Publishers Clearing House, known for its 'Prize Patrol' sweepstakes, files for bankruptcy
In an announcement this week, PCH said it was using the bankruptcy process to 'finalize a shift away' from its legacy business of direct-mail, retail merchandise and magazine subscriptions. The company is hoping to instead transition to a 'pure digital advertising" model, where it will continue to offer free-to-play entertainment and prizes.
The Chapter 11 proceedings, filed in New York on Wednesday, arrive amid growing financial strain for PCH — which has struggled with rising operational costs and changing consumer habits in recent years.
Pivoting from its old way of doing business will help the company break free from past constraints and 'establish a strong foundation for our future," CEO Andy Goldberg said in a statement.
But that doesn't mean the famous sweepstakes are going away. PCH says it plans to operate in a "business-as-usual manner" throughout the bankruptcy process — noting that the 'Prize Patrol' team will continuing to deliver awards across the U.S. The company says it's lined up debtor-in-possession financing from Prestige Capital to fund operations through its restructuring.
PCH's roots date back to 1953 — when Harold and LuEsther Mertz and their daughter, Joyce Mertz-Gilmore, formed a business out of their Long Island, New York home to send direct-to-consumer mailings that solicited subscribers for a number of magazines through one single offering.
The company later grew with chances for consumers to win money — first launching a direct mail sweepstakes in 1967 — and expanded its offerings to a wide variety of merchandise, from collectible figurines to houseware and 'As Seen on TV' accessories, in the years that followed. Its in-person 'Prize Patrol' team was formed in 1989.
PCH became known for surprising prize winners with oversized checks, which was often filmed and featured in TV commercials. In Wednesday court documents, the company said it has awarded over half a billion dollars in prizes and continues to attract millions of contestants today.
But its operations haven't been without financial strain — particularly in recent years.
'While PCH's direct mail and e-commerce programs were profitable for decades, changing patterns of consumer behavior, costs and competition, along with a declining pool of new prospecting names, negatively impacted the business, resulted in losses beginning in 2022,' William H. Henrich, co-chief restructuring officer for PCH, wrote in a court declaration Wednesday.
Henrich pointed to a handful of cost pressures — including rising shipping and postal rates, inventory and supply chain challenges that have continued since the start of the COVID-19 pandemic and rising competition from major retailers today, like Walmart and Amazon, that have dominated the e-commerce space.
PCH also faced some scrutiny from regulators who previously raised concerns about consumers mistakenly believing that making purchases from the company would improve their chances at winning its sweepstakes. As a result, PCH has racked up several costly legal settlements over the years — most recently, Wednesday's court documents note, paying $18.5 million to resolve allegations from the Federal Trade Commission in 2018.
As of the end of March, PCH had total assets of nearly $11.7 million and total liabilities of about $65.7 million, court documents show. The company currently has 105 employees and an annual gross revenue of about $38 million.
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