Reader's Digest goes bankrupt -- again

The iconic publisher is $1 billion in debt. Can it survive the digital age?

By Jonathan Berr Feb 18, 2013 11:55AM
Copies of the Reader's Digest magazines (Shannon Stapleton/Newscom/Reuters)RDA Holding Corp., the parent company of Reader's Digest, has filed for Chapter 11 bankruptcy protection for the second time since 2009, the latest sign of the continuing struggles magazine publishers face in reinventing themselves for the digital age.

According to The Wall Street Journal, the Pleasantville, N.Y., company listed more than $1 billion in debts and $1.2 billion in liabilities. Under the terms of the deal, the company will convert $465 million in senior notes to equity. When RDA exits Chapter 11, its debt will be about $100 million, about 80% lower than where it stands now.

CEO Robert Guth, the third person to lead RDA since its first bankruptcy filing, argued in a press release that the current restructuring will enable the company to focus on its growing business in North America with lower costs.  Indeed, there appears to be some cause for optimism. Publishers Information Bureau data from the Association of Magazine Media shows that the company's flagship publication earned $189.7 million in advertising revenue last year, an increase of more than 12% from 2011. The company's business in Europe and its books and home entertainment business, though, have produced disappointing returns.

The publisher was taken private in 2007 by an investor group led by Ripplewood Holdings for $2.4 billion, including the assumption of debt. The company, however, continued to struggle and over the past few years has been shedding assets to cut costs. Last year, it sold Every Day with Rachael Ray and for $175 million to Meredith (MDP), the Iowa publisher of Better Homes and Gardens. Scholastic (SCHL) acquired Weekly Reader from RDA in 2012.

RDA's struggles are not unique. Time Warner (TWX), which has been under pressure from investors to shed its underperforming magazine business, reportedly is in talks with Meredith about forming a joint venture to run magazines aimed at women. News titles aimed at more general audiences, such as Time, Sports Illustrated and Fortune, would stay with Time Warner.

--Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.

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Tags: Media
Feb 18, 2013 2:35PM
Maybe if they actually were still a 'digest,' RD would not have lost their loyal readership base. RD used to be the best bathroom reading with précis of other print materials, books, etc. Now it is mostly original pap, designed for folks with 20 second attention spans who like pictures and not words. A quarter of the pages are medical ads in miniscule type. As a 60 year RD reader, I have cancelled my subscription and replaced it with Smithsonian, which actually does have real articles and great pictures.
Feb 18, 2013 3:14PM
   I had a RD subcription  fo nearly 40 years, Great stories and informative articles, as they say, great bathroon reading and it fit nicely on the back of toilet....but then the whole format changed in the 90'2 for some reason???No table of contents on cover , boring stories and every other page was full of advertiseing...very much like the Internet is becoming....Ads....Ads ...I'm sick of Ads..!!! I cancelled my subscription in 2004 and their constant push on Books  all the time.....
Feb 18, 2013 3:28PM
Im tired of all the pharmacy prescriptions ads in all of the magazines.  The ads should target doctors, clinics and hospitals, not individuals.  I've cancelled several magaizines because of these ads.
Feb 18, 2013 2:52PM
I kept a RD subscription for probably close to 20 years...longer than any magazine I've ever taken. I stopped in the 90's when it got smaller than a TV guide. Actually, about the time they changed the cover format from it's former listing of what was inside.
Feb 18, 2013 3:04PM
I am 62 yrs old.  As a child the two magazines that were always present in our home was Reader's Digest and National Geographic.  When I got my own place at the age of 20 I got my own subscription to both these magazines.  I STILL subscribe to Reader's Digest with no break in all these years.  42 years!  I would hate to see them go under.  Of course I have noticed that the size of the Digest has gotten thinner and thinner.
Feb 18, 2013 3:28PM
I have been reading RD since I was a little girl. Now I am almost 63 years old and still read each volume cover to cover. No what format changes they may have made it is still filled with stories that put a smile on my face, pride in the courageous heroes amidst all the rest of the evil in this crazy world, and many times a tear in my eye reading how others have overcome horrific struggles'. I only pray RD is able to get through this financial crisis.
Feb 18, 2013 4:22PM
I cancelled my subscription years ago when I realized they were trying to influence my views on political issues. They advertise for the drug industry and any medical device the can.
Feb 18, 2013 5:21PM
I was a subscriber for many years, and actually made several thousand dollars selling humorous stories to the magazine.  That was a long time ago when they published humorous stories and material worth reading.  As I said, that was a long time ago.
Feb 18, 2013 5:01PM

I guess losing readership is what happens when they started profiling leftist celebrities, communists and socialists and got away from telling stories from America's heartland.  

Good riddance!
Feb 18, 2013 4:13PM
I am retired professional, 71, who has subscribed/read RD since I was about 21 and still love it for 
stories, humor, nonfiction articles, and convenience.  At my bedside, in my purse, in my bath: it fits
everywhere I want it.  I love it and subscribe it for family and friends.  My favorite magazine of all times.  Thank you RD. Please don't stop the good work. 
Feb 18, 2013 2:44PM
It leans to far to the left.  The jokes are not funny.
Feb 18, 2013 7:18PM

A Piece Of The Past,

I was raised in Pleasantville, NY where the Digest originated. I remember going to the old garage off Bedford Road where the Wallace's publication work began in the early 20s. The RD was and is an icon among American magazines. It would be a shame if they were not able to somehow resurrect the business, but the digital age has produced headwinds that the printed page can hardly compete against in the 21st century. In any event, I do wish them luck.


Peace to all ~

Feb 18, 2013 6:08PM
In response to multiple people upset about the all the ads...
This is the second bankruptcy, so it seems they are struggling.
If they continue to publish, they are going to have more and more ads because they have to pay their bills. As long as the good reading material is there, what does it matter if there are ads? I still love the magazine and will continue to be a loyal customer if they are able to overcome this generation of internet surfing for our entertainment.

Feb 18, 2013 6:28PM
Their subscriber base is slowly dying off and is not being replaced.  Once this generation of old folks is gone, RD will probably close up shop.
Feb 18, 2013 5:35PM
Shame as they used to do a great job calling out crooked judges and lawyers.
Feb 18, 2013 7:52PM
I used to love Reader's Digest.  Especially monthly articles like "Drama in Real Life".  But today's version is so puny with very little content.  I can read it from cover to cover before the next day's mail arrives.  The multitude of adverts is a sad sign of the times but I can skip those pages, it's the many good stories and articles that I really miss.  It's just not a great magazine like it used to be.
It would seem to me that almost all magazines and newspapers are history. I'm a Geezer and don't buy any now that I have all these devices.It's also an expense issue.If you have a choice between the Internet,TV, etc. what do you drop to save money ???  
Feb 18, 2013 4:20PM
Bill's NAFTA agreement probably sold them to China.
Feb 18, 2013 2:57PM
never touch a used copy of rd.....think about it.....
Feb 18, 2013 5:46PM
More evidence that the Republican Party is in trouble!
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