Quad sues magazine publisher in contract dispute

By Brian Huber

August 10, 2018

WAUKESHA — Sussex-based printing giant Quad/Graphics is suing one of its clients, the publishers of Time magazine and others, over changes the publisher wants, like bagging magazines, that Quad/Graphics says would negate any benefit it gains by offering millions of dollars in discounts in recent years.

Quad/Graphics filed suit in Waukesha County Circuit Court last week against the Meredith Corp. of Des Moines, Iowa, seeking damages of at least $10,000.

Jill Davison, vice president of corporate communications for Meredith, said in an email, “We are very confident that we are within our contractual rights and plan to move forward with our ongoing strategies that maximize value for our customers, company and our shareholders.”

According to the suit, Time entered contracts with Quad to print several publications — Coastal Living, Real Simple, Health, Cooking Light, InStyle, and Southern Living. But also subject to the suit are Food & Wine and Travel & Leisure, which Quad was scheduled to begin printing in January 2019. Those 21 contracts were amended in 2016 to extend to 2023, with Quad offering discounts of 7 to 11 percent, becoming effective in July 2016, and January 2017, 2018 and 2019.

“These extensions and additional publications were material both to Quad’s willingness to print additional publications for Time and to significantly discount its prices,” a discount the suit said was worth millions, in exchange for the continued and additional publications that were the principal benefit of the bargain to Quad, the suit said.

Meredith took over Time, Inc.’s publications in January 2018, and by June sought new contractual requirements for eight publications printed by Quad, seeking to have them “polybagged” — an industry term meaning to wrap publications in clear plastic — and having copies with preaddressed consumer marketing envelopes and inkjet-addressed copies all in the same mail stream, saying such handling fell under binding “Specifications” language in the contract and reserved the right to nullify the entire contract, the suit said.

Quad said the processing fell outside the “Specifications” clause, and, given that Quad has been offering discounts on the titles since 2016, Meredith was threatening to kill the contract before Quad derived any benefit from it.

“The changes demanded by Meredith would require significant capital expenditures by Quad for which Meredith is apparently unwilling to compensate Quad,” the suit said.

Meredith replied with a letter terminating the contract, and set out a plan to wind down printing at Quad of several publications over the fall of 2018 into January and February of 2019. In late July, Quad got a letter affirming Meredith’s right to terminate the contracts. It also laid out an “ultimatum” that Quad commit to a 100 percent selective poly capacity and also demanded an across-the-board discount on all Meredith work beginning Aug. 1, the suit said.

Quad sued, saying Meredith has breached its contract with Quad by terminating its agreements “without any valid contractual basis upon which to do so,” the suit said.

In a statement, Quad spokeswoman Claire Ho said, “We have enjoyed a long and productive relationship with Meredith Corporation since 1994, and our goal is for that relationship to continue long into the future. We did not enter lightly into the decision to file a complaint as we value our relationship with our clients. We have spent considerable time and effort trying to resolve this matter amicably. At the core of the complaint is that we do not agree on contractual language, specifically as it relates to the Time Inc. titles that Meredith acquired earlier this year. This is a straightforward contractual dispute, and the filing was an unfortunate last resort.”