Eric Reynolds, Fantagraphics Books: In the direct market, we were with both Lunar and Diamond, but the ratio had been moving fairly significantly in Lunar's direction. Even after Diamond filed, we wanted to continue doing business with them. Diamond was still functioning and we support a healthy multi-distributor environment. We have a long history and despite the issues we had with them, they were a trusted partner in terms of the important things, like paying on time. For the book trade [the majority of Fanta’s business], we're with Norton.
Do you still consider yourself to have a business relationship with Diamond?
Well, they are selling our stock and not paying us for it, so is that a business relationship or not? We're not shipping them new books and they're not paying us, but they have inventory that they don't own, that they're continuing to sell and they haven't paid us for in, I guess now, six or seven weeks.
Do you have an estimate of the of the total amount of inventory that they're holding and how much how much of those un-disgorged sales revenues that they're holding on to?
They are holding retail inventory estimated in the low seven figures.
And since they stopped paying us on May 16 – maybe it goes back to the week of May 12 – they owe us about $35,000 according to the sales data which, ironically, they are continuing to provide us.
And legally, that inventory is yours? You haven't given them any rights to do anything other than distribute it and pay you the profits?
Correct. We have a contract with Diamond. It is unequivocally consignment inventory, the disbursement of which is at our discretion, not theirs.
Do you think what's actually going on is part of their business plan or is it just a byproduct of the general shambles?
For the first couple of weeks or more, I thought it might be the latter. But at this point it's pretty clear it's the former.
For example, we have a small warehouse in Seattle where we process some inventory for online sales, sales through our bookstore, that kind of thing. We request books from Diamond through a process called NCR – it’s a pretty standard thing a lot of publishers do. And from the moment they told us they weren't processing NCR anymore, that was the first major red flag. We thought, ok, this isn't just a byproduct of a transitional phase, this is a conscious decision to hold our inventory hostage.
Did you have any reason to expect that the new ownership was going to pursue anything like this?
We were concerned that they did not have any long term interest in distributing books or comics. But as long as they were paying us, we were giving them the benefit of the doubt moving forward. In regard to the amount owed us by Diamond at the time of the bankruptcy filing in mid January, that money immediately just got tied up in the courts and was completely out of our hands. But when they did that, they [the old management] were very communicative with us.
They got that $45 million loan from Chase to continue operating through the bankruptcy. They agreed to a very generous payment plan. And they continued to pay us every week from mid January to mid-May. So as long as they were doing that and honoring what they told us, we were continuing to sell them books. They acted pretty responsibly up until May 16. And when Ad Populum took over on May 16 everything changed.
Have you had any communication with the new ownership?
To some very small degree. We've gotten a couple of replies from them basically telling us that their hands are tied. That was from some of the people who have been there prior to the new regime.
But effectively no. On May 16th they just stopped returning our calls. The only thing we've gotten is they've referred us to Rob Gorin, the executor of the old Diamond.
Are they contending that this that this inventory that they're holding on to is old Diamond’s problem and not their problem?
That's what we gather. They're effectively saying that the money that they owe us since May 16 is a part of the bankruptcy management and is all related to that $45 million chase debt. So they are blaming it on Old Diamond and also Chase. I think it's essentially Chase that we're competing with.
So Chase is elbowing itself to the front of the line in front of all of the publishers and everybody else to make sure they get theirs first?
They’re invoking the fact that publishers didn’t file this form (see "Diamond Seeks To Take And Sell Consignment Inventory; Another Major Departure"). No publisher I've talked to over the past week ever heard of this requirement.
You didn't receive any notification of a deadline or requirement to file?
No. I had never heard of this until last Thursday, and no one, not other publishers, not our lawyers, no one had heard anything.
Marvel, DC, VIZ and lots of big publishers are on that list. You'd think their legal departments would have known something about this kind of situation.
Exactly. It would be one thing if some of the big guys had received special treatment, or if there had been "most favored nation." But we have a contract with Diamond that should take precedence here, stating unequivocally that this is consignment inventory.
You say you're talking to other publishers. Are you just exchanging notes or are you contemplating some kind of coordinated action?
Both, and it's with publishers across the board: big ones, small ones. It's a little premature to discuss tactics but we're lawyering up and trying to discuss the best path forward. Likely there is strength in numbers.
Does this affect creator royalties, in terms of the unpaid revenue on those sales?
We usually pay royalties for books sold for which we don't get paid, but this is an unprecedented scale and it's possible we wouldn't be able to pay royalties for books for which we don't get paid at this level.
What do you think is the likely outcome?
Best case, we get paid for everything and we get our books back. But more likely, this goes to court and may be a very long, expensive process.
Some retailers are declining to place backorders with Diamond because they've become aware of this situation of not paying publishers. Is that helpful? Do you encourage that?
Yeah, for sure. I can't fault any retailers who are continuing to order from Diamond, particularly if they're just not keeping tabs on what's going on. But I think it would be an ethical issue in knowingly purchasing stock from any publisher, from AD Pop at this point. I think most of the retailers that are paying attention agree with me.
There's a point of diminishing returns in terms of what they can expect to sell if they're not getting any new inventory. They're basically limited to backlist, right? So if you're a retailer that's ordering from Diamond and you're ordering Monica or Joe Sacco books or whatever, they're going to run out and they're not going to get restocked. I've read the things from Brian Hibbs about the minimums that retailers are being asked to hit. And you know, if you have no new books and you're running out of the old books, then it just stands to reason every week there's going to be fewer and fewer retailers who are ordering through Diamond, especially as they become aware of the broader concerns at play. So I don't know what their end game is. Other than to, I guess, just liquidate as best they can to pay off this this debt.
Fantagraphics has been around through a lot of tough times for the business. How does this situation compare?
It's definitely the most fucked-up situation. When Capital City Distribution went out of business, they paid us everything they owed us, which was unprecedented. We had another distributor go out owing us around $75,000, and after the bankruptcy, we got some nominal payment. But this has just turned bizarre. We're battling Old Diamond, New Diamond, potentially Chase. It's really perverse, and these are uncharted waters.
For us, we had already taken some steps to absorb this by moving to Lunar and doing most of our business on the trade side through Norton. People can get our books.
My concern is more about the overall health of the direct market, then how it impacts Fantagraphics. Fantagraphics is, if nothing else, remarkably resilient. I worry about a generation of retailers that started their stores in the 80s or 90s that are now getting closer to retirement age and are being nickel and dimed at every turn, losing a point here, a point there.
I've been concerned about all this stuff for at least 10 years, and it could sound a little bit like crying wolf. But you know, there is a tipping point it just seems to be inching us ever closer. We're definitely at, like DEFCON 2, if not one.
The opinions expressed in this column are solely those of the writer, and do not necessarily reflect the views of the editorial staff of ICv2.com.
Rob Salkowitz (Bluesky @robsalk) is the author of Comic-Con and the Business of Pop Culture, a two-time Eisner Award nominee, and a proud longtime contributor to Eisner-nominated ICv2.
Column by Rob Salkowitz
Posted by Rob Salkowitz on June 30, 2025 @ 6:46 pm CT
