A Look Inside the Reader's Digest-Rachael Ray Split

With its “30-Minute Meals” and its namesake’s bubbly personality, Every Day With Rachael Ray quickly became one of the hottest magazines in the industry—and a source of pride for publisher Reader’s Digest Association—after it launched in 2005. But this year, it became a money-losing liability. The growth of food magazines has softened across the board as makers of packaged foods have curtailed ad spending, but Rachael Ray’s fortunes fell particularly sharply. Its ad pages plunged 34.7 percent in the third quarter, according to Publishers Information Bureau, and RDA blamed it for falling operating profits in the U.S. in its second quarter. So now RDA has unloaded the magazine, selling it off to Meredith, publisher of titles like Better Homes and Gardens and Family Circle. Sources with knowledge of Ray’s arrangement, speaking on condition of anonymity, said the relationship also had soured as she sought more money from RDA. “She never felt like she was making enough money,” one said. “There was always that contentious relationship with Reader’s Digest.” Another source, who had knowledge of the sale negotiations, said that tension had become a factor as contract talks loomed. “Rachael wanted a better deal, and they [weren't] prepared to do it,” the source said. Though Rachael Ray had that impressive start, it's faced an increasingly competitive market for food media in the years since, and it and RDA were, together, simply not equipped to handle that change. RDA lacks the scale that bigger publishers like Meredith can use to bundle like titles and offer deep discounts to advertisers, and RDA's contract with Ray herself prevented the publisher from taking the magazine to other platforms and making it more attractive to advertisers that way. "Because our agreement limited our participation to producing just a magazine, we were unable to expand the brand and its content across multiple platforms,” RDA CEO Robert Guth said in a statement. “Going forward, it was not a fit with our master brand strategy.” Meredith has a similar agreement to RDA’s, but it has the potential of it going broader. “We’re buying the magazine and website, and we have a separate deal to work on a variety of platforms to help promote the platforms and her brand,” said Tom Harty, president of Meredith’s National Media Group. RDA has had some ambivalence about magazine partnerships before. A few years ago, it passed on the chance to partner with Scripps on a magazine based on its successful HGTV network. (Scripps ended up with Hearst, which just launched its first test issue of HGTV Magazine.)

Performance Marketing

A Look Inside the Reader's Digest-Rachael Ray Split

Sources: Food star wanted more money

Lucia Moses

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