Publishers Clearing House, the legendary sweepstakes company once widely known for showing up at people’s homes and delivering giant prizes and checks, has filed for Chapter 11 bankruptcy protection.
PCH made the announcement this week, saying it was using the bankruptcy process to “finalize a shift away” from its legacy business operations. 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.
“By taking this step, we are breaking free from the past financial constraints of our legacy direct mail and online retail merchandise and magazine subscription operating model, and taking action to establish a strong foundation for our future – enabling PCH to unlock the full potential of our digital advertising and consumer insights business,” Andy Goldberg, Chief Executive Officer of PCH said in the release.
Goldberg went on to say that its “world-renowned sweepstakes” will continue despite the filing, with “free-to-play entertainment and awarding prizes in the ordinary course of business during and after this process to uphold the historic legacy of Publishers Clearing House.”
According to the release, PCH will operate in a “business-as-usual manner” through the bankruptcy process, with the brand’s famous “Prize Patrol” team expected to continue awarding prizes to sweepstake winners across the country “with the famous big check, champagne and flowers that have endeared the brand to consumers for over 50 years.”
The history of Publishers Clearing House
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.
In recent years, the Better Business Bureau has also warned of scams from people and businesses attempting to impersonate Publishers Clearing House via cold calls.
“Everybody wants to be a winner and everybody wants something for nothing and everybody wants to believe that they are going to get a new car or they are going to get a million dollars, former Illinois Attorney General Lisa Madigan said in 2018. “And so once you hear that there’s just a little catch, you’re already lured in.”
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