While the iconic magazine Reader’s Digest’s parent company RDA Holding files for bankruptcy in the US, it claims its Asia business will remain unaffected.
“It is very much ‘business as usual’ for the local arm of Reader’s Digest, which remains completely unaffected by Chapter 11 proceedings with the American section of the business.” managing director and publisher of the company in Asia, Walter Beyleveldt, said.
Reader’s Digest Association or RDA in Asia operates on a different P&L and is cash positive, another spokesperson for the company told Marketing.
However, she was unable to provide the latest circulation figures for the title saying the audit is currently underway.
According to executives at the parent company, the losses in the US stem from readers’ preference of electronic over print media.
Robert E. Guth, the company’s president and chief executive officer said through the process which will “facilitate a significant debt reduction” the company can continue to redefine its business. Going forward, it will focus resources on its strong North America publishing brands.
In the US, the media company has put into motion a deal with its largest creditor, Wells Fargo on a financial restructuring plan. The company will be converting approximately US$465 million of secured notes to equity, which it says, “will strengthen it by significantly deleveraging its balance sheet.”
“The process in the US is quite different to our own system and will ultimately see the American division emerge in a strong, healthy position. And even in the US it is not affecting day-to-day operations of Reader’s Digest products and services,” Beyleveldt said.
This is the second time in the last four years that the US business of RDA has filed for bankruptcy. In 2009, Reader Digest’s Asian offices saw several staff reductions in Asia. Soon after, the parent company announced it will restructure its debt in a pre-packaged bankruptcy filing in the US, not impacting its Asia business.
RDA is not the first publishing company to feel the heat from the enormous growth of digital as a medium.
Earlier last year, Newsweek shut down its offices in Singapore, Hong Kong and Japan following the announcement of the magazine going fully digital by 2013. The magazine’s last print edition in the US was for the 31 December issue.