Venerable publishing institutions are not overlooked by the crosshairs of technological and economic disruption. Seventy-two years after its first edition, the Reader’s Digest’s UK edition, which bills itself as “the world’s favourite magazine‘, has filed for administration, after failing to win government backing for a pension fund rescue plan.
This was expected. The title’s U.S. parent Reader’s Digest Association (RDA) filed for Chapter 11 U.S. bankruptcy last year and recently told a U.S. court it had “a longstanding and significant unfunded liability within its UK pension scheme” that might lead to it filing for adminstration (for U.S. readers, that’s the term for placing insolvency businesses alternative hands, to maintain and reorganise operations).
Print circulation fell from 3.3 million in 2001 to 599,000 in 2008 (*ABC*
(NYSE: DIS) figs) and the website has been an ecommerce destination since 2006, though RD also has a digital-edition.
Reader’s Digest United Kingdom to File for Administration
Pleasantville, NY – February 17, 2010 – The Reader’s Digest Association, Inc. (“RDA”), announced today that its UK subsidiary, The Reader’s Digest Association Limited (“RDA UK”), has filed for administration in the UK. The decision by the board of RDA UK to place the UK company into an orderly insolvency process follows the recent decision by the UK Pensions Regulator that it would not support an agreement between RDA UK, the trustees of its pension scheme and the UK Pension Protection Fund (PPF) to settle a longstanding pension scheme liability.
The agreement, which would have involved a lump sum payment into the pension fund by parent company RDA plus an equity stake in RDA UK, and which was authorised by the US Bankruptcy Judge overseeing RDA’s U.S. Chapter 11 proceedings, would have relieved RDA UK of significant financial obligations associated with its underfunded UK pension scheme. In the absence of an agreement, RDA UK is unable to meet those obligations financially and therefore unable sustain its operations.
RDA is working with RDA UK and the administrators to help ensure an orderly process and maximize creditor returns.
The RDA UK pension issue is specific to the UK entity and does not involve any other RDA company. RDA expects that its other global operations will continue to operate as normal and without material impact as a result of the UK insolvency.
The Reader’s Digest Association, Inc. is a global multi-brand media and marketing company that educates, entertains and connects audiences around the world. The company builds multi-platform communities based on branded content. With offices in 44 countries, it reaches a customer base of 130 million in 78 countries. It publishes 92 magazines, including 50 editions of Reader’s Digest, the world’s largest-selling circulation magazine, operates 78 branded websites and sells 40 million books, music and video products across the world each year. Further information about the company can be found at www.rda.com or www.rd.co.uk.