In the latest shock to the direct sales market, Diamond has announced that they are experienceing cash flow problems and will not be paying vendors (publishers and suppliers) this week. The letter was signed by Geppi Family Enterprises president Stan Heidmann.
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.
President, Geppi Family Enterprises
This announcement has been met with….well, it’s not good.
Talking to a few people and going into speculation, there are two theories as to why Diamond might have done this.
A) They are broke
B) They are just conserving resources things to keep gas in the tank for when things rev up again – the kind of corporate move many companies are making now.
Either way, many comics publishers are not that well funded with their own cash flow and this is going to winnow the surviving field quite a bit.
Marvel has already given Diamond an extension on payments, so Diamond’s cash flow must be severely squeezed if not gettting billed by their biggest vendor still doen’t help.
With many freelancers being told to go pencils down, and no new comics coming out (but graphic novel/books coming out and being ordered) the entire supply chain of comics is mostly on hold for now.
We’er going to emerge into a very differnet world, my friends.