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RDA Moves to Mend

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Two years ago, Reader’s Digest Association was embarking on an aggressive tear to start new magazines while others were retreating in the recession. Today, it’s just the opposite. While others are easing out of the downturn, RDA is in contraction mode as CEO Mary Berner tries to shore up the company postbankruptcy.

The publisher of wholesome media properties like its eponymous flagship and Taste of Home has shelved a number of titles or tests. Gone are The Purpose Driven Connection (a Christian title launched with best-selling pastor Rick Warren), Best You, Cooking for Two and Backyard Living. And, it’s conducting a massive review of Reader’s Digest that could involve taking the magazine back to its roots as one of the original aggregators of other’s editorial content, according to people familiar with the review. (RDA execs declined to comment.)

Examples of this direction are already in evidence. It has added a front-of-book section called The Digest that culls news from elsewhere, and it has been running more stories compiling other writings on the topic. Other options being mulled are using more freelancers and tapping content from its foreign editions as it looks for ways to do more with less.

The cost cutting isn’t sparing other parts of the company. Last week, RDA announced internally it would trim staff by about 10 percent as Berner seeks to firm up its financial footing. The Digest’s problem is that it’s taking in less revenue since it reduced its rate base to 5.5 million and annual frequency to 10 from 12 issues. Magazines that cut rate base often try to raise ad rates based on the notion that the smaller circulation is of higher quality. But buyers said a title like Reader’s Digest, synonymous with homespun, elderly reader-friendly advice and with a history of offering steep discounts off its ad rates, will have difficulty getting advertisers to do so in a still-tough economy.

“If your demographics aren’t going up, you’d be really hard pressed to get higher CPMs,” said Roberta Garfinkle, svp, director of print strategy, Targetcast tcm. She and other buyers suspect the magazine will cut the rate base again to reduce printing and distribution costs.

As the flagship becomes a smaller part of the company, RDA is looking to the Web for growth. It’s trying a paid content model at its biggest food site, Allrecipes.com, where for $17.50 a year, members can get features like the ability to customize recipes by nutritional criteria and print personalized recipe cards.

If it works, RDA will push the model out to other sites. The company also is working on Reader’s Digest Version, a multiplatform portfolio of products offering general-interest information on hundreds of topics. An August launch is planned.