2014

Reader's Digest Association Boldly Recasts Business To Build A Successful Future Increases Commitment to Building Premium Experience for Customers and Advertising Partners

- Restructured Company to Focus on Profitable North American Print and Growing Digital Business

- Lowers Rate Base to Focus on Direct-to-Publisher Sold Subscriptions and Enhance Profitability

- Innovative Advertising Model Will Feature Limited Category Exclusivity With an 80 / 20 Editorial to Ad Ratio

- Will Deliver Consumers Higher Quality Products, Enhanced Editorial Content and an Improved Reader Experience

NEW YORK, July 10, 2013 /PRNewswire/ -- The Reader's Digest Association, Inc., the iconic multi-brand and multi-platform media company, today announced a series of bold initiatives to dramatically recast its business as it prepares to emerge from Chapter 11 in the coming weeks.  The plan of reorganization approved by the Court on June 28 will transform RDA into a stronger, revitalized company with a greatly simplified structure, significantly less debt, and a renewed focus on its most profitable businesses.  The strategic initiatives announced today are designed to capitalize on this refocused mission and to help ensure a successful future.

"We are tremendously proud of Reader's Digest Association's more than 90-year history, and we have taken decisive actions to realign our business focus and put our Company on a stronger path for the future," said Robert E. Guth, President and CEO of Reader's Digest Association.   "We have rethought our business practices and shed legacy industry conventions that were no longer good for our business or our customers so that we can redirect our resources towards making better, more compelling and relevant products.  At the same time, we are embracing the best and strongest elements of our past, renewing our commitment to providing our customers with a premium experience – a commitment that has been the hallmark of our Company since the beginning."

Restructured Company to Focus on Profitable North American Print and Growing Digital Business

The Company's new business model will focus on its profitable North American print business building engagement and excitement amongst its loyal customers.  At the same time, the Company will continue to meet the opportunities of the digital era with a growing digital presence.  Highlights of the North American business will include:

  • Focus on RDA's many brands that reach more than 141 million consumers in North America and are each category-leading by consumer engagement levels.
  • Both Reader's Digest and Taste of Home will continue to deliver critical mass with print rate bases of more than 3 million, respectively, and delivering highly engaged audiences.
  • RDA North America brands will continue to deliver digitally with RD.com, Tasteofhome.com, Familyhandyman.com, and RDA's enthusiast brand websites collectively delivering 20 million unique visitors in May, showing significant growth vs. prior year collectively, and individually.
  • Rejuvenated books business with a new, multi-channel marketing effort.

With respect to the books business, the Company will look to capitalize on the business model that made its recent Digest Diet franchise such a success. The Company will continue to choose products more closely correlated to consumers' desires and market them via multiple channels.

Increased Commitment to Offering Advertisers a More Valuable, Premium Experience

RDA is taking a new approach to the way it does business with its important advertising partners, offering them a richer experience.  The cornerstone of the new strategy is consumer economics, focusing on the value of marketing to the Company's most engaged readers as well as shedding circulation that does not contribute to magazine profitability and eliminating unprofitable subscription offers.

  • Category Exclusivity for Advertisers: Reader's Digest magazine will introduce limited exclusivity by category for its advertising partners, promising an 80/20 editorial to advertising ratio, delivering these partners a premium and showcase presence. 
  • Focus on Direct-to-Publisher Sold Subscriptions.  Effective immediately, Reader's Digest will shed as much unprofitable circulation as possible, dropping verified circulation levels, increasing the proportion of direct-to-publisher sources and limiting the use of agent-sold subscriptions. The AAM (Alliance for Audited Media) qualified circulation will decline over time, and the rate base guarantees for the second half of the year will be an average of circulation served by issue throughout the second-half 2013 period.  As a result of the new strategy, effective with the January 2014 issue, Reader's Digest will lower its rate base guarantee for advertisers to 3,000,000. 
  • More Transparent, Profitable, "Fair Price" Subscription Pricing Model.  RDA will introduce a more profitable subscription pricing structure while maintaining price stabilization for existing customers.  RDA will discontinue its unprofitable introductory offers and eliminate some of the price confusion around subscription pricing for its products.

