RDA Holdings, the magazine’s parent company, listed $ 1.1bn (£711m) of assets and $ 1.2bn in liabilities in a bankruptcy filing in New York late on Sunday. The company said it will use the bankruptcy to finalise an agreement with its creditors to reduce its debt and to focus on growing the online sales of its 75 magazines.
“The key message here is that we have a lot of confidence in the future of the business based upon the success of the ongoing operational transformation, but we haven’t had as much success with the balance sheet side of it,” Bob Guth, chief executive of RDA, told Bloomberg.
Established 91 years ago in New York, Reader’s Digest has been hobbled as an increasing number of readers switch from buying the magazine to reading the content online, where the advertising rates that publishers can command are lower.
RDA first filed for bankruptcy in 2009, just two years after American private equity firm Ripplewood bought the publisher for $ 1.7bn. Mr Guth said the company intends to emerge from its second bankruptcy in the next six months with just $ 100m in debt, after a group of bondholders agreed to convert their debt into equity.
After trying and failing to sell itself in 2011, RDA has focused on offloading individual titles in an attempt to reduce debt. Although it managed to sell Allrecipes to a rival publisher last year for $ 175m, Mr Guth admitted that we “frankly haven’t had enough success on that front”.
The publisher has become the latest well-known US brand to file for bankruptcy in the past 12 months, following camera maker Kodak and Hostess, the company behind the snack Twinkies. Mr Guth insisted that the restructuring will provide Reader’s Digest with a “very good new lease on life”.
Besides almost 50 international editions of Reader’s Digest, RDA also publishes titles including Taste of Home, The Family Handyman and Birds & Blooms.