For the second time in less than four years, Reader's Digest has filed for bankruptcy.
Seeking ways to funnel approximately $465 million of debt into equity held by creditors, the 91-year-old omnibus magazine's parent company RDA (Reader's Digest Association) Holding filed for Chapter 11 protection late Sunday, Feb. 17.
The last time RD filed for Chapter 11 bankruptcy protection was in August 2009, and was then too attempting to carry out a debt-for-equity deal that would grant lenders control of the company.
"The publisher had struggled with a heavy debt load since Ripplewood Holdings, a New York private equity firm, led a consortium of investors in a $1.6 billion buyout of the company in 2007," wrote The New York Times on Jan. 11, 2011.
In August 2010, the Times reports, the magazine's circulation dropping 25 percent (to 6.1 million) led it to see one of the largest such decreases of all top 25 magazines that year.
Now, RD confesses that its debt of just under $1.2 billion will be difficult to overcome, considering its current assets measure $1.1 billion. For the time being, it has culled together $105 million in financing which it hopes will keep the publication above water during the Chapter 11 proceedings.
"After considering a wide range of alternatives, we believe this course of action will most effectively enable us to maintain our momentum in transforming the business and allow us to capitalize on the growing strength and presence of our outstanding brands and products," Robert E. Guth, the company's chief executive, said in a statement.
As per reportage by CNNMoney, RDA anticipates its Chapter 11 process will be concluded within six months and the filing will allow the company to exit bankruptcy with 80 percent less debt than it holds now.
In September 2012, the Pew Research Center discovered that of those surveyed, only 18 percent of Americans had picked up a print magazine the previous day, with 39 percent stating they now read the news online. The 18 percent number dwindled from 26 percent in 2000.
With countless other media outlets around the world feeling pressured to enter the digital era, even the biggest of the once-revered titans has nowhere to escape but online. When Newsweek stopped publishing its print edition last year, Editor-in-chief Tina Brown pointed to consumers' increased use of tablets in collusion with weakness in print advertising.
Conde Nast and Time Inc. have both reported recent job cuts, as well, due to what Time referred to as "the significant and ongoing changes in our industry."
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