R.R. Donnelley and Quad/Graphics, the USA's two largest printing companies, apparently have their sights set on gobbling up more competitors -- but not each other. Quad's CEO, Joel Quadracci, was caught off guard on Tuesday by a question from a Goldman Sachs analyst at the end of Quad's quarterlyearnings conference call. "I'd kind of love to hear your thoughts on potential regulatory pushback or maybe lack thereof on a tie-up between your company and your biggest competitor," said Fred Krom. Quadracci at first thought the question was about Courier Corp., which Quad recently planned to acquire until Donnelley stepped in.
Coated paper was invented in the United States, but after a major industry shakeup today most of the country's ability to make coated paper is owned by foreign companies.
This morning, two momentous events occurred nearly simultaneously in the industry that makes coated paper for catalogs, magazines, inserts, and brochures:
1) NewPage, the largest North American maker of coated paper, sold its Biron, Wisconsin and Rumford, Maine mills to Catalyst Paper, which shifted about 12% of the nation's coated-paper capacity into Canadian hands.
OK, fellow publishing fans, you can't be ready to face this new year without understanding what happened in 2014. Here are the 10 words (yes, "magazine media" and "native advertising" are single words) that summarize the year that just was, along with links that provide further information:
October began with both good news and bad news on the cost front for publishers of magazines and catalogs.
Because of announcements made on Wednesday, publishers can scratch the usual January postage rate increase from their 2015 budgets but should probably count on price increases for coated paper.
The U.S. Postal Service Board of Governors announced it would not raises prices on "market-dominant" mail classes early next year, contrary to its usual practice of implementing inflation-based price hikes in January.
Demand for graphic papers keeps dropping, usually faster than the industry can reduce capacity. Struggling paper mills are often playing a giant game of chicken, scuffling along on thin margins (or negative margins) in hopes that a competitor will shut down a machine to balance the market.
So why are paper companies suddenly announcing price increases for coated paper, and why is the biggest printer in the U.S. worried about possible paper shortages?
The proposed merger of NewPage and Verso Paper may be on the ropes, but it has brought much attention to the oddities of the U.S. market for coated paper.
Intrigued by the unusual proposal (which Verso was forced to reconsiderlast week), the bankruptcy experts at The Capitol Forum recently published comments from a federal prosecutor explaining why the U.S. coated-paper industry is prone to cooperation among competitors.
Somewhere there must be a person who fully understands all aspects of the proposed combination of NewPage and Verso Paper, North America's two largest makers of magazine-quality paper. But mostly there is confusion and debate and even misinformation about the marriage and what it would mean for the paper industry and its employees, for magazine publishers, and for catalogers.
Such a pre-nup! What Verso and NewPage have worked out is far more complex than described in the companies' announcements or even in stock analysts' reports.
Verso Paper Corp. today announced that they have entered into a definitive agreement under which Verso will acquire NewPage in a transaction valued at $1.4 billion.
After finally emerging from bankruptcy protection, with a much lighter debt load, NewPage Corp. clearly has merger on its mind. Why else would North America’s largest maker of coated paper choose as its chairman Mark A. Angelson, the U.S. printing industry’s Great Consolidator? And why else would he accept the job?
Only four months ago, the man who led the rolling up of such major printers as Worldcolor, MooreWallace, and Banta quit an apparently successful run as deputy mayor of Chicago so that he could lead “a somewhat less frantic life.”
Only three weeks after Verso Paper’s CEO said acquiring NewPage was the key to its future, Verso announced it no longer wants to buy its rival. Why the sudden change of heart?
In a mid-August interview with The (Memphis) Commercial Appeal, Verso CEO David J. Paterson said that the company’s key strategy is acquiring ailing companies “to get the cost reductions we can't get on our own.” NewPage, which is in Chapter 11 bankruptcy reorganization, is Verso’s only publicly announced target.