One of the most frustrating things about Diamond’s bankruptcy is that I learn everything about the bankruptcy, Diamond’s financial situation, the future, etc., not through work but through the media.
Case in point. Bleeding Cool: Diamond Comics Was Already Looking For A New Owner Back In 2023. And while learning that Diamond was looking for a buyer as early as 2023 feeds into the sense of self-recrimination I’ve felt since January — I had been looking for signs of financial distress, knowing that with every publisher leaving for another distributor Diamond’s financial stresses would grow, not to mention knowing how much Diamond paid the Conti group to resolve 2021’s ransomware attack, and didn’t see anything that indicated a problem — it’s actually this bit from Mark Minuti in the court documents that I found most intriguing:
“Since 2019, particularly during and after the COVID-19 pandemic, the Debtors have faced a decline in comic book and graphic novel sales through DCD’s Diamond division.”
2019. Before COVID. Diamond already “faced a decline in comic book and graphic novel sales.”
I went and looked up some dates to refresh my memory. And in retrospect, the signs of distress were there in 2018.
In late 2018, Roger Fletcher, the Vice President of Sales and Marketing held an urgent all-hands meeting in the York 1 and 2 conference rooms for his people. Yes, it took two conference rooms, that’s how many people he oversaw.
Roger delivered a simple message. He put on his reading glasses and read it from a notepad. It was essentially this: “Revenues are up. Diamond is making money. But expenses are also up. No pay raises right now, they’re not in the budget, but the company will revisit in the spring when things are better.”
There were a lot of shocked faces as we filed out of the conference room that morning. This would the third year without pay raises. But I was not shocked. Nor even a little bit surprised.
I worked on the monthly comic book sales charts Diamond released and had since 2009. Diamond had seen pretty steady revenue growth after the Great Recession, driven by (first) DC’s New 52 (2011-2012) followed by some Marvel initiatives, but that growth plateaued about 2015 and things had been pretty flat since. I would have to go back and look at my charts spreadsheets, but I remember that there were two years in a row where DC’s dollar sales were within about a thousand dollars of each other. Millions of dollars of business, literally a thousand dollar difference. That‘s how flat things were.
I had conversations with a few people in my department, because several noticed I wasn’t that bothered by the news. I explained what I knew and expressed some disappointment; three years without a pay raise is abusive, but to be fair Diamond abused people with sub-market pay for years and years and years. (I took a 16 thousand dollar pay cut from EB Games to go to Diamond, and that’s not an uncommon story.) But I also cautioned people, in my department and others (as they had received the same message) when they latched onto “we will revisit in the spring,” a “revisit” was unlikely.
First, this was before Christmas. Maybe late October, as I wrote my self-appraisal in 2018 on September 24th. “They’re dangling that out there,” I said, “to keep people from bolting in Q4.” (Yes, I really would have said “Q4,” not “the fourth quarter.”) “We don’t want to try to replace people in Q4. They have options.”
Second, what was going to change about Diamond’s revenue trajectory in six months? Diamond was a distributor and very much at the mercy of its publishers and their plans. Diamond was pathologically passive about protecting its business. While I thought we put far too much effort into promoting products with little to no margin for us — Marvel, DC, and Image — due to our limited manpower and contractual agreements with publishers we also didn’t have the time, space, or energy to more aggressively promote products with better margin. Saying things would be better “in six months” was a hope, not a promise.
Third, something would come up. Something always did. It would be forgotten entirely and, if asked about, it would be dismissed as an aspiration that fell short.
The words of Éomer, king of Rohan, echoed in my mind: “Do not trust to hope. It has forsaken these lands.”
In January 2019, there were layoffs. I don’t recall how many people were affected, but we lost Vince Brusio in the marketing department. I considered Vince my mentor. Vince had been the one who trained me when I started with Diamond in 2007, and as I got up to speed he transitioned off the PREVIEWS catalog to work on the consumer website. (A very Diamond thing, that–rather than staff to meet the demands of new and developing projects, Diamond would redeploy people off of existing projects, leaving both the old and the new projects a bit understaffed.)
Unfortunately, and this is no fault of Vince’s, consumer marketing at Diamond was a bit of poisoned chalice. As a B2B business, Diamond’s customers were retailers, not the end consumer. While Roger thought comics websites like Newsarama and Comic Book Resources were our competition — he announced this at a meeting — these websites weren’t competing for Diamond’s customers. They didn’t sell comic books and merchandise. Other distributors did. They, not Comic Book Resources, were after our customers’ dollars. One of those distributors tried to headhunt me a few years earlier. Comic Book Resources could drive customers to comic shops, but they didn’t make money from the retailers like Diamond did. Again, Diamond was pathologically passive about protecting its business. Roger cared passionately about Facebook Likes — he wanted as many Likes as Dorito’s had — which did absolutely nothing to improve Diamond’s bottom line.
