sharethis

Wednesday, August 19, 2009

RIP Readers Digest?

The US business of Readers Digest is going into Chapter 11. It is the same old story – sheds load of debt, $1.6 billion to be precise and not enough profits. Only two-and-half years ago a private equity firm purchased the company for $2.6 billion. Unfortunately the razor sharp MBAs, who devised the deal, got it horribly wrong.

The demise of this trusty old publication, which is associated with the 50-plus reader, is widely covered in the media. The best analysis is in the WSJ, but this is likely to be subscription only. The BBC has a summary of the situation.

I thought this was an interesting commentary.
Time, Reader Digest, Newsweek, and US News, all magazines that are decades old now tend to have readers over 50, and, in some cases over 60 years old. They also tend to be middle class. They are not nearly as active in their presence online as the generations of people who spend time on Facebook or Twitter.

These print media have been left behind. The most recent measure of the Reader’s Digest’s online audience shows the magazine with only 1.6 million unique visitors in July. Even if the figure is too low by half, the audience is not nearly large enough to bring in the ad revenue to offset the falling print sales at the magazine.

The Digest is dying slowly by dropping its circulation to 5.5 million and consequently decreasing what it can charge advertisers. The company has no choice, since too few people are interested in the magazine any more. The firm would need to race to cut costs to keep pace with falling revenue, and that is not possible any longer.

The Digest won’t make it much longer because its audience is too old. The content that it digests or runs is too easily available elsewhere on the internet—“the dos and don’ts of corporate culture”, “six healthy fish recipes”, and “8 medical myths”. The Digest was always quaint. It never had much of an edge. That was comforting to millions of people. It is not comforting enough for them to pay for the Digest in great numbers. Due to their age, they are also dying off.
Where I think this analysis is wrong is in the first sentence. I bet the majority of the publication's readers are 60+, with a large number being 70+. Also, a large chunk of their customers are spending time online.

Like Woolworths, some companies just don’t develop and become set in aspic. A great shame but that’s life. Dick Stroud

No comments: