Publishing/Writing: Insights, News, Intrigue


Inside Intrigue Re Readers Digest’s 2nd Bankruptcy Filing

Did you realize that Readers Digest reaches more $100,000 + income households than Fortune, The Wall Street Journal, Business Week and Inc. COMBINED ? Well, it does — according to Mediamark Research and Intelligence (also known as Growth from Knowledge – Mediamark Research and Intelligence [GfK MRI]).

RD is a veritable empire — albeit, one in stormy straits.

I grew up devouring Readers Digest and dearly love(d) it for the enlightening, timely and clearly written articles/stories AND the superb humor. Apparently, this venerable piece of consumer literature, enjoyed around the world in numerous languages, has encountered some rough waters — due, most probably, to bad management decisions in what had become an unwieldy, global empire during an explosively changing publishing landscape (in this writer’s humble opinion).

Let’s get into some key numbers and behind-the-scenes happenings with Michael Rondon writing for FOLIO magazine:

Behind RDA’s Chapter 11 Filing

RDA considered a sale, major creditors include several former employees.

RDA Holding has filed for Chapter 11 bankruptcy protection for the second time in four years.

The move to convert $465 million in debt to equity comes after the company considered a “wide range of alternatives” however, according to a statement from Robert Guth, president and CEO of RDA.

Guth was unavailable for comment in the lead-up to first-day motions with the U.S. Bankruptcy Court for the Southern District of New York, but some in the industry believe a sale of at least part of the company had been one of the “alternatives” explored.

“I do believe that RDA was approached by buyers and in conversations,” says Reed Phillips, CEO and managing partner of DeSilva + Phillips, an M&A advisory firm specializing in media properties.

Selling off titles wouldn’t be a first for the company, who parted with Every Day with Rachel Ray in October of 2011 and in January of 2012–both purchased by Meredith. Those are among the more publicized changes since Guth took over about a month before the Rachel Ray deal, but they’re part of an on-going evolution, he says.

“The complex transformation that we began 18 months ago under the leadership of a new senior management team has resulted in a more streamlined, more focused, and more profitable business,” Guth says in the statement.

Since then, business has been mixed though. Year-over-year operating losses decreased in first three quarters of 2012, while revenues took big hits. Yearly ad pages were up on two of its three biggest titles, Reader’s Digest and Family Handyman, but down on another staple, Taste of Home, according to the Publishers Information Bureau. Circulation has remained relatively steady over that time for each, per Alliance for Audited Media numbers.

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Readers Digest Morphing into 24 New Products

Readers Digest, one of my all-time fave magazines, just emerged from bankruptcy last February and has struggled somewhat. Now RD is moving forward while at the same time going back to it’s roots as a content distiller. RD has just finished a restructure that will get it into the world of websites, mobile apps, newsletters and a new book imprint.

This is exciting stuff for RD and I’m looking forward to viewing the finished products.

Here is more by Matthew Flamm from Crain’s New York Business:

Reader’s Digest will be going back to its roots—and saving money—with a redesign that will launch in January and turn the 88-year-old magazine into a distilled version of mostly repackaged content, said company executives who unveiled their plans for the flagship brand of the Reader’s Digest Association on Tuesday morning.

The company, which emerged from bankruptcy in February, will launch a new website, called the Reader’s Digest Version, as well as a daily e-mail newsletter and a book imprint, both under the name Best You, presenting health and wellness information targeted exclusively to women. The company published several test issues of Best You as a magazine in the last year before pulling the plug.

Reader’s Digest will also step up its newsstand-only publications, adding five new special interest magazines for a total of 13 in 2011, and launch one new mobile application each month. The apps will be built around familiar Reader’s Digest elements like humor and home repairs.

Altogether, the brand will be introducing 24 new products over the course of the next year. The announcements coincided with the company moving its headquarters into midtown Manhattan from its longtime home in Pleasantville, N.Y., as part of the consolidation that followed the bankruptcy.

“What people need is selection,” said Daniel Lagani, president of Reader’s Digest Media, at Tuesday morning’s event. “It’s a return to the brand’s role as the original curator of content.” He added that the many different elements launching next year will be treated as “one entity” and pitched to advertisers as “brand centered, not platform centered.”

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Reader’s Digest Association (RDA) Emerges from Chapter 11

Filed under: RDA emerging from chapter 11,Readers Digest bankruptcy — gator1965 @ 10:12 am

One of my very favorite magazines is the venerable Readers Digest…I grew up reading the interesting, knowledgeable articles and laughing out-loud at the true- life humorous anecdotes. So, I am ecstatic that this old favorite has re-structured, emerged from bankruptcy and will continue to provide the reading public with it’s unique brand of content…in all the media formats available, I hope!

On 2/22/2010 Jason Fell of FOLIO magazine had this to say about RDA emerging from bankruptcy:

After six months of restructuring its debt through a pre-packaged bankruptcy, the Reader’s Digest Association Monday said it officially emerged from Chapter 11 protection.

“This is a very important day for our company, and emerging with a de-leveraged balance sheet and a strong new capital structure is a significant step forward as we continue to transform RDA into a global media and marketing leader,” president and CEO Mary Berner said in a statement announcing the emergence.

As part of its restructuring, RDA reduced its debt by 75 percent from roughly $2.2 billion to approximately $525 million. Holders of RDA’s senior secured debt will receive equity, effectively transferring ownership of RDA to the lender group.

RDA said its gross operating leverage was lowered from 17.5X to 3.2X.

The company said it secured $525 million in exit financing as a result of a recent bond refinancing. It will provide RDA with $30 million in cash interest expense savings annually, compared to its previous credit facility. In addition, RDA said it has access to $50 million of revolver credit.

In connection with its emergence, RDA announced a new board of directors. In addition to Berner, the members are: chairman Norman Matthews, former vice chairman and president of Federated Department Stores; James Hawkes, former chairman and CEO of the Eaton Vance Corporation; Karen Osar, former exectuive vice president and CFO at Chemtura Corporation; Fredric Reynolds, ex-executive vice president and CFO of CBS Corp.; Webster Capital managing partner Donald Steiner; Time Warner Cable vice president and chief strategy officer Peter Stern; and Carl Wilson, an executive vice president and CIO of Marriott International.

RDA reportedly was expected to announce a new corporate name around the time of its emergence. An RDA spokesperson did not immediately return a request for comment about a name change.

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