I remember Dan Manser, the Marketing Director, huddling with Marty Grosser (the PREVIEWS editor) and myself in Marty’s office to tell us personally that Vince had been let go. “We had to make some cuts to stem the bleeding.”
Marty: “We’re bleeding?“
Dan: “There’s bleeding everywhere.”
In February another shoe dropped — Diamond bought assets of Gentle Giant, a toy company.
I refrained from saying “I told you so” to colleagues I had talked to after that autumn meeting. I didn’t have to. Layoffs. The purchase of another company, even if likely a debt-financed deal. There would be no revisitation.
In the fall of 2019, around the time of my hospitalization, some Alliance Game Distributors moved from their office in (I think) Owings Mills into Diamond’s offices on York Road.
To call Diamond’s York Road offices “dull” would be an oversell. When we moved into the new offices in June 2013, I was asked by a few people, including Dan, what I thought of the offices. “The office is as soulless as a 1970s community college library,” I said. (Dan recoiled like I had slapped him in the face and told me to never repeat this.) I’ve seen photos and videos of comic publisher offices. Compared to them, yes, Diamond’s offices were soulless and bland.
But there was something else about Diamond’s offices that I generally kept to myself, telling a few people over the years because once it was pointed out it could not be unseen — Diamond’s offices were built for exactly Diamond’s staffing level of early 2013, when the office plans were drawn up. There was no extra room. There was no room for growth. Diamond couldn’t hire to meet its business needs because there was nowhere to put them. Which also meant that Diamond met its growing business in those post-New 52 years by piling more work onto its already overworked and underpaid staff. And the reason I kept that observation to myself was that when the implications of “no extra room” hit, it would be a bit demoralizing to the person I shared it with.
Over the six years since we had moved into the York Road building, extra cubicles cropped up here and there due to attrition or limited layoffs. Sometimes departments would get moved around to consolidate areas. At one point, Gemstone moved in to our vacant cubicles. At another point, Baltimore Magazine moved in. And then, Alliance. All to save money on leases.
I remember seeing the Alliance people in the office after I returned from my medical leave. It was nice to see them — it’s always nice to see new people — but at the same time, they represented the death of hope. Diamond would not be staffing up again. There was nowhere for new people to go. It may have been unintential, but the message was clear — Diamond didn’t expect a brighter future.
I know things were afoot in late 2019 to steer Diamond in a new direction.
The plan, as it was explained to me, was to ship comics and toys out of Alliance’s network of warehouses, which would save money on the large Diamond warehouse in Olive Branch. This would take “about three years,” I was told. “The big problem to solve is freight costs. Alliance has free shipping. Diamond charges for shipping because there’s no margin in comics.”
Diamond was looking into developing new, non-comic, non-collectible business. “What about distributing pizza boxes?” Dan asked me one day. “That’s something not tied to the cyclical comic book market.” I had no opinion, though I thought the pizza box industry already had a well-developed distribution chain.
Diamond was looking into monetizing its data. We’d been giving data away for free for years, but we could monetize the data. There was talk of selling ComicSuite sell-through data to the publishers, so they would know what customers were actually buying. “But why would Marvel want that?” I said. “What matters to them is what the retailers buy, not what the retailers’ customers buy. The retailers are Marvel’s customers, not the readers. If retailers have unsold Amazing Spider-Man #1s in their long boxes, David Gabriel doesn’t care. He already has their money.”
And there was a new management team. Roger left early on — he could have stayed but with a demotion — and they let Dan go after the New Year. This management team wanted to improve Diamond’s profitability, especially on the premier publishers and, with the DC contract renegotiation, wanted to increase Diamond’s handling fee (which had not changed since the 90s, even though costs were higher in 2019 than they were twenty years before) and charge the publishers for services that had previously been free.
None of these initiatives ever came to fruition, at least not by Diamond, and not in 2019-2020. DC walked away from Diamond instead of acquiescing to Diamond’s terms in the summer of 2020. Plans for data monetization never went anywhere. And now Universal, the buyers of Alliance Games, will be using Alliance’s network of warehouses to distribute comics, beginning with DC Comics, to North American comic book shops.
I looked for signs of Diamond in trouble, but the signs were always there and I didn’t recognize them. I was looking, I guess, for something more overt, an actual change in the way we went about our business. Actual belt-tightening, not just payroll cut after payroll cut.
I had all the pieces. I just didn’t see it.