Huh. No, really…get school-aged kids to flog magazines door to door to bolster revenues. Time Inc. has bought out QSP, a school and youth groups fundraising company that was part of Reader’s Digest Association, for $110 million in cash. RD is owned by PE firm Ripplewood Holdings.
For Time Inc, the fit is, well, I’ll let them describe it: “It sees fundraising as a growing area for subscriptions across the magazine publishing industry and envisions benefits to operating QSP’s large direct-selling force in North America.” In other words, it will focus QSP on selling magazine subscriptions as a way to raise funds, something the company was already doing in addition to other incentives/gifts such as food items.
And there is history to this: RDA and Time Inc. jointly ran QSP after it was founded in 1963, but RDA bought Time Inc.’s share in 1971. QSP went on to become one of the largest fundraising company in North America helping schools, scouting groups and other organizations..it says over the years it has raised more than $3 billion.
Time Inc is slated to launch its online magazine megastore Maghound by next month, so there are some synergy possibilities there. Then of course it owns Synapse, the big magazine subscription marketing business, so there are some obvious synergies there.
But buying QSP as a time when it is trying to cut print costs, AND, focus on more digital efforts seems counter-intuitive, more harvesting a slowing business than actually latching on to a growth market. Some numbers from Time Inc’s results in parent Time Warner’s (NYSE: TWX) Q208 numbers are illuminating: Time Inc’s revenues declined 6 percent ($77 million) to $1.2 billion, reflecting a 9 percent decrease ($66 million) in advertising revenues and a 10 percent decline ($14 million) in other revenues, offset slightly by a 1 percent increase ($4 million) in subscription revenues.
For RD, it does makes sense: it says it is focusing on its publishing businesses and “building multi-platform communities of customers based on our branded content”. It recently sold off Taste of Home Entertaining magazine to a group of private investors led by Eric Schrier, former president and CEO of RD.