Regular Features April'03

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Case in Focus Reader's Digest : The Story of a Magazine - A Neela Ra hi!a The case examines the evolution of the Reader's Digest magazine since its launch in the early !"#s towards $ecoming the largest selling magazine in the world% $y the !&#s' (t ex)lores the reasons $ehind the su$se*uent reduction in )rofita$ility and fall in su$scri$er $ase during the mid+ !!#s' The case examines the restructuring and magazine redesigning efforts undertaken $y the com)any% to increase )rofita$ility and reach during the early " st century' (t also discusses the magazine,s future in the light of criticisms faced $y the com)any% on account of the redesigning initiatives and ac*uisition of Reiman -u$lications in "##"' Reader,s Digest became what the .all Street /ournal was to call `the greatest publishing success since the Bible'. The Digest simply is not what it used to be. There are still occasional flashes of the old excellence, but now these increasingly rare moments double as disturbing reminders of how much has been lost. - An Article in the National Re"ie#$ February 2002. The %o#nfall of a &ea er 0or many avid readers of the largest selling magazine in the history of the world% Reader's Digest 1RD2% the early " st century $rought in rude shocks' 3ot only had the flagshi) )roduct of Readers Digest 4ssociation 1RD4% 5S2 changed drastically in terms of looks and styling% more im)ortantly% its content 6ust was not the same anymore' The changes were even $eing viewed $y hardcore loyalists of the earlier format as signs of a dear friend wasting away due to some mystery ailment' 3ot sur)risingly% the glo$al su$scri$er $ase of RD came down to "7 million in "##" from the !!8 level of "& million' (n 5S% the su$scri$er $ase reduced to " million in "##" from the )eak level of & million in the !9#s' RD4,s )rofits declined stee)ly $etween !!8 and !!&' (n !!&% RD4 re)orted a net )rofit of : ## mn as against :7!" mn in !!;' The com)any,s revenues decreased $y &< in !!9% coming down to :"'& $n' Though RD remained the market leader in terms of readershi) and reach in "##"% analysts were *uick to )oint out that the magazine was certainly on a downward slo)e' 4nalysts attri$uted RD,s woes to various issues such as the increased use of advanced targeting software $y RD,s com)etitors 1that hel)ed them easily identify and reach their target customers through mail orders2 and government restrictions im)osed on swee)stakes 1which had $een RD,s ma6or source of attracting new su$scri$ers2' 4)art from these% analysts felt that RD,s ina$ility to a))eal to the younger generations or change with the market trends also contri$uted to its downfall during the mid+ !!#s 1the average age of RD's reader $ase was =9 years2' (ndustry o$servers commented that RD should have revam)ed its strategies to im)rove its )erformance in the mid+ !!#s itself' But% as a result of uncertainty at

the to) management level at RD4 1change in four >EOs during the )eriod2% this issue was neglected' During the same )eriod% many talented )ersonnel left RD% which severely affected the magazine,s editorial as)ects' 4nalysts felt that the exit of ?enneth Tomlinson 1Tomlinson% RD,s editor2% in !!8% was a great $low to the magazine' Tomlinson was seen $y many as RD's last great editor + a former RD em)loyee said% @Ae really understood what the Digest is all a$out'@ >hristo)her .illcox who took over as the new editor of RD after Tomlinson% focused on cutting costs through em)loyee reduction' The editorial staff at RD was cut down significantly $etween !!8+!&% $y way of attrition or forced retirements' .illcox also $rought out significant editorial changes in the magazine such as cutting the num$er of stories% focusing on the magazine,s visual im)acts and shifting the ta$le of contents to inside the magazine from its front cover )age% and )lacing the latest news items under a section B>urrents,' Aowever% these measures failed to $oost RD's sales' .hile a few RD em)loyees thought that .illcox,s moves had hel)ed RD sustain its market )osition% others remarked that his strategies had in fact contri$uted to the magazine,s downfall' The moves to downsize the editorial staff and the editorial changes $rought $y .illcox were $lamed for reducing the morale among the magazine staff' 4ccording to a former editor% @Ae 1.illcox2 cared more a$out look than content' Ae did not do much to maintain standards'@ 4s costs escalated% )rofits nose+dived% and the su$scri$er $ase declined' Thomas O Ryder 1Ryder2% an 4merican Ex)ress executive% took over as the >hairman and >EO of RD4 in Cay !!&' 0aced with the task of Bsetting things right in the com)any,% Ryder had a tough challenge on hand' .ith )eo)le moving away from the B)rinted matter, to the Belectronic age, with the advent of the (nternet% making RD regain its lost glory was going to $e a task easier said than done' 'uil ing the Rea er's %igest ()pire The RD story dates $ack to the early+ !"#s% when De.itt .allace and his wife Dila 4cheson decided to launch a magazine that would offer condensed versions of Bdigested, articles 1)u$lished articles2 from a wide variety of sources to the readers' The idea $ehind the decision was to )rovide readers with all the $est articles in a single source and save them the cost of $uying a range of news)a)ers% )eriodicals or magazines' Aowever% no )u$lisher was ready to take u) the task% following which the .allaces set themselves to the task and launched RD' .allaces ado)ted the direct mail marketing system to sell the magazine' They sought :7 as the initial su$scri)tion 1for one year+ " issues2 and )romised a com)lete refund if the su$scri$er was not satisfied with the first issue' The first issue of the magazine was launched in !"" and $ecame an instant success' 4s RD,s )o)ularity increased% the magazine was also made availa$le on newsstands in the 5S in !"!' Aowever% as the magazine $ecame more and more )o)ular% many com)eting )u$lishing houses started re6ecting )ermissions to the .allaces to re)rint articles% following which the .allaces $egan rewriting the articles' Over the next few years% RD,s reach was extended to other )arts of the world as many international editions were launched' .ith the )rimary o$6ective of informing% enriching% entertaining and ins)iring )eo)le of all age grou)s and cultures% RD $ecame the most )o)ular magazine in the 5S $y the !7#s' The com)any decided to stick to the direct mail conce)t to attract su$scri$ers' Direct mail initiatives such as swee)stakes resulted in manifold growth in the su$scri$er $ase of the magazine% during the next few decades' (n the !9#s% RD,s su$scri$er $ase touched an all+time high of & million' 4nalysts attri$uted this mainly to RD,s su)reme editorial ex)ertise and efficiency of the magazine team% to locate the $est articles and )resent it in a condensed form' RD offered a wide range of to)ics that a))ealed to almost all the age grou)s' To)ics ranged from health and tax ti)s for the middle+aged and adults% real+life adventure stories for teenagers% columns such as B.ord )ower,% BAumour in uniform,% B>over story,% and BDife is like that,' 4ccording to analysts% the magazine a))ealed to readers across the world on account of its underlined em)hasis on self+

