The Target Report Releases September Deals, Court Filings, Closures (Includes Chart)

October 7, 2013—What is it about paper that adds perceived value to our intellectual and artistic pursuits? The appeal of paper as a medium for communication endures and often adds to the meaning of the words and images we print on that paper. This was evident during my recent visit to MoMA’s PS1 annex in Long Island City, NY. Thousands of attendees mobbed The New York Art Book Fair, an exhibition of more than 280 international presses, booksellers, antiquarians, artists and independent publishers from around the world. The “Book” was on center stage at this four day event, not for its content, rather as art itself.

Beginning around the mid-1970s, the concept of the Artist’s Book has developed in a reciprocal curve to the impact on printing by computer technologies including phototypography, Scitex image manipulation, and Mac page layout programs; and to the still evolving erosion of print by the forces unleashed by the internet. Many of the Artist’s Books on display were editions of one, some of which were “printed” on non-paper substrates such as fabric and copper sheeting, and others that were three-dimensional sculptures created by “carving” the pages of an otherwise normally produced book. In addition to these one-of-kind works, there were many examples of beautifully crafted limited editions—books printed using letterpress, as well as highly decorated and complex custom editions printed using the latest iGen and Indigo presses. The technology has changed, however the unique ability of paper to convey words, images and ideas was still wonderfully evident.

In another nod to the value of paper, Investcorp, a global asset manager with over 10 billion dollars under its care, acquired Paper Source, a national retailer of “fine and artisanal papers, invitations and announcements, personalized and distinctive gifts, gift wrap, greeting cards, custom stamps, and a custom collection of envelopes and cards.” Investcorp’s investment speaks to the value they see long term in the ability of paper to convey something special about what’s written, printed, wrapped, and packaged on or in it.

Unfortunately for those of us involved in the more mundane pursuit of increased revenue and profits gained through the repetitive application of ink on substrate, the growth of the Artist’s Book movement and endurance of personal stationery will not come close to reversing the larger trends impacting the industry, as evidenced by the deals announced in September.

As I projected during my recent presentation in the NAPL booth at PRINT 13, the transactional/transpromo printing sector will be under continued stress from the constant pressure from credit card issuers, utilities, communication providers and others that issue monthly statements to “go electronic.” International Paper named the e-statement trend as a key factor in its decision to shut down its massive paper mill in Courtland, AL. The giant paper manufacturer also cited the overall decline in the demand for the grades of printing and copier paper that have been manufactured at Courtland since 1971. On the other side of the country, Harbor Paper in Hoqiuam,WA, a small mill manufacturing copier grade papers, closed after struggling, unable to pay for its electricity.

American Express indicated that the same trend, increasing e-delivery of its monthly statements, was behind its announcement to close its in-plant facility in Weston, FL. American Express will now outsource its declining volume of statements delivered via U.S. mail.

Ennis continued its steady beat of acquisitions of printers that manufacturer specialty products, purchasing Folder Express in Omaha, NE, and picking up the Custom Envelope Division from Cenveo. In the strategic choices available to commercial printers, product specialization, customer selectivity or service diversification, Ennis appears to clearly be driving growth by finding and investing in specialty product niches, now having appeared on our deal log five times in the past two years, with the three previous transactions all focused on printed forms and related product specialties.

Fortress Investment Group, through an affiliate, purchased The Dow Jones Local Media Group, publisher of eight daily and 15 weekly community newspapers. Fortress handed the management of its new acquisition over to GateHouse Media, one of its other portfolio companies, which itself publishes more than 400 community and local newspapers and shoppers. It became clear later in the month as to at least one reason that Fortress used a different entity to purchase the Dow Jones Media Group when it placed GateHouse Media and 41 related entities into Chapter 11 bankruptcy. In a concurrent filing of a prepackaged reorganization exit plan, the company has requested the Court’s approval of the elimination of approximately $720 million debt, for which it claims to have sufficient lenders on board. If approved, the plan of reorganization calls for GateHouse Media and Local Media Group to be combined under the common ownership of New Media Investment Group.

Harte-Hanks exited The Shoppers, which includes the iconic PennySaver brand in California and Florida. The coupon shopper company, with a reported revenue of over $200 million, was picked up for what appears to be a bargain price of $22.5 million. The buyer, OpenGate Capital of Los Angeles, has previously, and it claims successfully, ventured into the world of declining print circulation with its 2008 purchase of TV Guide. The private equity fund announced that it is “enthusiastic about media, publishing and advertising businesses in the United States.”

In the packaging space, deals were back on the log after an absence in August, as Multi-Color Corp. continued its international expansion with two acquisitions in Europe: wet-glue spirits label printer John Watson & Co. in Glasgow, Scotland, and wine label printer Gern & CIE in Neuchatel, Switzerland. Back in the United States, label printer I.D. Images of Brunswick, OH, acquired label printer Hi-Tech Printing of Cincinnati.

We found no bankruptcy filings of printing companies during September, and for the first time in the two years that we have been tracking filings, we did not find any Chapter 7 liquidations in the printing or related industries. Publishing did not fare so well, however, with the aforementioned bankruptcy of GateHouse Media; and after struggling for years to survive the transition of its content to the internet, FriendFinder Networks, the publisher of Penthouse magazine, filed bankruptcy.

PLEASE CLICK HERE (AND SCROLL DOWN) TO VIEW CHART

About the Author of The Target Report
Mark Hahn is the senior vice president of NAPL’s Business Advisory Services, working with progressive companies in the printing, packaging and related industries. With 30+ years’ experience in the areas of finance, operations, sales, M&A, and general management, Hahn has served as CFO, COO, and other senior positions with several printing companies, as well as founding and eventually selling his own printing company. Hahn's expertise includes strategic and financial advisory, capital structure and funding, and assisting owners with the sale of their business. He has served as financial advisor in turnaround situations when an owner or lender requires an objective and unbiased view of financial and operational results.

Hahn has deep experience in the commercial printing sector, with expertise in financial analysis, business valuations and cost studies. He earned degrees in Business and Environmental Science at Ramapo College of NJ. He has been published in printing industry trade and management journals. He served as a volunteer for Court Appointed Special Advocates (CASA), providing oversight to the NJ Family Court on behalf of abused children.

Source: The Target Report.