2 Big Book and Magazine Printers Face Suit to Block Their Merger

By Marc Tracy

ImageOne of the companies, Quad/Graphics, prints every Condé Nast magazine title, including The New Yorker, as well as Vogue and Vanity Fair.
One of the companies, Quad/Graphics, prints every Condé Nast magazine title, including The New Yorker, as well as Vogue and Vanity Fair.CreditCreditJeenah Moon for The New York Times

The printed page has seen better days.

To improve their chances in a struggling industry, two of the largest companies in the business of printing and distributing magazines, books and catalogs last year agreed to a merger deal that was expected to close in the next few months.

Not so fast, the Justice Department said.

In a lawsuit filed last week in federal court in Chicago, the Justice Department asked for a halt to Quad/Graphics’s planned $1.4 billion purchase of LSC Communications. Lawyers in the department’s antitrust division argued that the merger would decrease competition and drive up prices.

Quad publishes every Condé Nast title, including The New Yorker and Vogue, most publications from Hearst Magazines, including O: The Oprah Magazine, and Scholastic books. LSC Communications publishes two magazines from AARP that claim to have the largest circulations in the world, Penguin Random House books and more.

Makan Delrahim, the assistant attorney general in charge of antitrust, said in a statement that a combination of Quad and LSC Communications would “raise prices and reduce quality at the expense of publishers, retailers and, ultimately, American consumers.”

In its attempt to block the deal, the Justice Department had two allies from the community of writers: The Authors Guild and PEN America. “The lack of competition among book printers has already caused a bottleneck and increased publishing costs, and a merger between these two companies could exacerbate this situation by creating a monopoly,” the Authors Guild said in a statement in March.

That same month, the Authors Guild and PEN America joined the Open Markets Institute, an antitrust think tank based in Washington, in sending a letter to the Justice Department recommending that the merger be blocked.

It was imperative that the government act, the letter said, because magazines and books “are fundamental to the ability of citizens to freely express and share their thoughts, ideas, opinions and works of art.”

Leaders of Quad and LSC Communications said the proposed merger was essential to their companies’ continued survival. The deal “will strengthen the role of print in an increasingly multichannel media world that is dominated by digital advertising,” said Joel Quadracci, the Quad chief executive.

The migration of readers to the internet has led to falling revenues, layoffs and closings at many traditional media companies. Digital advertising has failed to make up for losses in print advertising, with Google and Facebook gobbling up a large share of the revenue generated by online ads.