im)rovement' Every issue of RD featured an article on an extraordinary achievement of an ordinary individual% which inflicted a desire for self+im)rovement in )eo)le' 4)art from general to)ics such as health% entertainment% education% adventure etc'% RD also served as a )latform for ideas% )u$lishing articles that su))orted small governments and missile defense% and o))osed welfare de)endency and union corru)tion' RD was widely res)ected for its editorial creativity and direct marketing ex)ertise across the world' The com)any )hiloso)hy was to think glo$ally and manage locally% following which it focused on o)erating locally managed )u$lishing houses and $usinesses across the world through the years' 4s a result of this focused a))roach and su)erior content% the magazine $ecame a )art of the lives of millions of readers all over the world' 4)art from editorial efficiency% swee)stakes and stam)sheets+driven direct mail cam)aigns contri$uted greatly to the rise in su$scri$er $ase during the )eriod' Ex)laining the rationale $ehind extensive use of swee)stakes and stam)sheets to )romote RD% com)any sources revealed% @-rize draws hel) to )u$licize our )roducts' They create attention $y adding excitement and fun to our offers + and% as the 3ational Dottery has reconfirmed% most )eo)le like the chance to win money' (n other words% )rize draws are for us what would $e advertising or window dressing to a retailer'@ The chance of winning a swee)stake offer attracted )eo)le into su$scri$ing for the magazine' 4lthough the )urchase of magazine was not necessary to win% many )eo)le tended to su$scri$e to the magazine in the 1false2 $elief that it 1)urchasing RD2 would increase their chances of winning' 4s a result of all these initiatives% RD emerged as the largest selling magazine in the world $y the !9#s' During the !&#s and !!#s% the com)any entered into many other $usinesses such as $ooks% music% videos and children,s )roducts 1Refer Exhi$it ( for the milestones in RD4,s history2' These were the Bgolden days, for the magazineRD em)loyees were re)ortedly showered $y the )arental affection of the .allaces and en6oyed cushy 6o$s full of )erks' The .allaces )assed away in the !&#s and in !!#% RD was made )u$lic and was traded in the 3ew Eork Stock Exchange as Reader's Digest 4ssociation (nc' 1RD42' The transformation into a )u$licly traded com)any from a )aternalistic family+owned $usiness took )lace almost overnight' This change soon manifested in the form of certain ma6or u)heavals at the com)any' Though RD remained RD4,s flagshi) )roduct in the late !&#s% the com)any $egan deriving more revenues from its other $usinesses during the )eriod' By the early !!#s% RD magazine accounted only for an estimated ";< of RD4,s revenues' Aowever% the BRD, $rand name was res)onsi$le for the reasona$le success of RD4,s other $usinesses such as $ooks% music% s)ecial edition magazines and videos' RD4 em)loyees felt that RD was )rimarily a direct marketing com)any that used RD $rand name to market its $ooks and videos and derives a ma6ority of its revenues from the non+magazine functions' 0ew analysts even remarked that RD was acting as a loss leader"% $y )romoting other )roduct ranges% while not focusing on im)roving its )rofita$ility' The strategy of utilizing RD,s $rand e*uity for its other $usinesses worked for RD4 and resulted in high revenue increases' 4ided in a ma6or way $y the swee)stakesFstam)sheets initiatives% )rofits increased from :"=# mn in !!# to :7;"'9 mn in !!7% with the revenues increasing to :"'! $n in !!7 as against :" $n in !!#' Aowever% the com)any )assed through a difficult )hase during the mid+ !!#s as four >EOs were changed and su$scri$er $ase and )rofita$ility declined' 4nalysts were *uick to )oint out that the ex)ansion of o)erations $eyond RD was res)onsi$le for the situation' 4)art from this% they also attri$uted the decline to )oor marketing efforts and the magazine,s failure to re)lace its aging readershi)' 0ollowing this% the com)any )ut in )lace measures to restructure its $usinesses in the late !!#s and early "###s' The revam) in RD4,s strategies was aimed at im)roving its )rofita$ility and $uilding its future' (n "## % RD4,s $usinesses were classified under three categories(nternational Businesses% 3orth 4merica Books and Aome Entertainment% and 5S Cagazines' 4)art from RD, other )roducts included s)ecial interest magazines% $ooks% music al$ums% videos and audio $ooks 1Refer Ta$le ( for RD4,s offerings2' .hile (nternational Businesses accounted for =;< of RD4,s total revenues% 3orth 4merica

