Quebecor goes it alone

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Production executives glad printer—renamed World Color Press—fended off R.R. Donnelley When printing giant Quebecor World in late July emerged from Chapter 11 bankruptcy protection after 18 months of restructuring and having fended off takeover bids from competitor R.R. Donnelley, it was a major relief to many b-to-b magazine production executives. “The more competition in the industry, the better our prices will get,” said Marie Myers, senior VP-manufacturing at United Business Media. “Printers are coming out of the woodwork seeking jobs. They are out-bidding each other just to keep the presses running,” said Bryan Crowe, art director at Allured Publishing. Glenn R. Filippone, VP-production at Incisive Media, said that having more than one major printing option gives companies such as his flexibility. “It also stops, ever so slightly, the string of continuous bad news within the publishing industry,” Filippone said. “It's refreshing to hear some positive news instead of another layoff, magazine close or poor advertising numbers. As a consumer, it gives me hope that the economy may have hit the bottom and is on the way to recovery.” But the future success of the company, now know as World Color Press, is by no means guaranteed. Dedra Smith, president of magazine production consultancy Printmark West, noted that World Color Press has exited bankruptcy at a time of unprecedented price declines “that are going to cause a huge contraction in the print industry.” Smith said that if Donnelley had acquired Quebecor, the merged company would have likely started shutting down printing plants. This would have helped Donnelley as well as other printers, such as Quad Graphics, which she said is putting extra emphasis on the shorter-run magazine market. “Now each printer will have to look at their own operations—again—to make these deep cuts,” she said. “Otherwise, the downward pressure on print pricing as business falls away and capacity remains high makes it very hard for any of them to stay afloat.” Many production executives speculated that a purchase of World Color Press by Donnelley could still happen down the road, especially since some of the company's new executives used to work at Donnelley. For example, World Color Press' nonexecutive chairman, Mark Angelson, is a former CEO of R.R.Donnelley. Roger Burg, VP-operations at Canon Communications, said there is no doubt that more consolidation will occur in the print market. “I think the larger printers have a greater chance of surviving—not just this economy, but the transformation going on in print,” he said, adding that World Color Press will have an edge over some others because of its economies of scale. Quebecor benefited from the timing of its bankruptcy filing in January 2008, Smith said. “As it turned out, they were able to refinance their debt just before the spigot was turned off. But it doesn't mean they're going to be well-managed and profitable,” she said. Smith added that she is concerned there is an expectation that technology can save the printing industry. “Who's going to be investing in research and development for a submerging industry?” she asked. However, Smith did say that she expects a resurgence of print in the future. “People [will] tire of online overload and find the magazine a refreshing change,” she said. “The printing industry will still be around to embrace the growth. But it will be a much smaller animal, and only the fittest will survive.” M
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