Readers Digest UK Undergoes Restructure, Drops 75% of EmployeesBy
Print magazine and newspaper publishers are already feeling the effects of the surge in popularity of e-readers and tablets, to the point that some are shutting their doors. The latest casualty may be Readers Digest.
The UK arm of the company that was facing financial and legal trouble a couple of years ago was thought to have been saved by the purchase of RD by Better Capital over two years ago. Unfortunately, the numbers have not turned around for the company in the way that was hoped; Better Capital announced the closure of Reader’s Digest’s retail section of the company and layed off about 95 employees last Friday. Right now, it is hoping to reach an agreement with RD’s creditors to arrange some reasonable kind of payoff schedule.
Better Capital’s statement on the closing of the retail division and loss of employees included: “The objective of the restructuring is to focus the business on the profitable magazine activity whilst moving away from the loss-making direct marketing sector. The restructuring involves the immediate redundancy of approximately 95 employees and a restructuring of certain other liabilities of the business. The proposed Company Voluntary Arrangement process has been launched today and is expected to take several weeks to conclude. If the proposed CVA is successful it is envisaged that the smaller business based largely around the magazine will continue to trade.”
RD will discontinue sales and marketing of CDs, DVDs, and books, focusing instead on the still-viable magazine division. However, as other magazines like Newsweek have learned, magazine audiences are an evolving demographic as well, with more and more readers turning to their tablets for magazine consumption. Organizations that cannot adapt in the way that those like Newsweek have–which has now gone strictly digital–will begin to close shop.