Books and Aome Entertainment% and 5S Cagazines accounted for "&< and "9< res)ectively' (n "## % a$out 8!< of RD's revenues came from circulation% while the remaining came from advertising' RD4 remained the leading )u$lisher 1in general interest magazine market2 in the world with a turnover of :"'8 $n 1Refer Exhi$it (( for To) "; general interest magazines glo$ally2 in "## ' By "## end% RD reached over ## million readers through its =& editions in ! languages across the world' RD4,s ma6or com)etitors in the 5S were CcGraw+Aill% -earson -lc% Scholastic >or)'% .iley /ohn and Sons (nc'% 3elson Thomas (nc'% and Cill$rook -ress' Ry er to the Rescue - The Restructuring (n !!&% under the leadershi) of Ryder% RD4 announced a reengineering strategy% to increase )rofita$ility and create long+term growth o))ortunities $y $uilding on its core strengths' 4s a )art of this% RD4 decided to revitalize RD,s franchises% focus on health% home% faith% family and finance 1areas of high interest to consumers2% focus on new marketing channels a)art from swee)stakes and direct mail% and continue geogra)hic ex)ansion' 0ollowing this% RD4 focused on efforts towards leveraging the RD $rand% $uilding editorial ex)ertise and direct marketing skills% and attaining a large customer data$ase and glo$al reach' Ryder announced a three+)hase )lanmanagement restructuring% cutting costs and finding new revenue growth to achieve these o$6ectives' By the mid+"###s% Ryder had successfully )ut in )lace all these )lans $y em)loying new staff 1mainly editorial staff2 of the magazine% cut costs through exiting the video $usiness and $y ac*uiring new $usinesses such as Books 4re 0un% which offered dis)lay marketing for $ooks and gifts for other organizations or schools and generated over :79# mn annually' (n early "###s% RD4 focused on reinvigorating RD following which it )ut in )lace many strategies' 5nlike the earlier years% when RD4 focused only on direct mailing cam)aigns that mostly included swee)stakes% the com)any now $egan focusing on other marketing channels such as news)a)ers% catalogs% Direct Res)onse Television 1DRTV2 and the (nternet' >ommenting on the rationale $ehind refocusing the su$scri)tion marketing efforts% a RD4 executive said% @.e sim)ly realized that we tended to )ut all of our eggs in one $asket' (n order to develo) other demogra)hics% we recognized the need to develo) alternative )romotions% )articularly DRTV and the (nternet' .e are going to $e using these media to reach out to younger )eo)le' .e need to invest and s)end in order to $uild the $rand' S)eaking of the decision to reduce direct mail volumes% Bartholomew% a RD executive said% @.e sim)ly had $een investing too much in% and )aying too much for% some su$scri)tions' .e )ro$a$ly had $een )ushing the envelo)e too far on direct mail and stealing tomorrow,s customers for today $y mailing so dee)ly'@ (n !!!% on account of increased regulations on swee)stakes in !!! 1in the 5S2 and the cases filed against the com)any in few )arts of the 5S% in "###% on grounds that the com)any was using misleading statements in its swee)stake offerings% the com)any decided to reduce its focus on swee)stakes'7 .ithin a year% RD4 $egan garnering a considera$le )art of its su$scri)tions from non+swee)stakes sources' >ommenting on this% Gregory G >oleman% .orldwide -u$lisher% Reader's Digest said% @Right now% for this year% 8"< of our su$scri)tions are coming in through non+swee)stakes sources% including TV and news)a)er advertising% which the Digest had never $efore $othered with' (t is far more )ractical than the old way had $een' .e used to s)end : %### )er ## )eo)le to mail out these very com)licated swee)stakes' 3ow we s)end :7;# )er thousand )eo)le'@ To address the issue of finding new avenues for revenue growth% RD4 decided to increase the num$er of advertisements featured in RD' This was also necessitated $y the fact that there had $een a drastic reduction in swee)stakes+related su$scri)tions' The anthrax threat severely affected the direct mail market in the 5S% and hence% RD,s su$scri)tion as well' Thus% RD4 seemed to have had little

