Four Print-Related Giants That Have Defied Bankruptcy Predictions

So much for crowd sourcing.

Exactly 18 months ago, 79% of voters in a Dead Tree Edition poll predicted that at least one of four major U.S. print-related companies would be in bankruptcy court by the end of 2012. All four companies – the country’s largest magazine distributor, the largest seller of magazines, and the #2 printer and paper maker for the industry – are still afloat. Two of the four are even profitable.

Print, it turns out, isn’t dead. Maybe comatose, but definitely not dead yet.

The 743 voters in that January 2012 poll couldn’t agree which of the four would go belly up, but the vast majority thought at least one would. Here’s another look at those four organizations and where they are today:

Barnes & Noble was chosen Most Likely to Expire, with 30% of the voters saying it would be in bankruptcy by the end of the year. Pundits were dubious whether B&N’s Nook venture would be sufficient to save the big bookseller from the rapid shift to digital media.

The bookstores, however, continue to be profitable, keeping the company afloat despite continuing losses in the Nook business, which has turned out to be more of an anchor than a lifeboat. The company seems likely to spin off the Nook business or at least to de-emphasize sales of Nook tablets.

What’s not clear is what would take the place of the huge Nook department in the typical brick-and-mortar B&N store. Books? Event space? Food service? Kindles and iPads? In any case, Barnes & Noble’s stock price is up 45% since Jan. 31, 2012 when the Dead Tree Edition poll ended.

Quad/Graphics was #2 on the See-You-In-Chapter 11 list with 21% of those January 2012 voters saying it wouldn’t survive the year. Meanwhile, its stock has risen 131%, it gobbled up another major competitor (Vertis) in January, and it’s apparently on pace for a profitable year.

It’s not that catalogs, books, and direct mail are suddenly growth businesses, but those who predicted the sort of catastrophic declines that devastated the newspaper industry have so far missed the mark. Quad has been able to grow market share with acquisitions and to battle declining demand and prices with efficiency-improving plant consolidations.

A close third to Quad was Verso Paper, which has continued to defy predictions that bankruptcy reorganization was just around the corner. Its stock price is down 14% since the January 2012 poll, and “profit” is still not part of Verso’s lexicon.

The heavily indebted paper maker seemed too fragile to survive a major disaster like the May 2012 explosion that led to the closing of its Sartell, MN mill. But an insurance settlement and sale of the mill property have provided cash infusions, and prices for coated paper have remained remarkably stable despite eroding demand.

And then there’s the U.S. Postal Service, which brought up the rear with only 20% of the voters predicting a 2012 bankruptcy despite suffering by far the largest financial losses. Commenters noted that USPS was on a financially unsustainable path but said Congress would eventually do something because a shutdown of the Postal Service would be politically unacceptable.

But, so far, Congress has done little except to prevent USPS from curtailing Saturday deliveries and to extract projections from postal officials about the exact hour and day when USPS will run out of cash. Oh, and of course to name more post offices – a task so crucial to national security that even one of the most do-nothing Congresses in U.S. history would not shirk it.

If the Postal Service were a real business, its stock price would be zero now. Then again, if it were a real business it wouldn’t have loaned the federal government billions of dollars interest-free in the form of “prepaid” retiree health benefits. And Congress would probably have bailed it out by now.

Related articles:

• Is the Postal Service Really Broke? 
• Congress Is Fixin' To Fix the Postal Service
• Weak Demand Will Mean Higher Paper Prices  
• Yankee Invasion: Quad/Graphics' Jonesboro Closing Marks End of an Era 
• Verso Changes Course -- Why?