Reader's Digest Association Inc., publisher of the iconic general interest magazine that began gracing American homes in 1922 and now reaches a worldwide audience of 130 million, filed for Chapter 11 bankruptcy protection Monday as it faces falling print circulation and looming debt payments.
Known for its heartwarming stories about American life as other publications moved toward edgier fare, the company's flagship Reader's Digest magazine has seen U.S. circulation drop from a peak of more than 17 million in the 1970s to 8 million last year.
Magnifying the publishing world's woes is a recession-worsened advertising slump that already has led to the closing of several high-profile magazines, including Conde Nast's Portfolio and Blender.
But Reader's Digest CEO Mary Berner has said ad pages for the company's U.S. magazines are down less than 6 percent through the September editions. The publications' down-home feel, instead of a high reliance on luxury and high-income tastes, has an added attraction to advertisers during the recession.
Reader's Digest said the prearranged bankruptcy filing would give lenders a 92.5 percent ownership stake in exchange for lowering indebtedness to $550 million from $2.2 billion. The filing has gotten approval of more than 80 percent of the company's senior secured lenders.
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