choice $ut to focus more on increasing revenues through more advertisements' Drastic changes were made on the editorial front as well' (t had $een a general )ractice of the com)any to elevate RD,s to) editors from within the magazine' 1This was $ased on the )remise that those editors understood the fundamental values on which RD was $uilt2' (n /anuary "###% this )ractice was $roken% when Ryder a))ointed Eric Schier 1Schier2% from Time magazine,s health )u$lication division% as Editor+in+>hief of RD4' 0ollowing this% .illcox resigned as Editor+in+>hief of RD in early "###' 5nder Schier,s leadershi)% many outsiders 1to RD2 such as /aco$ Eoung 1Executive Director2% >atherine Romano 1De)uty Editor2 and /ac*ueline Deo 1Editor+in+>hief2 entered the editorial team of the magazine during "###' Re)ortedly% most of the new staff were alien 1and hostile2 to RD,s traditions and values' Even as com)any watchers were yet to take in these changes taking )lace% RD4 announced its decision to redesign RD across the glo$e' 5nder its magazine reengineering )lans% the look and content of the magazine was changed in a ma6or way for the first time' The age+old tradition of RD to honor ordinary )eo)le on their achievements $y featuring their )icture on the cover )age% was dro))ed in early "## ' 0rom Carch "## % RD featured )ictures of most )o)ularF$eautiful faces in the world such as Cuhammad 4li% Tom Aanks and -rincess Diana% to make the cover )age attractive' RD4 also used the (nternet to extend the reach of its existing $usinesses across the world' (n "##"% it had =# we$sites reaching to millions of customers across the world' RD4 )romoted and marketed its )roducts through its we$sites' On the content front% RD4 reduced the num$er of hard news stories and focused more on mini+articles% that did not take much time to read or much thought to )rocess 1in magazine )rofessionals, 6argon such short articles are known as Bshort commitment )ieces,2' 4s )art of its content redesigning% while features such as BCugged $y the Daw, were dro))ed% others such as BThat,s Outrageous,% 1dealing with $ureaucratic a$use and cultural rot2 were given lesser s)ace 1according to com)any sources% RD was even )lanning to discontinue this feature in the future2' (n /uly "##"% RD4 $rought some more changes in the design of the magazine% in order to $roaden its target audience $ase% a))ealing to younger generations% as against its average customer age grou) of mid+;#s' (t changed the *uality of its )a)er 1cleaner )a)er2 in /uly "##"% to im)rove its visuals' The issues 1content2 covered in the magazine also were changed as they focused less on first )erson tales and nostalgia tri)s while )rimarily focusing on offering mini+articles that took little time to read' The magazine was made colorful% featuring more advertisements and )ictures% to attract young su$scri$ers' Rea ers o not %igest

Cuch to RD4,s chagrin% many RD lovers% who had $een )atronizing the magazine since the )ast few decades% ex)ressed their dissatisfaction over the changes in the magazine,s design and content' 4ccording to them% the *uality of content had come down drastically' 0or exam)le% the 0e$ruary "##" issue carried a )icture of film actress Ceg Ryan on the cover )age and a #+)age interview with her' The $ack cover featured a )icture of B4laska,s all+girl rescue s*uad, and a related story% which re)ortedly looked Bnothing less than an inferior article on feminism,' 4ccording to RD readers% all the new changes were making the magazine lose the distinct identity it had )ainstakingly created over many decades' 4ccording to them% in doing so% RD was $ecoming indistinguisha$le from the swarm of other )u$lications 1featuring Aollywood stars% new diet reci)es for women2% which offered nothing of enduring value to their readers' The *uality of content had re)ortedly come down so much that it was instantly forgetta$le' Readers even criticized the increased num$er of advertisements' 4 former RD su$scri$er said% @Reading of current RD magazine may cause you to want to turn on your TV to view advertisements instead'@