Mr. Guth commented: "The new rate base strategy will deliver a more profitable, sustainable business for the brand, a better experience for the consumer, and a more effective environment for our advertisers.  All of our brands are category leading on a number of fronts, but particularly from a consumer engagement perspective, and this new strategy will enhance these levels further, helping our advertising partners reach our premium readers more effectively.  

"More than ever, we want to take smart, decisive actions that will put our business on a stronger path for the long-term, and this means rethinking business practices and questioning accepted industry convention.  One of the most important examples is how we manage our rate base. The conventional rate base math in the publishing business that involves using costly agents to sell less profitable subscriptions is an equation that no longer makes sense for RDA.  Now our partners can more effectively reach our most engaged readership, our readers have an improved experience, and RDA will have a more sustainable business."

Will Deliver Consumers Higher Quality Products, Enhanced Editorial Content and an Improved Reader Experience

Reader's Digest Association has already taken a number of steps as part of its renewed commitment to its customers. Building on the Company's popular decision to increase the publication of Reader's Digest magazine from 10-12 issues annually, the Company has plans to enhance its pledge to its customers with premium products and improved services on a number of fronts.  This improved experience includes a significantly more favorable editorial / ad ratio than the 50% / 50% average for the competitive set.

"RDA is recommitting itself to providing our customers and advertising partners with a premium experience," said Mark Josephson, Vice President and Chief Sales Officer of The Reader's Digest Association.  "Providing our consumers with an improved reader experience gets us back to our core DNA – providing an exceptional, friendly product, which is good for consumers and therefore good for business.  With respect to our recent focus on quality and new enhancements at Taste of Home, advertisers have already taken notice.  Ad pages for Taste of Home's June/July issue are up nearly 16%."

In addition, the Company will enhance its customer offer in the following ways:

  • Reader's Digest RedesignBeginning in the winter of 2014, Reader's Digest will have a refreshed, modern look that reflects the vitality and engagement of its readership. The Company plans to announce further details later this summer.
  • Taste of Home To Build on Recent Investments in QualityThe Company has already taken significant steps to give Taste of Home a quality upgrade and will continue to add new products and enhancements. Earlier this year, RDA announced that starting with the June / July issue, Taste of Home would feature more recipes, better quality paper and a perfect bound book to meet the desires of collectors of the popular publication.
  • Customer care centers moved back to the U.S.  RDA has moved its customer care centers back to the U.S. for all English-speaking customers, improving its ability to interact live and digitally with customers.  Already, customers are benefiting from these changes, seeing an increase in first call resolution and a decrease in talk time.

International Businesses Continue to Pursue Licensing Strategy

RDA remains committed to its strong, vital international businesses as well, as it continues the transformation from an ownership structure to a licensed model.  As of emergence RDA will have licensed operations in Iberia, the United Kingdom, India, the Nordic and French regions, Hungary, Poland and Romania.

The Company continues to focus on new marketing approaches, including digital and B2B campaigns for all of its websites and partner websites, and on the improvement of its content offerings.  In addition, RDA is building new tools to support its ongoing customer-centric focus, and the first software tools are to be introduced in Brazil in September 2013.

About The Reader's Digest Association, Inc.

Reader's Digest Association (RDA) is a family of iconic brands that celebrate reading, sharing and doing among consumers on print and digital platforms.  Our portfolio of products includes our flagship magazine Reader's Digest; Taste of Home, the world's largest circulation food publication; The Family Handyman, America's leading source for DIY; and a suite of Enthusiast titles including Birds & Blooms, Country, Country Woman, Farm & Ranch Living and Reminisce.  For more than 90 years, we have simplified and enriched the lives of a passionate readership by discovering and expertly selecting the most interesting content in family, food, health, home improvement, finance, and humor.  Reader's Digest casts a global footprint by providing products and services around the world through owned and licensed operations.  Further information about the company can be found at www.rda.com.

For further information contact:
The Reader's Digest Association 
David Press Tel: 917.721.7046

SOURCE Reader's Digest



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