It’s the debt, not the Net

Readers’ Digest continues with its debt problems, being one of the many US publications in bankruptcy, and in its latest move swapping debt for equity (i.e. ownership), of the venerable magazine. Only affects US magazine, but again illustrates that the biggest problem with most North  American publications is not the ad slump (which they’ve ridden through many times before) but the huge debt overhang they have, usually from reckless moves ten years ago to get into “convergence”, one of the worst business strategies of the new century. The Net isn’t killing them, it’s the debt.

Christian Science Monitor, August 18 2009

Reader’s Digest goes right in the U.S.

Faced with too much debt (what is it about MSM that makes it go too far in debt?), the U.S. version of Reader’s Digest is going socially and religiously conservative. I doubt that it will mean much in Canada, whose social conservatives don’t constitute a large part of the population, but it is interesting that RD is moving this way, with the political right in the U.S. pretty much in disarray after eight years of George W. It’s also trying to slim down its circulation, from eight million to 5.5 million (and down from 17 million in the 70’s.) This is the same strategy that Life, Look and the Saturday Evening Post tried to do to survive as mainstream heavyweights in the 1960’s and 70’s — they are just rump publications now. Could the same happen to RD?

New York Times, June 18 2009