Another one bites the dust. The Reader?s Digest company is filing for Chapter 11 bankruptcy. But, unlike say historic retailer Woolworth?s in the UK, which went down in this economic crisis after 100 years in business, the magazine looks like it will live on to tell more tales.
At the height of the credit bubble, Ripplewood Holdings got hold of the company, in $2.8 billion of a leveraged buyout. Now, media and entertainment companies are leading debt defaulters. We can say, in retrospect, this acquisition wasn?t too brilliant given that the Digest has been posting declines since 1999. Ok, but the magazine still had global circulation of 18 million, impressive by any measure. Via direct selling, its brand name and subscriber base promised bigger markets for everything from vitamins to books. In fact, the flagship Digest contributes only 16% of the company?s total revenue. Some company properties like allrecipes.com are doing very well. It had 9 million unique visitors this June, up 46% from the same month in 2008. Many Digest editions, including those in India and the UK, claim healthy balance sheets.
So, what?s the problem? First, circulation has been taking a hit. In the UK, where the Digest used to be the bestselling magazine hawking around 2 million copies in the 1990s, it?s down to around 5,00,000. Second, the campaign to increase advertising has come at the worst of times. Third, fans are as loyal as they come, but they are ageing. One disrespectful blogger says, the Digest contains ?the first practical application of nanotechnology?no matter where you put the magazine, tiny mites embedded in the cover would pick it up and move it to the top of the toilet tank?. If the brand is ageing alongside its faithful subscribers, then that?s going to impact the rest of the company portfolio. What?s good news for these subscribers is that a financial restructuring of the company is in place now, such that its debt load will be reduced 75% in exchange for lenders getting ownership. Ripplewood Holdings? 2007 investment will be wiped out, but on the flip side Indian subscribers will comfortably keep getting their Digest in the mail every month.
Back in 1954, when the Digest?s Indian edition was launched, that was apparently at PM Jawaharlal Nehru?s special behest. Generally, foreign magazines were persona non grata in newly independent India, but an exception was made for the Digest. Around the time, the PM?s sister, Vijayalakshmi Pandit, then High Commissioner for India in the UK, even wrote for the Digest?s US edition. The piece was positioned in the most digesty of fashion: Best advice I ever had. None other than the Mahatma himself had helped her through the anguished period following her husband?s death, helping her get over the anger against relatives who wouldn?t share family property with a widow and her children. What was the advice? Avoid bitterness; no one can harm you but yourself.
Perhaps that?s the most colourless of lessons. And perhaps that?s the secret of the Digest?s long reign across continents, across 50 countries. The colour that endures across time and geographies is what it calls the colour of the heart, family and community?or, paradoxically, what the Digest?s founder DeWitt Wallace called good American values. Along with wife Lila Bell, he devised the so-called magic formula: simplify and condense, raise a chuckle and a cheer. Did that equal insipid homilies to some? Of course. Do they endure? Of course. For fans of ?How to lose 10 pounds for good,? it might be interesting to know that titles like ?How to regulate your weight? were common in even the 1930s. Yes, the Digest was first published in 1922, in the US.
With World War II, it became officially associated with US propaganda. Apparently, it was very much at the behest of the Office of War Information that its first foreign editions were launched, including an Arab one early in 1943. Later, it kept on the right side of Richard Nixon and Ronald Reagan. Pioneering advertising guru David Ogilvy gave it the thumbs up for doing much to ?win the battle for men?s minds? on behalf of America. The Digest triumphed even in France, where that other ageing American stalwart Archie Andrews could never give Asterix and Tintin a real run for their money.
Back to India?s first family, we are told Indira Gandhi spent some part of her last day reading the Digest jokes with Pupul Jayakar. Many won?t peruse these jokes even when they pick them off, as the blogger said, the toilet tank. What?s certain is that for those of us who grew up without the Internet, cable TV or just TV, the Digest was an affordable window into a varied universe. We are happy that the Digest looks like it will come out on the right side of a Chapter 11 bankruptcy.
renuka.bisht@expressindia.com