(WJET/WFXP) — Publishers Clearing House (PCH), the sweepstakes company best known for its decades of deals and big checks, filed for Chapter 11 bankruptcy Wednesday evening.

As part of the bankruptcy, the company plans to transform itself into a digital advertising-supported entertainment company, shifting away from its legacy direct mail and subscription services. PCH has largely exited its print marketing business and plans to phase these services out over the coming months.

Their magazine and merchandise advertising service brought in $879 million in revenue in 2018 but quickly declined to $181 million in 2024 as customers began shifting to online shopping, a trend that was greatly fueled by the COVID-19 pandemic. Like many companies over the past year, the COVID-19 pandemic led to increased financial pressures due to inventory challenges and shipping delays. Rising costs for printing, mailing, and TV advertising led the company to pull back from its direct mail marketing business.

Publishers Clearing House was founded in 1953 in the basement of founder Harold Mertz in Long Island, New York. The company began as a magazine subscription service and quickly grew; by 1982, revenues exceeded $100 million. Since its founding, PCH has awarded over half a billion dollars to winners across the nation. PCH currently employs 105 people with an annual gross revenue of $38 million.

“Today marks a crucial development in our transition to a digital advertising-supported entertainment company,” said Andy Goldberg, the chief executive officer of PCH. “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. Importantly, our world-renowned sweepstakes will continue to be a cornerstone of our experiences, and we intend to continue offering 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 a press release, PCH will operate as usual, continuing with its well-known sweepstakes and other online operations. PCH’s renowned “Prize Patrol” team is also expected to continue traveling across the nation, surprising winners with big checks, champagne and flowers.

According to court documents, approximately $26 million in prize money for the larger prizes will be paid out over as many as 60 years. In the next 30 days, the company will pay $474,500 in prize winnings. Along with these payments, the company currently owes $1.8 million to recent winners and $40 million to employees, vendors, service providers and landlords.

In June of 2023, the Federal Trade Commission ordered PCH to pay $18.5 million to consumers, and make substantial changes to how it conducts business online. The FTC, citing a complaint against PCH, said that the company “used dark patterns — manipulative phrasing and website design — to convince consumers that they needed to buy a product of some kind to enter the company’s sweepstakes or increase their chances of winning.

As part of the order, the company was to end its deceptive practices, separate sales from sweepstakes, make clear disclosures, end surprise fees, destroy consumer data prior to January 1, 2019, and preserve records of any of its research or testing used for marketing and promotions.

According to court documents, the New York-based company owes $65.7 million in liabilities and has $11.7 million in assets. Court documents show that PCH plans to reject, pending court approval, two of its office space leases.

To maintain its operations during the restructuring process, PCH has acquired $5.5 million debtor-in-possession financing from Prestige Capital. PCH notes that it will be exploring a variety of strategic operations moving forward, which may include a sale of its digital assets.