RIP : Reader Digest Bankruptcy

A sad day for Reader Digest readers, the company is filing for bankruptcy because of the management's poor timing . They borrowed a huge sum of money at the advent of the global financial crisis.

I used to be a reader digest reader when i was in secondary school. My father would subscribe them for me. Year by year the fees got higher. I remembered that it was only RM11 when my dad first subscribe it but leaped to RM15 in a couple of years.

Reader Digest's marketing strategy is actually quite aggressive. Every year they will diligently send a nicely crafted letter or contest form telling my dad that he is going to win a brand new luxury car or RM100K "PROVIDED" that he bought some books that they advertised.

My father bought quite a lot of books but sadly never won anything. But nevertheless, my dad never bothered or sad about winnning anything. He just wanted his children to enjoy reading them. That my dad :)

Reader's Digest -- the publication that grandmas everywhere used to love -- was the original aggregator, the first blog, the pioneer of short-attention-span reading. How ironic, then, that it has been gnawed nearly to death, like everything else in the old media, by a new media that is doing what the fusty, family-friendly Digest started 87 years ago.

In one of those periodic shocks to nostalgists that seem to come all too often during this recession, Reader's Digest's owner announced Monday that it plans to file for bankruptcy protection within the next 30 days for its U.S. operations. The Digest will continue publication, but as a wounded bird.

Chief executive Mary Berner said she didn't anticipate new layoffs, after a round of job cuts earlier this year. The financial reorganization is primarily designed to reduce the company's debt by about 75 percent.

The proximate cause of trouble was a buyout launched by an outfit with a homey, Reader's Digest-y name (Ripplewood Holdings) in 2007. Ripplewood borrowed the better part of $2.8 billion to cash out the Digest's old shareholders. And you know what happens when you're still carrying $2.2 billion of that debt in 2009, the era of ad-starved, circulation-shrunken periodicals.

Right. You end up as the subject of an article the Digest might have called "I Am Joe's Chapter 11 Reorganization Plan." Bottom line: Ripplewood will be moved aside and the banks will own the Digest.

The larger issue, however, wasn't really the Reader's Digest Association's balance sheet. It was -- the nature of the Digest. Started by DeWitt Wallace and his wife, Lila, in the years after World War I (a boom time for magazine entrepreneurs), the Digest thrived by reprinting the work of others. Well, much of the work of others. The Digest was edited -- "condensed" was the word -- for speed. Its editors might boil down a 5,000-word exegesis on the growing Soviet missile threat to 1,500 words, and pack two dozen or more such featurettes between the pages of a magazine that looked like a dime-store novel.