Revenue Falls, Net Loss Improves for Reader's Digest in 2010
Reports advertising gains in lifestyle group, offset by RD rate base cuts.
RDA Holdings Co., the parent company of The Reader's Digest Association, announced today that revenue in the fourth quarter of 2010 dropped 15.9 percent to $521.8 million compared to the fourth quarter of 2009. Meanwhile, net income rose to $58.5 million in the fourth quarter, compared to a net loss of $26.7 million for the same period last year.
Looking only at the company's performance since February 2010, when RDA emerged from bankruptcy protection, it generated $1.5 billion in revenue, compared to $2.1 billion in calendar year 2009, with a net loss of $40.5 million, compared to a net loss of $921.4 million in 2009.
In the U.S., the Reader's Digest business accounted for $60.8 million in revenue in the fourth quarter of 2010 and $184.5 million since emerging from bankruptcy, down from $82.4 million in fourth quarter of 2009 and $259.5 million in calendar year 2009. Meanwhile, the Lifestyle business generated $140.6 million in the fourth quarter of 2010 and $380.2 million since February 2010.
Segment operating income grew $1 million to $108.8 million compared to $94.87 million last year, which the company attributed to the elimination of certain unprofitable revenue streams, advertising gains and a 10 percent reduction in the global workforce. That helped bump consolidated EBITDA to $100 million in the fourth quarter, compared to $89 million in the fourth quarter of 2009.
RDA cited "significant improvement in advertising revenue across several of our brands in the U.S.," including Allrecipes.com and Taste of Home. The company also added another issue of Simple & Delicious in the fourth quarter. However, those gains were largely offset by a planned rate base reduction at Reader's Digest from 8 million to 5 million.
"We are pleased to announce that a year after our successful emergence from Chapter 11, pursuant to our strategic plan, we have delivered on a number of fronts," said RDA president and CEO Mary Berner. "We achieved consolidated EBITDA of $175 million in 2010, hitting the high end of our guidance, and generated strong pro forma free cash flow of $86 million. We enjoyed sizeable gains in advertising in our U.S. lifestyle communities, the result of our concerted effort to make advertisers aware of the strengths of our affinity groups."