>ommenting on the change in RD,s marketing strategies% a former RD reader said% @Over the years% they ca)italized on their )o)ularity and it unfortunately has seriously downgraded the *uality of their )roduct' Carketing strategies would never have $een an issue if they had not evolved the magazine' (t used to sell itself% not it sells you a few hundred advertisements and a few stories'@ The reader unrest ex)ectedly translated into a decline in circulation and RD4 re)orted a = < decline in its earnings for "##"' 0or "## +#"% o)erating )rofits came down 7 < to : ;& mn from :""! mn in the )revious year 1Refer Exhi$it ((( for RD4,s financials2' (n s)ite of this% the com)any )roceeded with another )lan that attracted criticism from many *uartersthis was the decision to ac*uire Reiman -u$lications DD> 1Reiman2 in /anuary "##"' Reiman was engaged in )u$lishing cooking% gardening% lifestyle and nostalgia $ooks and magazines' >ommenting on this% Ryder said% @(t will hel) us distri$ute our )roducts to new customers% through new marketing channels% while )roviding an alternate )latform for new )roduct develo)ment' The ac*uisition also will advance our effort to further reduce our de)endence on swee)stakes )romotions'@ RD4 sources said that there was no overla))ing of su$scri$ers 1readers who read $oth RD and Reiman,s )u$lications2% and hence% it would hel) the com)any reach out to a com)letely new customer $ase' >om)any sources said that the ac*uisition was ex)ected to )rove $eneficial to RD4 as the average age grou) of su$scri$ers of Reiman was also mid+;#s' Aowever% Richard Gru$man 1Gru$man2% of Aighfields >a)ital Canagement 1Boston2% one of the ma6or shareholders in RD4% o))osed the ac*uisition' Gru$man said that the ac*uisition of Reiman was a terri$le mistake made as RD4 actually needed to focus on reinforcing its core )roducts' Gru$man even attem)ted unsuccessfully to ac*uire a ma6ority stake in the com)any' Aowever% in 4)ril "##"% Ryder succeeded in executing the ac*uisition )lan and $ought Reiman -u$lications DD> in the 5S and >anada for :98# mn' Cedia and com)any o$servers ex)ressed dou$ts regarding the rationale $ehind RD4 ac*uiring Reiman' This was $ecause Reiman,s average su$scri$er age was in the mid+;#s% and this went against RD4,s new+found focus on a))ealing to younger generations' (n the light of the mounting dissatisfaction of its existing reader $ase% declining revenues and )rofita$ility% accusations of $rand dilution% and ac*uisition of Reiman des)ite o))osition from ma6or shareholders% it remained to $e seen how far RD4,s management would succeed in its o$6ectives to reinvigorate and leverage RD,s 1lost2 $rand e*uity' The author is a Research Associate at !"R. References

#. $erman %tacy, A Sad Story at the Digest, www.time.com, "arch &, #''(. &. Reader's Digest Magazine Redesigns "arch )*, #''(. ). #s a !a$e of Rate %ase &uts on the !ay' >irculation Canagement% +o,ember #, #''(. -. Reader's Digest (lans to #n$est on the !eb, www.nyls.edu, "arch #, #'''. .. !illco) to *ea$e After + ,ears as ditor-#n-&hief of Reader's Digest ditions !orld"ide, Business .ire%

Magazine, -R 3ewswire Cagazine% April /, &***. 0. 1aplan "ichael, Re$i$ing Reader's Digest, http233foliomag.com, 4uly #, &***. /. Reader's Digest Reorganizes its -S %oo. %usiness, www.writenews.com, 4uly &/, &**#. (. 4 "iller 4ohn, #ndigestible/ 0he Decline of a 1reat Magazine, +ational Re,iew, 5ebruary ##, &**&. '. Rose "atthew, Ma2or Reader's Digest Shareholder *oo.s to 1ain &ontrol of (ublisher, http233online.ws6.com, "arch #&, &**&. #*. 7agen 4oe, 0he 3igh !ire Act, http233foliomag.com, 4une #, &**&. ##. www.rd.com #&. www.businesswee8.com #). www.rd9india.com #-. www.epinions.com #.. www.glconline.com #0. www.news.moneycentral.msn.com #/. www.company.monster.com #(. www#.excite.com #'. www.ad,isorinsight.com &*. www.readersdigest.co.u8 &#. www.research.businesswee8.com &&. www.newsre.com 4uestions for discussion ' Examine the reasons $ehind the )henomenal success of Reader's Digest magazine through the decades and examine the reasons for the fall in its su$scri$er $ase since the mid+ !!#s' "' >ritically evaluate the restructuring strategies )ut in )lace $y RD4 during the late !!#s to regain its lost )rofita$ility' Did RD4 succeed in its attem)tsH Give reasons' 7' Discuss the future of Reader's Digest in the light of dissatisfaction of its readers and the ac*uisition of Reiman -u$lications in "##"' .hat according to you should the com)any do to regain its )rofita$ility and su$scri$er $aseH Swee)stakes is a )romotional techni*ue through which items of value 1)rizes2 are awarded to )artici)ating customers $y chance' 3o )urchase or entry fee is re*uired to win a swee)stakes )rize' Direct mail swee)stakes )romotions )rovide the

