Rival Print Giants Donnelley and Quad Not Looking To Get Hitched

R.R. Donnelley and Quad/Graphics, the USA's two largest printing companies, apparently have their sights set on gobbling up more competitors -- but not each other.

Quad's CEO, Joel Quadracci, was caught off guard on Tuesday by a question from a Goldman Sachs analyst at the end of Quad's quarterly earnings conference call.

"I’d kind of love to hear your thoughts on potential regulatory pushback or maybe lack thereof on a tie-up between your company and your biggest competitor," said Fred Krom. Quadracci at first thought the question was about Courier Corp., which Quad recently planned to acquire until Donnelley stepped in with a higher offer.

Krom clarified: "I was actually referring to you and/or Donnelley but . . ."

"Oh, so me acquiring Donnelley?" Quadracci asked.

"You or vice-versa."

"We haven’t done any work on that and that’s not in our plans," Quadracci responded.

Donnelley officials were not asked the same question at their conference call Wednesday. But it's clear they have their hands full with Courier and several other acquisitions.

Though the U.S. printing industry is highly fragmented, certain segments are a true duopoly of only Donnelley and Quad. For example, they have North America's only rotogravure publication presses, making them the only real players that can compete for catalogs and magazines that have print orders in the millions.

So it's understandable that Quadracci wouldn't even dream of a linkup with his arch rival getting the approval of antitrust authorities.

But Goldman Sachs isn't known for asking idle questions.

Perhaps Goldman has noted that antitrust decisions involving print-media industries aren't necessarily logical: For example, the government took a full year to approve the merger of almost-bankrupt Verso Paper and just-out-of-bankruptcy NewPage, forcing a reshuffling of the industry that did little to preserve competitive markets for coated paper. But it didn't issue a peep last year when Quad bought Brown Printing, the duopoly's biggest competitor in the large-publication market.