Reader's Digest Eliminates Reiman Media Group

Reiman Media Group has been folded into RDA corporate structure and ratebase for the flagship magazine will be cut by 20 percent.

There have been some early, sweeping changes at Reader's Digest Association (RDA) in the last seven months since Mary Berner took over as president and CEO following the sudden $2.4 billion acquisition of the company by an investment group led by Ripplewood Holdings. The company has seemingly capped its troubled integration of the Reiman Media Group by eliminating it altogether and absorbing it into several corporate divisions. As a result, Reiman president Barbara Newton will leave the company. RDA has also just cut its flagship magazine's ratebase by 20 percent, reducing it to 8 million from 10 million.

Newton says that Reiman, which includes 14 country lifestyle-oriented publications with a total circulation of 13 million, 2.5 million in annual book sales, a mail-order business that makes 800,000 shipments each year, a tour company, and a cooking school;are being broken up into customer affinity business groups, with supporting functions being centralized under corporate services in the Pleasantville, New York headquarters. Her last day will be June 29.

"First I'd like to say that I'm personally sorry to be leaving because it's a job that I love and it's a business that I love," says Newton, "but the best thing that could happen from this strategy around customer affinities is to be able to package them better from an advertising standpoint."

"Two of the affinities, the food and entertaining affinity and the home and garden affinity, build on the success of many of the Reiman publications, such as Taste of Home and Birds & Blooms," says Ellen Morgenstern, director of public relations for RDA. "The whole approach of the organization is around the affinity structure. So what we're doing is realigning the company and allowing the brands in these affinities to be closely aligned with the other content areas of similar interests."

Through the realignment, the Reiman brands will now be reporting to their respective division presidents, which explains the elimination of Newton's position.

RDA purchased Greendale, Wisconsin-based Reiman in 2002 for $760 million. At the time, Reiman had annual revenue of about $300 million. RDA's integration of Reiman was bumpy, in less than three years following the deal, Reiman went through three leadership changes, losing president Tom Curl and his successor Russell Denson before Newton came on board in July 2004. Reiman Vice president and editor-in-chief Mike Beno also left in early 2004. Much of the turmoil was associated with reconciling Reiman's culture with the growth expectations of its new owner.

A Ratebase Trim
Meanwhile, ratebase for Reader's Digest has been cut by 20 percent. The January 2008 issue will be the first to ship 8 million copies rather than 10 million. "We came in and took stock of a lot of things, one of them being the circulation statistics, and found that while we were delivering that 10 million ratebase, it would be more cost efficient to bring it down to serve our more dedicated, loyal readers," says Eva Dillon, who was recruited by Berner in March as president and group publisher of Reader's Digest. "The other side of the coin is that advertisers have been saying for a long time that they desire tighter, more dedicated readers in circulation."

In other words, Dillon's team has trimmed away readership that wasn't as likely to respond to a first or second-round renewal or subscription effort. "Some readers will renew on the first or second mailing, some will be on the seventh or eighth. We stop mailing after the first or second time. It's a combination of not mailing to as many new people and not mailing as many notices to current subscribers," she says.

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