Private Frazer’s Doomed Magazines

January 6, 2013

RD Graft

What are we to make of the news that Readers Digest is laying off 90 staff and trying to sort out a Corporate Voluntary Arrangement?

The first thing to note is that a CVA isn’t an insolvency or a liquidation, but a process a company uses to try to avoid going out of business. If an agreement is reached with creditors then a proportion of debt is written off and a payment schedule for the outstanding amount is put in place. If agreement isn’t reached then the creditors can push the company into administration.

The second point is that as the direct marketing division doesn’t seem to be a separate company, it is Vivat Direct itself that is trying to get a CVA*. If this fails then the whole of the company, including the magazine business, will be forced into administration.

And the third point is that non-magazine sources used to constitute 80-90% of Reader’s Digest’s revenue. If any print product does survive these next few weeks then the size of the company will be worth a fraction of what Better Capital paid for it three years ago.


*Interestingly, the FT squib says BECAP values the investment at just £1 million. Better Capital paid £13 million for RDUK in 2010.


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