customers with a chance to win )rizes in return for o)ening an envelo)e and returning the entry form to the com)any' 4 )roduct or service sold at a su$stantial discount in order to generate additional sales' Ty)ically% this is a )o)ular article% which $y $eing sold at a very low )rice 1very often at a loss2 for the )ur)ose of attracting customers and generating additional sales% often for other )roduct in a com)any,s )roduct mix'
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During the late !!#s% com)anies in 5S and other )arts of the world were accused of fraudulent and misleading swee)stake )romotional techni*ues' This was due to )resentation of swee)stake offers in a manner so as to make readers $elieve that the )urchase of s)ecific )roducts would increase their chance of winning the swee)stake )rize' To )ut an end to this% the 5S Government a))roved BThe Dece)tive Cail -revention and Enforcement 4ct of !!!, in mid+ !!!' This 4ct re*uired com)anies utilizing swee)stakes to )rovide ade*uate disclosure and state in clear terms that the )urchase of items listed or advertised would not increase the customer,s chances of winning' 4midst growing criticism across the world% many com)anies were forced to focus on alternative methods of )romotions'
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Reader's DigestI The Story of a Cagazine - A5it % ot many would disagree that over the years% Reader's Digest 1RD2 has $ecome an institution in itself and an ins)iration for many to emulatees)ecially its )ioneering marketing efforts such as mailers and giftsFswee)stakes'
3

Aowever% the )rint media has undergone a ma6or change over the years and so has the market for magazines such as RD' 3arrowing down to )eriodicals% the change is much more cons)icuous' -u$lishing houses have realized the inevita$ility of these changes and that they cannot afford to remain o$livious of the realities of the market)lace' (n (ndia% we have the case of stalwarts like ndia Today res)onding to changing market dynamics with the advent of com)etition in the form of :utloo8' The case clearly )oints out the endeavors RD has $een making to change its facethe cover has $een changedJ new columns have $een added and the )rinting has $een altered' Thinking of the B$rand associations, of RD% one would in all )ro$a$ility come across terms such as BCature Reading,% BCailers,% B.ord -ower,% BDaughter is the Best Cedicine, and B(ns)irational Stories, highlighting the Ball+in+ one, nature of the magazine' Aowever% something does seem to $e amiss )erha)s youthfulnessJ sensational attri$utesJ in+de)th coverage of issuesH The )o)ularity of )rint media as a source of entertainment and knowledge enhancement has significantly declined' Even within the magazine segment% there are Bsu)er s)ecialized, )eriodicals availa$le for readers that give detailed coverage to )articular interests' .ith the noise levels in the )rint market going u)% one would have to acce)t that sensation sellsand sells $etter than anything elseK This is one area where RD,s Bserious, image seems to $e working to its disadvantage' 4nother )henomenon that has added to RD,s woes is the (nternet' .ith information availa$le at the click of a mouse% the referral value of the )rinted word has gone down' 4gain the issue here is% would an all+in+one magazine have a longer life% than say a current affairs )eriodicalH RD is no longer the only source availa$le for general interest articles )resented in the digest format' 4 search on Google would give one much more than thatKK RD,s diversification moves% though look related% have made its )ortfolio a little wider than it ideally should have $een' Talking of synergies% it seems dou$tful how much of a real term $enefit would a catalog $usiness add to the RD em)ire' So what should RD doH Gloss sells' Taking into consideration the crossroads RD is standing at right now%

giving it a more visually a))ealing look 1say with art card glossy )hotogra)hs2 could $e one of the things that can )rovide a lot of freshness to the magazine' This way% RD could let ins)iration s)eak through )ictures alongside the usual articles and mundane family )hoto kind of visuals' This will further increase its referral life' RD can also ex)lore the )ossi$ilities of making changes with res)ect to size and )rinting' (f not new in content% it would then at least $e B)erceived, new and work towards $reaking the Bold )eo)le,s magazine, image' Aere,s wishing RD all the $estK

Exhibit I: Readers Digest Association Milestones Year 1922 1929 19$% Event/Achievement First issue of RD published (5,000 copies) and sold exclusively throu h !ail" RD appeared on the ne#stands for the first ti!e" RD&s first international edition published in 'nited (in do!"

