retailers is unclear. Distribution executives and store owners agreed that exclusive wholesale relationships could speed deliveries and otherwise make retailers' lives easier.

But the new alignments will also force stores to buy from more than one distributor. Some smaller operators have a tough time now meeting minimum-order requirements with even one distributor. They may not be able to afford to order from two.

"If you can't meet the minimum, you can't buy product. And if you can't buy product, you're out of business," one store manager said. Stephen A. Geppi, Diamond's president, said the company is prepared to take on thousands of new accounts. "We have a history of successful expansion, and our distribution infrastructure is already in place and effective."

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