CHAPTER 11 AHEAD: Reader’s Digest Association said Monday that it will likely file for Chapter 11 under a prearranged agreement that it expects to complete while operating the “business as usual.” There will be no layoffs or changes to management as a result of the filing, and Mary Berner will remain as chief executive officer. Other well-known media executives expected to remain on board include Alyce Alston, president of home and garden and health and wellness; Eva Dillon, president of Reader’s Digest Community; Suzanne Grimes, president of food and entertaining, and Peggy Northrop, global editor in chief of Reader’s Digest. “There are no layoffs associated specifically with this restructuring,” a spokesman said, although he declined to specify whether layoffs might result for other reasons.
Under the planned restructuring, the company’s senior secured lenders will receive a large portion of RDA’s $1.6 billion debt in exchange for equity. Ownership will be transferred to the lender group from Ripplewood Holdings, which bought RDA in March 2007 for $2.4 billion. RDA’s new owners reportedly are J.P. Morgan, G.E. Capital, Merrill Lynch, Eaton Vance, Regiment Capital Advisors, Ares Management and Davidson Kempner Partners.
This story first appeared in the August 18, 2009 issue of WWD. Subscribe Today.
“This agreement in principle with our lenders follows months of intensive strategic review of our balance sheet issues to financially strengthen the company,” Berner said.
Meanwhile, all the members of the company’s board who have served since the acquisition by Ripplewood, with the exception of Berner, have resigned. The two recently appointed directors, Paula Gavin and Don Leclair, will continue to serve on the board.
The company has reached an agreement in principle with lenders to reduce debt to $550 million from $2.2 billion. And instead of paying its $27 million interest payment due on Monday, on its 9 percent senior subordinated notes due in 2017, RDA is using a 30-day grace period to seek further consensus with additional lenders regarding the debt. In an SEC filing, chief financial officer Tom Williams said the company expects to end its June 30, 2009, fiscal year with revenues down 8.3 percent.
In January, RDA, publishers of Reader’s Digest, Every Day With Rachael Ray and Taste of Home unveiled a planned reduction of 8 percent of its global workforce, or about 250 jobs. RDA also suspended matching contributions to the 401(k) retirement plan and implemented unpaid time off for employees. In May, Reader’s Digest won the National Magazine Award for General Excellence with magazines over 2 million circulation, but a month later the company cut the circulation of Reader’s Digest to 5.5 million from 8 million and lowered its frequency to 10 times a year from 12. — Amy Wicks
MYSPACE LIKES ILIKE?: MySpace is reportedly in the final stages of talks to acquire social music site iLike for $20 million. MySpace, owned by News Corp., already has positioned itself as the online leader for bands, and adding iLike would increase that foothold. ILike is the fastest-growing social music site on the Web and most popular music service for MySpace’s leading competitor, Facebook. According to Facebook’s site, more than 50 million music fans use iLike’s music application. A spokeswoman for MySpace would not comment on widespread reports of an impending iLike deal.
A recent report in the Wall Street Journal noted MySpace intends to reposition itself as a Web site for accessing entertainment and related information. News Corp. chief executive officer Rupert Murdoch told the Journal that MySpace needed to be refocused “as an entertainment portal.” The MySpace deal comes hot on the heels of rival Facebook’s agreement last week to buy FriendFeed, an online sharing service, for $50 million. — A.W.
JACKSON CONTINUES COVER TURNS: The monthly titles continue to play catch-up on their retrospectives on Michael Jackson. GQ will feature the late pop star on its September cover, with a never-before-published 1983 photo by Bonnie Schiffman. The image was produced during a cover shoot for Rolling Stone. The accompanying story by John Jeremiah Sullivan dives into Jackson’s psyche and other bizarre behavior, including an assessment of his unorthodox processes when he created songs. “His art will later depend on his ability to stay in touch with that childlike inner instrument, keeping near enough to himself to heed his own melodic promptings,” Sullivan writes. “If you’ve listened to toddlers making up songs, the things they invent are often bafflingly catchy and ingenious. They compose to biorhythms somehow. The vocal from Michael’s earlier, ‘Off the Wall’-era demo of the eventual ‘Thriller’ hit ‘Wanna Be Startin’ Somethin’ sounds like nothing so much as playful schoolyard taunting.”