+nternational editions of RD published in ,atin -!erica, .#eden, -ustralia, 19)0*)% /anada, 0el iu!, Finland, Den!ar1, 2er!any, France, +taly, .#it3erland, .outh -frica and 4or#ay" 1950*5) 1955 195% 1959 1992 199$ RD /ondensed 0oo1s (.elect 5ditions) launched in the '., /anada, -ustralia and '(" 6aid advertise!ents appeared in the international editions of RD" 6aid advertise!ents appeared for the first ti!e in the '. edition of RD" RD&s first co!puter is installed in line #ith its technolo ical initiatives" +n 2002, RD operates t#o 2lobal Data /enters that process infor!ation fro! across the #orld" 7usic, the first non*print product line of RD- #as launched #ith a classic antholo y, 7usic of the 8orld&s 2reat /o!posers" 5asy*to*enter s#eepsta1es #ere introduced by RD-" :he ;uality .chool 6ro ra! (;.6) #as founded, #hich e!er ed as the lar est fund*raisin or ani3ation that helps over 25,000 schools and youth roups in the '. and /anada" RD entered into the <ideo business #ith 8hy 8e Fi ht" RD ac=uired special interest !a a3ines such as :he Fa!ily >andy!an, -!erican 8ood#or1er 0ench!ar1, 4e# /hoices and 7oney#ise" RD- #ent public, tradin as RD- on 4e# ?or1 .toc1 5xchan e" +nternational editions launched in Russia, 5astern and /entral 5urope, >un ary, 6oland and /3ech Republic" RD&s video, 2reat 4ational 6ar1s ++ #on an 5!!y -#ard@the first of five 5!!y a#ards #on by RD&s videos" RD&s ?oun Fa!ilies +nc", #as established" Forayed into direct response television throu h its co!!ercial for :he Fa!ily >andy!an&s >elpful >ints" ,aunched its :hai edition that reaches to >on (on , +ndia, (orea, 7alaysia, 4e# Aealand, the 6hilippines, .in apore and :ai#an" ,aunched its lobal #ebsite ###"rd#orld"co!" :ho!as B Ryder too1 over as the /hair!an and /5B" RD- initiated lobal re* en ineerin and ro#th strate ies to build on its funda!ental stren ths and create lon *ter! opportunities" RD- announced its pro ra!, Cstrate ic ro#th initiatives&@start*ups, ac=uisitions and partnerships@to build for the future" -c=uired 0oo1s -re Fun ,td" the lar est display !ar1eter in 4orth -!erica" Redesi n of the RD" .ourceD ###"rd"co!

19%1*%) De!ise of the founders De 8itt 8allace and ,ila 8allace" 19%9 1990 1991 1992 199) 1999

199%

1999 2001

Table I: RDA Prod cts and !ervices "##ered Prod cts and !ervices +llustrated Reference 0oo1s Details /over various cate ories such as eo raphy, health, co!puters, travel, do*it*yourself etc"

.elect 5ditions

:hese are essentially, series boo1s offerin specially edited versions of novels #ritten by leadin authors" .elect 5ditions are published in 29 countries and in over 15 lan ua es" 4e# series of .elect 5ditions include 8orld&s 0est Readin , :oday&s 0est 4on*Fiction and :he 0est 7ysteries of -ll :i!e" Display !ar1eter of boo1s and ifts in the 'nited .tates" /hildren&s boo1s and videos !ar1eted via direct !ail by the Readers Di est ?oun Fa!ilies i!print and boo1 stores run by Readers Di est /hildren&s 6ublishin i!print" +ndividual !usic box sets and series co!pilations (ran in fro! classical to country, !ood to s#in and roc1 to Ea33) sold #orld#ide" 6opular ori inal video productions and series on a #ide ran e of topics such as travel, history, #ildlife, science etc" Fla ship publication of the co!pany" :he lar est sellin !onthly !a a3ine in the #orld" 6ublished in )% countries and in 19 lan ua es #orld#ide" :he Fa!ily >andy!an, -!erican 8ood#or1er and 4e# /hoicesD ,ivin 5ven 0etter -fter 50" /atalo business includin 2ood /atalo /o!pany, 2ood Find and ifts"co! ( ift store on the 8eb)"

0oo1s are Fun ,td" /hildren&s 6roducts

Recorded 7usic <ideo Reader&s Di est Bther 7a a3ines

Bther 6roducts 6roducts and product lines in develop!ent on account of Eoint ventures, invest!ents or other strate ic initiatives" -dapted fro! httpDFFco!pany"!onster"co!Freaders

