Special Report: What Does Quad's Worldcolor Acquisition Mean to the Marketplace?
The only way for printers to hold or increase price is to accept the possibility that volume will decline, and that pursuing growth has a very high cost in this mature industry. A plant that sheds a press and lets the new, lower plateau of demand take shape can be profitable if management has the courage to accept that we're in a new world with a diminished need for print.
INBOX: When will printer consolidation produce the typical economic result of price increases? Have we finally reached the tipping point to turn it into a seller's market?
MAG EXEC: We are a long way from a seller's market for printing.
BROWN: We've been in an oligopoly for quite some time. The Quebecor-Worldcolor merger looked like the last straw too, but prices have been continuously constrained. First it was the printer's hard-luck status as last in line behind the post office and the paper mills. Then it was the one-two punch of the burst tech bubble and 9/11. Now it's a recession wrapped around a society that is logically, inexorably, and happily evolving into consumers of digitally delivered news and entertainment. A seller's print market cannot emerge under those conditions, even for boutique print applications, because the residual capacity from print's heyday will always lag the drop in demand.
INBOX: What type of reaction do you think this news drew in Donnelley offices across the country?
BROWN: Donnelley should be happy, even if some folks spent a moment or two being miffed that they couldn't pull this off last summer. First, conditions would appear to allow prices to rise. (Again, I happen to believe it won't be so simple, but RRD still has to be pleased that the oligopoly has shrunk still further.) Second, Donnelley can spend the next year and half selling its known versus Quad's new unknown. And that includes making sales while Quad's attentions are understandably directed inward.