Jun 19, 2009, 10:29AM

Readers Digest Not Doing So Well

Apparently middle America just doesn't give a damn anymore.

For 87 years, Reader’s Digest, that monthly breadbasket of condensed articles, can-do tales and grandmother-approved jokes, has aimed squarely at Middle America.
Now it is aiming a little more to the right.
After years of trying to broaden the appeal of Reader’s Digest, the publishers are pushing it in a decidedly conservative direction. It is cutting down on celebrity profiles and ramping up on inspiring spiritual stories. Out are generic how-to magazine features; in are articles about military life.
“It’s traditional, conservative values: I love my family, I love my community, I love my church,” said Mary Berner, the president and chief executive of Reader’s Digest Association.
Like Time, Life, Newsweek and The Saturday Evening Post, Reader’s Digest was once the epitome of a general-interest magazine, one intended to appeal to a broad swath of the American public. But with a politically polarized public and a downturn in advertising, the survivors now seem to be slimming down. Reader’s Digest is decreasing its circulation to 5.5 million from 8 million and lowering its frequency to 10 times a year from 12.
“Magazines and cable channels are trying to figure out what they can add to the mix if people already have the basic facts from the Internet and elsewhere,” said Tom Rosenstiel, director of the Pew Research Center’s Project for Excellence in Journalism. “A lot of them will aspire to do that around ideology, because it’s the easiest way, the simplest way, to organize an audience.”
Whether that audience still exists for Reader’s Digest is one question. Whether the current management team can reach it is another.
Reader’s Digest was acquired in 2007 by a consortium of investors led by Ripplewood Holdings, a private equity firm in New York that brought in longtime magazine professionals to turn the company around.
Ms. Berner is a publishing powerhouse — the former chief executive of Fairchild Publishing and publisher of Glamour and TV Guide. Eva Dillon, the president of the Reader’s Digest Community, the division running the magazine and related books and Web sites, and Peggy Northrop, who is the United States editor in chief of the magazine, both cut their teeth in Manhattan publishing before making the commute to the 114-acre Reader’s Digest campus in Chappaqua, N.Y.
Last week, just before 10 a.m. on Wednesday, company employees began streaming from their ivy-covered brick buildings up grassy hills to an auditorium, resembling morning chapel at a prep school more than a strategy meeting.
Inside, Ms. Berner took the stage and reviewed the 94 international magazines owned by the company, including 31 American magazines like Taste of Home, Every Day With Rachael Ray and The Family Handyman, and online brands including AllRecipes.com, one of the most popular recipe sites on the Web.
“They are brands that may not be considered cool by the often elitist and self-absorbed standards of New York media,” she said. She had taken a car from Manhattan that morning, and wore a pink wool shirt-dress, patent leather Manolo Blahnik heels, and diamond hoop earrings.
The project that signals Reader’s Digest’s future, Ms. Berner said, is a new multifaceted effort produced with Rick Warren, the evangelical pastor, called the Purpose Driven Connection.
For about $30, subscribers get a quarterly magazine with religious workbooks, along with DVDs featuring Mr. Warren, and membership in a social-networking Web site, including tips on what to pray for each week. It is available through churches and at Wal-Marts, and Ms. Berner wants to introduce other unorthodox distribution strategies.
“That is the model going forward,” she said.
In an interview in her office, Ms. Berner addressed the change in direction. “It’s not as cynical as you think,” she said, adding that she does not usually dress in $600 shoes but in jeans and sweaters, a fact she had her assistant confirm. And, Ms. Berner said, Ms. Northrop had heartland roots because she was from Iowa (she’s actually from Pennsylvania).
“It’s an unabashed commitment to and focus on a market that’s ignored but is incredibly powerful,” she said.
The editorial team had even considered turning Reader’s Digest into a right-wing handbook, a companion to Fox News. “It was a supposition,” Ms. Berner said, that half the country is annoyed that Barack Obama is president.
“What if we just go after them?” said Ms. Berner, who has a framed photograph of President Obama in her office. But testing the right-wing handbook idea with cover lines like advocating prayer in schools flopped.
“What worked was conservative values,” Ms. Berner said.
In some ways, the shift is a return to the magazine’s roots. Founded in 1922 as a compendium of articles, Reader’s Digest reached its height of popularity in the 1970s, with a circulation of 17 million domestically.
But the good times have gone. After going public in 1990, it was bought by the consortium led by Ripplewood in 2007 for $2.8 billion. It has lost money every year since 2005, and has $2.1 billion in debt, high enough that analysts worry the company cannot pay it off on schedule. In February, Standard & Poor’s lowered its credit rating to CCC, a negative outlook. The company hired a new chief financial officer that month and says its debt-to-earnings ratio has improved.
Ms. Berner cut costs by about $25 million in the last quarter, but is under pressure to increase revenue. She is reorganizing the company’s brands around subjects like food and home. She has sold some educational units and is moving away from the widespread branding that put Reader’s Digest on everything from caskets to pet insurance.
“In one of the Latin American countries, we were selling vibrators,” she said.
Like Time and Newsweek, Reader’s Digest is now looking to focus on a more niche audience. Its advertising has held relatively stable this year: ad pages are down only 8 percent this year, according to Media Industry Newsletter, compared with 23 percent for the industry, and it is no longer as dependent on pharmaceutical advertising. Readers, and advertisers, Ms. Dillon said, “really appreciate the wholesome nature of the magazine.”
Ms. Northrop, who will be promoted to global editor Friday, has already moved the magazine away from covers like “10 Easy Ways to Cut Big Bills” in favor of perky upbeat images. The best-selling cover of the last six months showed a harried-looking baby with the cover line “Oh, Cheer Up!: America’s Funniest Jokes.”
If the new direction works, Ms. Berner said, she may consider introducing magazines around Rick Warren-like religious personalities, along with increasing the amount of spiritual content in Reader’s Digest itself.
“As far as I’m concerned, I don’t care what the religion is, what the spirituality is, as long as it’s legitimate, there’s a built-in community and it’s global,” Ms. Berner said.
“We don’t choose our partners to change the world, we choose them because we’re running a business. I guess it sounds cynical if you believe that to run a business to make money is cynical. But that’s what I’m paid to do.”


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