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Philippe Cloutier, general manager of Reader’s Digest Association (Canada), shows off a mock-up of the company’s newest title, Taste of Home Canada. (Christinne Muschi for The Globe and Mail)
Philippe Cloutier, general manager of Reader’s Digest Association (Canada), shows off a mock-up of the company’s newest title, Taste of Home Canada. (Christinne Muschi for The Globe and Mail)

PUBLISHING

Reader’s Digest shores up Canadian operation Add to ...

As Reader’s Digest slips into bankruptcy protection in the United States for the second time in four years, the Canadian publishing company that shares its name is fighting its own battle for relevancy outside the courts.

Reader’s Digest Association (Canada) ULC – which until recently was the country’s reigning subscription champion – plans to reinvest in the printed magazine the money it saved last year when it shut its direct marketing division.

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It also plans to buttress its eroding subscription base with a new tool: A quarterly magazine called Taste of Home Canada will be added to the company’s stable of publications (which includes Sélection and Our Canada) this summer. The magazine will be a Canadian version of the U.S. publication, which has 3.5 million subscribers.

“It’s the world’s largest food and entertaining magazine operating as a brand in the world,” Philippe Cloutier, general manager of Reader’s Digest Association (Canada), said of his new title. “And on top of its magazines, there are additional products such as books and cooking schools.”

RDA Holding Co., the U.S. parent of Reader’s Digest Association Inc., filed for Chapter 11 bankruptcy protection, this time hoping to eliminate about $450-million (U.S.) in debt so it could continue delivering its ubiquitous magazine to some 25 million homes. Robert Guth, the company’s chief executive officer, wrote in court filings that he believes the company’s magazines have a place in a crowded media world, but its debt made any efforts to transform them futile.

The Canadian company, which was not included in the bankrupcty filing, is one of more than 40 international editions that are run independently of their U.S. namesake.

It saw its total paid subscriptions at its flagship magazine fall 15 per cent to 472,883, through the six-month reporting period that ran through Jan. 1. It was among the sharpest declines seen in the Canadian industry, and Reader’s Digest has slipped from the top spot a year ago to third behind Chatelaine and Canadian Living.

For the 67 titles tracked by the Alliance for Audited Media, overall paid and verified circulation was down 3.5 per cent in the same six months, while subscriptions fell 6.2 per cent.

“We’ve taken the approach to walk away from our direct marketing catalogue business and reinvesting that in the magazine business,” Mr. Cloutier said. “We used to sell a variety of products, books and merchandise. But the digital transformation means that’s no longer sustainable from a profitability standpoint. … We have a plan to maintain subscriptions around 500,000.”

The Canadian company has focused on enhancing its original content in the past several years, and doesn’t simply rely on copy provided by the U.S. office or other publications for the bulk of its content.

“Of course it’s going to affect us,” he said of the U.S. bankruptcy. “But we feel we’ve got an iconic brand and we are taking the approach of putting the product first and we hope people remember the quality of content that we have to offer. It’s a difficult industry, but we will weather this storm just as we have weathered others over the last 65 years.”

The Canadian company has added sales staff to its roster of 140 employees in an effort to increase the advertising in its pages. And while it has developed tablet versions of its magazines, it hopes to keep users hooked on the printed copies by embedding each copy with technology that will allow readers with smartphones to find enhanced content online.

“We recognize customer needs are changing,” Mr. Cloutier said. “Print is eroding, but I feel print will always be there.”

It’s a sentiment shared by the U.S. company, although it isn’t nearly as confident in the future of print. The company’s chief executive officer said in a filing that the company has reached an agreement with creditors that would leave it with about $100-million of debt in exchange for equity, but the case must still work its way through U.S. bankruptcy court.

“The Chapter 11 process, which will facilitate a significant debt reduction, will enable us to continue to redefine our business by focusing our resources on our strong North American publishing brands, which have shown a new vitality as a result of our transformation efforts, particularly in the digital arena,” Mr. Guth wrote.

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