DC Comics announced it was parting ways with Diamond Comic Distribution, formerly the comic industry’s lone, monopolistic distributor. Geppi Family Enterprises owns Diamond. Comics published by DC will be distributed by the newly formed UCS Comic Distributors and Lunar Distribution, not by Diamond.
This move began in late March. It was when the COVID-19 pandemic first began to get serious in the U.S. Individual states began issuing stay at home orders and nonessential businesses were told to shut down. Here in Maryland, Governor Larry Hogan ordered nonessential businesses to close their doors on March 30, 2020.
The following day, Geppi Family Enterprises announced in a letter Diamond Comic Distributors would be shutting down and not distributing comics. They also announced they were not paying publishers for books already distributed.
The first letter
Dear Diamond Vendor:
As the world responds to the outbreak of COVID-19, our focus is on protecting employees, understanding the risks to our business, evaluating the risks to our industry and examining the Federal Government resources available. While the full impact of this epidemic is still unknown, one thing is certain: supply chain disruptions have cash flow implications across the extended industry that can’t be underestimated.
While we work to understand the current industry landscape, the unfortunate truth is that we are no longer receiving consistent payments from our customers. This requires that at this time, we hold payments to vendors previously scheduled to release this week. This is a difficult decision and not one we make lightly. As this situation continues to evolve, we are committed to building out a plan for payment and will have more information to share later this week.
Thank you for your patience and understanding during these difficult times.
Stan Heidmann, President, Geppi Family Enterprises
Did Diamond have to shutdown?
I assumed this shutdown of Diamond had to do with the shutdown of nonessential businesses here in Maryland. Diamond Comic Distributors is based here in Maryland. I then learned book distributors were exempt from Gov. Hogan’s shutdown order. Diamond did not have to shut down. The decision to shut down was theirs and theirs alone. The decision to not pay publishers? That seemed highly suspicious. Was Diamond Comic Distributors so short on revenue that it could not pay its debts? It would seem so.
About a week later, Geppi Family Enterprises founder and CEO Steve Geppi sent a form letter to publishers. Diamond announced they would stagger payments to publishers.
The second latter
Dear Diamond Vendors,
COVID-19’s dramatic impact on businesses around the globe cannot be understated. My leadership team is working non-stop in concert with expert consultants and our publisher partners to safeguard the comic industry’s future. Thousands of retailers and publishers and hundreds of thousands of fans look forward to the products we distribute, and I take that responsibility very seriously.
Last week, we held vendor payments to allow for careful analysis of information from our industry, our business and the effects of COVID-19. We assured you that we would communicate our revised payment schedule when we were able, and I appreciate your patience and the many supportive messages I’ve received this week.
Working with what we know today, below is the outline of vendor payments from Diamond Comic Distributors and Diamond Book Distributors:
- Beginning this week, the week of April 6th, you will receive 25% of the weekly amount due under your contract terms
- Each subsequent week, you will receive a 25% payment of that week’s balance due
- This reduced payment schedule will continue for 6 weeks, with the remaining 75% due in each of those weeks being deferred
- Following that 6-week period, we will begin payment of the deferred balance in equal payments over a 13-week period
While we understand that this will have significant impact on everyone, and the situation could change, we also recognize that our world is in the midst of an unprecedented crisis and aggressive action is necessary. In addition to the steps outlined above, our leadership team is accepting a 50% salary cut, landlords have agreed to rent deferrals, and various other providers of professional services have agreed to defer their payments. Never before have we experienced such a test of our resolve and a demonstration of our commitment to each other.
Now more than ever we need to come together in support of one another, knowing that these difficult decisions will allow us to emerge from this trying time and thrive once again.
Thank you for your understanding and support.
Founder, Chairman & CEO
Geppi Family Enterprises
The nerve of Steve Geppi
I thought Geppi had a lot of nerve dictating the terms on how and when he was going to pay his debtors. He thanked them for their understanding and support without ever asking them for their understanding and support.
Did he even attempt to get a loan so that Diamond could make publishers whole? It seemed to me Geppi was attempting to abuse Diamond’s monopoly status in the comics industry by slowly paying its debts in slow trickles. Some of the smaller comic publishers might no longer be in business by the time Geppi’s debt scheme is complete.
DC Comics did the right thing by breaking up with Diamond Comic Distribution
I don’t think it’s a coincidence DC Comics is the only major comic publisher that did not have to lay off or furlough employees because of the COVID-19 pandemic. Comic pros heard the term “pencils down,” but not by DC Comics. They kept publishing comics when other publishers didn’t.
Diamond’s days are numbered
According to Geppi’s letter, they’re currently not paying rent on their properties. They’ve cut pay to members of the leadership team by 50%. These are huge warning signs. The people who are responsible for turning the ship around are making half what they normally make. Make a normal person take a massive pay cut and they’ll start looking for a new job. Stable companies with do not make employees take pay cuts.
The COVID-19 pandemic exposed Diamond Comic Distribution as being a cash-poor company. I think it’s safe to say COVID-19 did not cause its money woes, it exposed them. Diamond suffers from incompetent management.
It’s in DC Comics’ best interest to cut ties with Diamond. It’s a shame other publishers don’t see that too.