Diamond Comics Distribution Bankruptcy May Cause IDW Publishing To Go Out Of Business
In 2023, IDW Publishing made the news by posting a $1.9 million loss for the 2022 fiscal year. The losses compounded over 2021 when they posted a $0.8 million loss. After these terrible reports, the comic book publisher was delisted from the New York Stock Exchange and initiated a restructuring and layoffs, which amounted to approximately 40% of their workforce losing their jobs.
During this time, Senior Editor Heather Antos received a promotion to become the head of licensing at the company, sinking her tendrils into more of the comic publisher’s output.
2024 was supposed to turn IDW Publishing around with a relaunch of the Teenage Mutant Ninja Turtles line. As industry insiders know, comic book buyers often speculate on #1 issues, and rebooting TMNT was thought to bring in major profits for the company, as the limited series TMNT: The Last Ronin has been the one major seller for IDW Publishing over the last several years, keeping the company afloat.
While the layoffs and the temporary sales boost brought the company its first profitable quarter in years, IDW was then hit with another problem they couldn’t have foreseen.
The comic industry was rocked with another indication of massive troubles in January as Diamond Comics Distribution announced its declaration of Chapter 11 bankruptcy. The CEO of the company put out a statement after months of trouble delivering on time following the closure of their Pittsburgh warehouse last year.
Of the creditors listed for Diamond Comics, it was noted that Penguin Random House is the top creditor owed with more than $9 million in debts. Penguin Random House acts for distribution for both Marvel Comics and IDW Publishing, with comic shops that don’t qualify for enough size to go direct to PRH and international markets being subdistributed through Diamond Comics Distribution.
According to industry rumors, it appears as if Penguin Random House will be passing on their portion of the debt to the publishers, which would mean IDW Publishing may not get paid for shipped product in that batch.
While the amount of debt IDW has been unable to collect is not known, it sounds like it’s a substantive amount that may even be big enough to sink the company entirely despite their recent moves to cut costs.
An audit report lists "Substantial Doubt About the Entity's Ability to Continue as a Going Concern," when referencing IDW Publishing, saying, "the accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 19 to the financial statements, the collectability of certain receivables sold by the Company's distributor are in question and the dollar amount of the receivable in question cannot be estimated at this time and has stated that substantial doubt exists about the Company's ability to continue as a going concern."
In addition, there are uncollected amounts confirmed in a paragraph that states, "PRH paid IDW for IDW products ordered by Diamond, and, as a result of Diamond's bankruptcy, PRH may not be able to collect all or any of the corresponding amounts owed to PRH by Diamond. PRH has informally indicated to IDW that their understanding of the relevant terms of the contract between IDW and PRH provides that the significant majority of such uncollected amounts will be debited by PRH from future payments from PRH to IDW. IDW has not received any formal written communication, or definitive claim from PRH. IDW cannot at this time assess the likelihood that PRH will seek to debit any amounts against future payments to IDW, the amount of any such potential debit or the timing of any such debits. IDW is also making its own assessment of the relevant contractual language and the rights and obligations of the parties in respect of the current situation. In light of the foregoing as of the date of this report, we are unable to determine the potential impact, however it may have a significant negative impact on our future financial results and cash position. The Company will work to minimize any impact to the extent possible."
The statement implies IDW will have to pay PRH based on future earnings for the amount PRH has not collected, something IDW cannot afford to do give the current state of the business.
IDW’s current financials do not look better, as stated in a recent annual report, "At October 31, 2024, we had cash of $7,432,000 and working capital (current assets in excess of current liabilities) of $17,772,000," IDW Publishing had a loss of $1.4 million in fiscal year 2024 based on revenues of $26.4 million. Though staggering, it still wasn’t as bad as 2023's loss from operations of $3.9 million, due to the layoffs at the company.
At this rate with a large hit to their future earnings, IDW Publishing is in doubt to survive, which would make for a massive casualty to the comic book industry after Diamond’s latest troubles cause ripple effects that reach industry wide.
What do you think of IDW Publishing potentially going out of business because of Diamond Comics Distribution bankruptcy? Leave a comment and let us know.
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Has IDW ever turned a profit?