Exhibit II: To$ %& 'eneral Interest Maga(ines )orld*ide +%&&,-%&&%. Title Mar/et P blisher 0re1 enc2 3irc lation +&&&s. 1 2 $ ) 5 9 G % 9 Reader&s Di est 4ational 2eo raphic Reader Fortni htly :al1 0oso! Friend :i!e .tory*:ellin /urrent -ffairs (a!pioen '.'./hina /hina /hina './hina /hina '.'./hina '.'.Reader&s Di est -ssociation +nc" 4ational 2eo raphic .ociety H4H4H4:i!e +nc" H4H4:i!e +nc" 4e#s#ee1 +nc" H4-!erican 7edia +nc" '. 4e#s I 8orld Report +nc" .!ithsonian 4ational -ssociation -!erican 7edia +nc" -bril 7alayala 7anora!a 7onthly 7onthly 7onthly Fortni htly 7onthly 8ee1ly 7onthly 7onthly 7onthly 8ee1ly 8ee1ly 7onthly 8ee1ly 8ee1ly 12,599 G,%29 5,000 ),500 ),2$0 ),059 $,G20 $,G00 $,9G2 $,552 $,1)5 $,050 2,0%% 2,0G0 Ad lt readershi$ +&&&s. 4

)2,9%G 21") 29,%92 1)"9 * * * * * * * * * *

20,%09 10")

4etherlands -480 7edia

5,)2G ))"5 $),)$0 1G"2 19,0$1 * 12,910 10,5%2 9"5 * 9") 5"$

10 6eople 8ee1ly 11 4e#s#ee1 12 Fa!ily 4ational 1$ 5n=uirer 1) '. 4e#s I 8orld Report

15 .!ithsonian 19 .tar 1G <eEa 7alayala 1% 7anora!a

'.'.0ra3il +ndia

7onthly 8ee1ly 8ee1ly 8ee1ly

2,051 1,G10 1,1%0 1,199

G,995 $"%2 G,)%$ ),GG2 9,%G1 $"G ) 1

19 :he 0e innin 20 ,ife H4- J 4ot -vailable

/hina '.-

H4:i!e +nc"

7onthly 7onthly

1,1$0 1,120

* *

* *

.ourceD ###"fipp"co!FDataFtop50 eneralF

Exhibit III: Rda 0inancial In#ormation 0o rth 5 arter 0Y&% Revenue Bperatin profit J Reported J -dEusted (se !ent profit) 56. J Reported J -dEusted *0"0$ 0"19 *0"22 0"05 0"%9 1"12 1"29 1"9 G $$ *20 9 15% 1%) 229 2)G 5)5 0 ll Year 0Y&, 5)) 0Y&% 2,$99 0Y&, 2,51%

6alance !heet ! mmar2

7 n-&& ;! < =&&& +,%-Mos.

7 n-88 ;! < =&&& +,%-Mos. )1$,)00 2,%00 )G$,G00 15$,%00 9),900 1,1)9,500 ))G,G00 299,$00 1,G10,500 9,%9,$00 0 0 2%,%00 *),000 $59,G00 1,G10,500

7 n-89 ;! < =&&& +,%-Mos. 122,%00 2,$00 5)9,)00 1G$,000 192,200 9G2,900 922,)00 $$G,000 1,59),000 1,015,900 0 0 2%,%00 *12,200 2)2,000 1,59),000

7 n-8: ;! < =&&& +,%-Mos. 99,100 2,900 592,500 *199,200 19G,%00 925,%00 9G0,000 *$55,200 1,9)$,%00 1,01$,100 0 0 2%,%00 200 $1G,000 1,9)$,%00

/ash .ecurities Receivables -llo#ances +nventory /urrent -ssets 6roperty and 5=uip!ent, 4et Depreciation :otal -ssets /urrent ,iabilities 0onds 6referred 7andatory 6referred .toc1 /o!!on .toc1 Bther .toc1holder&s 5=uity :otal ,iabilities and 5=uity +nco!e .tate!ent .u!!ary :otal Revenues /ost of .ales Bther 5xpenses ,oss 6rovision +nterest 5xpense +nco!e 6re*:ax +nco!e :ax +nco!e /ontinuin Discontinued 5xtraordinary

)9,G00 5,)00 )00,900 1)9,000 120,$00 GG2,500 152,$00 29G,100 1,G5%,%00 1,25),)00 %9,)00 0 2%,%00 1,)00 1,)05,)00 1,G5%,%00

2,55$,G00 2,299,900 0 21),)00 5,900 29$,%00 90,000 1G$,%00 0 0

2,5$2,200 2,)0$,100 0 509,100 5,G00 211,G00 %5,100 129,900 0 0

2,9$$,G00 2,90$,500 0 0 9,)00 )1,500 2$,900 1G,900 0 0

2,%$9,000 2,9)9,200 0 0 G,000 210,200 G9,G00 1$$,500 0 0

/han es >et Income EP! Primar2 56. Diluted

0 ,:?@9&& <,BC? K1"91

25,$00 ,A,@8&& <,BD& K1"$9

0 ,:@8&& <&B,C K0"19

0 ,??@A&& <,B%D K1"2)

9 The author is a %enior :fficer ;!ommercial <ehicle %ales=, Tata >ngineering. Reference L =+#7+#=+# M (>04( -ress' 4ll Rights Reserved'