Reader’s Digest Association has hired investment bankers Evercore Partners and Morgan Stanley to shop part or all of the company in what could be one of the biggest publishing deals of the year, sources tell Media Ink.
The Wall Street Journal reported Monday that the company had put itself on the block without disclosing the investment bankers and was hoping to fetch $1 billion.
One source said that the company could get more than $1 billion with annual revenue of roughly $1.7 billion and cash flow of around $86 million.
While RDA has not confirmed anything, another source said that the company has considered a formal announcement of its sale plans but hasn’t made a decision yet.
The company’s pocket-size flagship publication, Reader’s Digest, which is published in more than 50 countries worldwide, is still the largest circulation magazine despite the battering it has taken on the home front for more than a decade. Its US circulation stands at 5.5 million readers, a drop of more than 60 percent since 1999.
RDA is also home to the EveryDay with Rachael Ray magazine and top-ranked food site Allrecipes.com, which regularly attracts more than 10 million unique visitors a month. Allrecipes could command $400 million alone, assuming it gets a high multiple similar to other digital properties that have traded hands recently. A big problem for potential buyers is that more than 30 percent of the company’s revenue still comes from print publishing while much of its other business is tied to direct-mail operations, which have been under tremendous pressure in recent years.
RDA has churned through its executive ranks with the ouster of CEO Mary Berner in April. She steered the company through a pre-packaged Chapter 11 bankruptcy last year that shed $1.7 billion in debt and put the company on a cash-flow positive basis following the 2007 takeover by private-equity firm Ripplewood Holdings. The bankruptcy wiped out Ripplewood’s equity.
A sweeping change in the board of directors resulted in the ouster of Berner and her replacement by her No. 2, then-Chief Financial Officer Tom Williams. Speculation began swirling at the time that the company could be headed for a bust-up.
Reader’s Digest declined comment.
In fashion
The fashion books seem to be closing their vitally important September issues later into the cycle each year as they scramble for last-minute ad dollars.
It appears that most are up, although only a tad compared to a year earlier.
With a day to go before the close, In Style Publisher Connie Anne Phillips is projecting that the Time Inc. fashion behemoth will have its third consecutive up year, marking the largest September in its 17-year history with 431 pages, a gain of 5.8 percent versus a year ago. That narrowly beats its personal best of 430 ad pages in 2000.
Vogue — the Condé Nast flagship that usually outweighs everyone in September — is not releasing its ad page tally until 5 p.m. tomorrow.
Elsewhere, Harper’s Bazaar, Hearst’s fashion entrant, reported a small increase in ad pages to 308, up 2 percent from a year ago. Its new sibling, Elle, which is now part of Hearst after the takeover of Hachette Filipacchi Media, is down 6.9 percent to 350 ad pages, according to Adweek. Condé Nast’s W also appears to be getting a little traction, up 3.2 percent to 255 pages, according to Adweek.
Dirt digger
Will we now see muscle-bound gardeners on the pages of Organic Gardening?
David Zinczenko, the editor-in-chief of Men’s Health, who is also a restaurateur and best-selling health book author, is adding a few more titles to his repertoire at Rodale.
He will now add Prevention and Organic Gardening to his portfolio as the newly appointed editorial director of those titles. He was already the editorial director of Women’s Health.
As a Manhattan resident, Zinczenko brushed aside criticism that he doesn’t spend much time digging in the dirt.
“I’ve spent nearly my whole career with Rodale. . .OK, maybe I’m not standing out on the bal cony of my apartment building with a garden weasel in my hand. But I know how to motivate and coach people in healthy living, and so far it’s worked out,” he told Media Ink.
“I’ll bring the same editorial skills — and my longstanding belief in the benefits of what Rodale does — to Organic Gardening and Prevention, and I think they’ll grow stronger than ever.”
More importantly, a Rodale spokeswoman says there are no plans to change any of the editors who will now be reporting to Zinczenko: Diane Salvatore at Prevention and Ethne Clarke at Organic Gardening, the granddaddy of the Rodale titles. But clearly Zinczenko hopes to bring some of his branding oomph to the titles.