Third Quarter Profits Slip at Reader’s Digest Association
However, year-to-date losses improve significantly over last year.
RDA Holding Co., parent company of The Reader’s Digest Association, announced Thursday that third quarter revenues declined about 30 percent to $341.8 million and that the company reported a $9.5 million operating loss, compared to a $5.2 million loss during the same period last year.
Through the first nine months, RDA’s combined operating loss jumps to $116.8 million, down considerably from a $928.9 million loss during the same three quarters in 2009. Looking only at the company’s performance since February 20, when RDA emerged from bankruptcy protection, its losses shrink to $92.5. Meanwhile, revenue for the nine months was $1.19 billion, down from $1.48 billion the same period last year. A total of $934.5 million was generated after RDA’s emergence from Chapter 11.
During the third quarter, the U.S.-based Reader’s Digest business generated $44.1 million in revenue, a decline of more than 30 percent from $64.8 million during the same period last year. The U.S.-based lifestyle communities saw revenues fall almost 15 percent to $126.4 million.
RDA attributes the profit loss to the absence of revenue from RDA UK, which was forced into an administration proceeding (during which a government-appointed specialist managed the company while it reorganized its financial structure) and was subsequently sold. RDA also cited fair value adjustments and movements in foreign currency exchanges, as well as additional investments in digital products.
RDA also said its board of directors approved a $50 million payment to stockholders in the form of a share repurchase. While consolidated EBITDA decreased to a loss of $10.6 million during the third quarter, EBITDA over the last 12 months (ended September 30) showed an increase of 10 percent to $165.4 million.
Earlier this fall, Reader’s Digest magazine said it was “returning to its roots” as a “trusted curator” of information for its family-centered consumers—meaning it would ramp up aggregation as opposed to content creation. Reader’s Digest also is planning to publish six new special interest publications next year and to launch one new special-themed mobile app each month in 2011.
RDA is still expected to unveil a new corporate name/logo sometime over the next several months.