Business

Reader’s Digest ducks doom

Reader’s Digest — the 91-year-old magazine — has lived long enough to make a second trip to bankruptcy court.

RDA Holding, the parent of Reader’s Digest, will continue to publish the pocket-size publication — long a staple of coffee tables and doctors’ offices — while aiming to emerge from bankruptcy in six months.

Once the top-selling title in the US, Reader’s Digest has seen its circulation fall to around 5.5 million, from more than 15 million in the mid-1990s.

The company filed for Chapter 11 late Sunday as part of a plan to shed 80 percent of its debt. A majority of bondholders have agreed to convert $465 million of debt into equity, according to the bankruptcy filing.

It marks the second time in less than four years that the publication — started by DeWitt and Lila Wallace in an office underneath a Greenwich Village speakeasy in 1922 — has gone to court in an attempt to further shrink its debt.

RDA first went into bankruptcy in 2009, hit by the recession and a leveraged buyout by private-equity firm Ripplewood Holdings that saddled it with $2.3 billion of debt.

Despite emerging in 2010 with a lighter debt load, the company couldn’t keep pace with the decline of print media, leading to two more years of cost-cutting and asset sales. The turmoil included pushing out its management team and board and slashing its 4,700-workforce by more than half.

The bloodbath helped cut debt to about $1 billion — which currently still carries hefty interest rates as high as 9.5 percent.

To help make ends meet, the parent started selling off assets, including Weekly Reader, Every Day With Rachael Ray and Allrecipes.com.

But it wasn’t enough to stem swelling losses, including $100.1 million in operating profit losses in the third quarter.

In its bankruptcy filing, RDA listed assets of more than $1 billion and liabilities of more than $1 billion.

CEO Robert Guth said the company had been trying for 18 months to rescue its balance sheet, adding that “We have unfortunately been unable to align our debt levels correspondingly.”

With blessings from key creditors, RDA said the latest restructuring would leave the company with debt of about $100 million.

Guth said the company expects to sell more assets and strike new licensing deals in the coming months.

The parent company operates in 46 countries, with 21 global brands. Only the US assets are involved in the bankruptcy filing.

Among RDA’s publications are mass-market food title Taste of Home, The Family Handyman, Birds & Blooms and more than two dozen specialty titles globally.