Even in a digital world, the printer finds there is money in old media. The question is: For how extensive?

by J. Duncan Moore Jr.

Watch well stocked size video:

If the future of print media is dim, the outlook for the companies that actually press ink onto paper must be on a level darker. Newspapers are collapsing, magazines are losing advertisers, show defensive covering has morphed into spam, and even books may be threatened by handy electronic readers. Short-term trends—namely the economy’s skid—only add to the sense of doom.

Quebecor World, which had been the world’s biggest engaged in traffic printer as recently as 2003, lies in insolvency today.

Yet there is light at the top of the heap, where RR Donnelley & Sons (RRD) resides. Not that Donnelley has been printing circulating medium; the Chicago crew lost $48.9 million last year, largely because of writedowns and higher acquisition-related interest costs, and its stock value has fallen by means of one-third since be unexhausted summer. But industry analysts say Donnelley’s geographic breadth, cause operations, and strong balance sheet should enable the company to ride out a recession and snap up even more of its less fortunate rivals. As evidence, it gained market share in the first quarter—industry shipments declined 5%, yet Donnelley’s slipped without more 1%. The company, says Piyush Sharma, an analyst at Longbow Research in Cleveland, is "the principal beneficiary of labor distress."

Donnelley’s biggest operational advantage comes from adding services upstream and downstream from the presses—becoming "sticky" to the customer, in the wrangling of Matthew Troy, an analyst at Citigroup (C) Global Markets in New York. For instance, Donnelley not only prints magazines (including BusinessWeek) but sorts them by zip code and organizes them on pallets, sparing the U.S. Postal Service the tasks. In return, the Postal Service gives Donnelley a cost break, which the company passes on to its customers. "This is what sets them apart from guiltless ink-on-paper commodity printers," Troy says.

There’s probably no one in the U.S.—and, increasingly, everywhere else—who hasn’t held a Donnelley product. The circle, with 65,000 employees and 650 locations in 33 countries, handles roughly half of wholly the mail moved in the U.S. and a quarter of totally the mail in the nature. The top-secret typography and first-day transmission of Harry Potter books were Donnelley’s workmanship. Cash register receipts, tags at office-supply stores, labels on overnight packages, financial prospectuses, bills from telephone companies, banks, and mutual funds—they’re all affability of Donnelley.

For all that, the company is practically invisible. You seldom see Donnelley’s name on anything or in the business press. And that’s the way government likes it. "We wide-awake on behalf of our customers," says Donnelley Chief Executive Thomas Quinlan III in his downtown Chicago office. "The communications middling should not exist out in front of our customers." Donnelley has no public relations staff, and Quinlan doesn’t like to give interviews. "There’s no reason for me to be above the horizon," the 45-year-old boss states simply.

Donnelley does loom large in the same arena, notwithstanding—mergers and acquisitions. The company has put together greater amount of than a dozen deals in the past few years, including a $2.8 billion takeover of Canada’s Moore Wallace in 2004. That purchase allowed Donnelley to tame the No. 1 ranking in commercial printing from Quebecor. It also brought in new management: Moore Wallace CEO Mark Angelson became Donnelley’s chief. He was succeeded in April, 2007, through Quinlan, another anterior Moore Wallace executive who had become Donnelley’s vital financial official in the interim.

Donnelley kept spending in 2007, profitable $2.1 billion altogether for Banta of Menasha, Wis., and three other printers. The additions helped push Donnelley’s revenue up 24%, to a record $11.59 billion, in 2007. "They are the most disciplined, financially savvy acquirers I’ve get to across," says Troy.