The amputations apparently haven’t yet saved the patient.
Reader’s Digest Association (RDA) announced this week it will offer its bondholders a take-it-or-leave-it buy-out, but at a 5% discount. The payout will be funded by proceeds from RDA’s sale of Allrecipes.com earlier this year, which brought in $175 million. Bondholders of these senior secured notes have until June 14 to decide whether to accept the deal and take a “haircut” on their investments.
Despite recently selling both Allrecipes.com and EVERY DAY WITH RACHAEL RAY* to Meredith, the company still is hemorrhaging cash, losing nearly $57 million in the first quarter of this year. Revenue for Q1 fell by almost 15%.
Somehow they continue to blame, in part, the weak performance of Every Day with Rachael Ray (how long can you ride that horse?), declining renewal rates at North American operations (what publisher doesn’t have that problem?) and soft international business.
The truth is that RDA has been in a constant state of financial upheaval since going private in 2007, going through a managed bankruptcy in 2009, and has never recovered. Now the company is looking at unloading its lifestyle and entertainment direct business, and selling off some international properties.
If RDA prunes down to its core North American publishing business, what then? How much can you cut before there’s not much left to save?
Writers, photogs and PR pros may find the editors distracted; this is why.
Filed under: Financials, International, Magazine management, Magazine publishing, North American magazines, US Magazines, US Publishers | Leave a Comment »
