Financial printers embrace biggest competitor: the Internet

At first glance, the financial printing industry appears to be facing an uphill battle in surviving the digital age.

After all, the industry has received increasing warnings of the imminent demise of its traditional business: printing reams of government-mandated forms, brochures and securities prospectuses.

Since May, companies have been required to make electronic filings of initial public offerings with the Securities and Exchange Commission. Moreover, the SEC announced in 1995 that companies could meet federal disclosure regulations in many cases by delivering financial information electronically. Investors can now find plenty of information on-line. And a site on the World Wide Web is becoming an increasingly important corporate brochure. So what is the financial printing industry to do? Why, embrace the very technologies that are threatening their core businesses, including the electronic SEC filing system known as on Edgar (for Electronic Data Gathering, Analysis and Retrieval System), Web publishing and CD-ROMs. As a result, financial printers are surviving, even flourishing. The three industry leaders, Bowne & Co. of New York; R.R.Donnelley Financial, part of R.R. Donnelley & Sons Co. of Chicago, and the Merrill Corp. of St. Paul, Minn. had combined sales of exceeding $1.1 billion in their most recent year. Bowne alone reported sales of $501.4 million, an increase of 28 percent over the previous year. Because different printing jobs require various expensive presses, the industry is specialized. As well as offering competitive ink-on-paper printing rates, financial printers must know how to handle the many particulars involved in producing SEC-approved documents, including timing, paper and typeface sizes, and confidentiality requirements, as well as proofreading and other services. This expertise, printers say, includes electronic communications. Of the 63,064 filings made in the first four months after Edgar went on-line on May 1996, 12,138 of them were handled by Bowne, with the three industry leaders together filing 40 percent of all electronic submissions. In addition, there are numerous sites dealing with initial public offerings on the Web, calling for Internet publishing expertise that printing companies are eager to offer. "How do you think these IPOs get on the Web?" asked Tom Vos, marketing vice president for Bowne. "People come to us and say, `We still need those 100,000 paper copies to distribute to our clients, but we now need the electronic version,'" he said. "In the last year or so, those same clients are saying, `We still need those 100,000 paper copies, we still need the electronic distribution, and we now need a version suitable for the Web.'" The industry is still struggling to overcome setbacks it has faced since the mid-1980s. Commercial printing employment has declined 34 percent in New York since 1989, according to the New York City Economic Development Corp. The introduction of computers in the production process obliterated some segments of the industry like typesetting and photo engraving. Expensive New York real estate drove plants to Connecticut and New Jersey. And in the aftermath of the 1987 stock market crash, many financial printing companies disappeared. Such warning signals encouraged companies like Bowne, founded in 1775, to begin adapting to new technology. "We've had to set up a lot of computer applications worldwide," Vos said. "Maybe we were lucky when Edgar came in when it did, and alerted us that we needed to get ourselves more literate in some of the new technologies. The retraining has been going on almost constantly." Of course, the big financial printers have the edge of experience in dealing with sensitive financial information. For decades, they have helped clients satisfy the painfully detailed labyrinthine government disclosure requirements. Investment bankers, lawyers, auditors and representatives from an issuing company may spend days sitting in a printer's offices making last-minute changes to a hefty prospectus booklet for an initial public offering, which perhaps must be forwarded to other experts worldwide for proofreading, then back to the printer, and so on. "It's a very involved, sensitive, highly confidential and emotionally charged process," said Carol Robbins, vice president for marketing and product development at Donnelley Financial. Financial printers are also familiar with tight deadlines and global demands. For example, Robbins said, Donnelley Financial once had to print 200,000 copies of a 600-page prospectus in 72 hours, from scratch. Yet some of the changes from the digital age may close in on the big printers faster than they can counter them. Electronic financial publishing needs more know-how than equipment, making it easier for law firms, smaller printers and clients themselves to join the fray. "The competition is out there quite strongly," said Ivan Obolensky, a vice president and printing industry analyst at Shields & Co. in New York. "There are an awful lot of mom and pops who can do something and chip away at the margins. And there are a lot of very good hotshot high-tech companies."

Copyright 1997
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