Meanwhile, the September issue of Allure has an evaluation of Jackson’s history of plastic surgery, outlined by author Joan Kron with the help of a handful of experts, including Jackson’s plastic surgeon from the Eighties and Nineties, Stephen M. Hoefflin. Among the findings, Kron writes that in the mid-Eighties, Jackson had injections of the steroid Kenalog to reduce scar tissue, implying the drug, not surgeries, caused Jackson’s skin around his nose to shrink even further. But the steroid shot also causes pain so excruciating that patients usually take the anesthetic Diprivan, which Jackson allegedly continued to abuse until his death.
Vanity Fair featured Jackson on one of two special covers this month (the other features Farrah Fawcett), and Harper’s Bazaar dressed model Agyness Deyn in Jackson’s iconic looks for its September issue’s subscriber cover.
— Stephanie D. Smith
FROM GLOSSY TO HARDBACK: Speaking of GQ, the magazine is losing its executive editor of six years, Andy Ward, who is joining Random House as executive editor, as first reported by the New York Observer. Editor in chief Jim Nelson gushed about Ward in a seven-paragraph, 900-word memo to staffers on Monday, praising his “Olympian generosity of spirit, his warmth and openness and always-willing-to-help-anyone-at-anytime-fulness, his reflexive mentoring and nurturing of talent and assistants and assistant editors and anyone smart enough to get close enough to learn from him — his basic and undeniable decency — basically, his Andy Ward-ness.” (Ironically, Nelson in paragraph six of the note claimed, “I will miss him in ways I can’t even hope to articulate”). Ward will join Random House in mid-September. No successor has yet been named for Ward. — S.D.S.
FORMER COLLEAGUES, JUST NOT FRIENDS: Among the many rules the digital age has broken, publicly second-guessing your former place of employment has to be one of them. Case in point: over the weekend, former New York Times Hollywood reporter Sharon Waxman blogged on the TheWrap.com, the entertainment news site she founded in January, about a piece in the Sunday Business section on the state of the Weinstein Company. “Leave it to The New York Times to take 5,000 words to give us a small amount of new information about the ailing Weinstein Company, which David Segal (um, who?) does in Sunday’s business section just weeks after one of the paper’s Hollywood correspondents weighed in on the very same subject,” she wrote.
Waxman left the Times for a six-month book leave in 2007 and never came back. Her nearly 1,000-word post on Monday accused the piece of having “plenty of razzle-dazzle, and precious few financial facts.” She listed what she saw as unanswered questions — such as how much Weinstein invested and lost in side projects like Halston.
Times Sunday business editor Tim O’Brien defended the piece to WWD: “David’s one of the most gifted feature writers at the Times, and he’s adroitly and deftly covered a wide range of stories. The Weinstein piece was just his latest tour de force.”
Though the dig at Segal’s profile on the beat (“um, who?”) might have been rhetorical flourish, it turns out Waxman knows very well who Segal is, since both came to the Times from the Washington Post Style desk. “David worked with and knew Sharon Waxman at the Post, so we were a tad surprised by her ‘David who?’ observation,” said O’Brien. “In fact, David and Sharon even shared a byline on a Post story about the arrest of Phil Spector in 2003.”
An e-mail sent Monday to Waxman requesting comment returned a message that she was away, but she did respond Sunday on her site to a commenter who accused her of sour grapes and singling out the reporter, rather than the institution. Waxman wrote, “Sorry — just because I worked there does not mean they are exempt from commentary and criticism when it’s warranted.” — Irin Carmon