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Reader's Digest in administration Reader's Digest in administration
(20 minutes later)
Reader's Digest has gone into administration in the UK, putting 117 jobs at risk. Publishing company Reader's Digest, famed for its magazine of the same name, has gone into administration in the UK, putting 117 jobs at risk.
The decision comes after negotiations between the company's US parent group and the UK Pensions Regulator broke down over its UK pension fund. The decision comes after talks between the company's US parent group and the UK Pensions Regulator broke down.
The dispute centred on how to fund its £125m pension fund deficit. The dispute centred on how to pay down a £125m deficit in its UK pension fund.
As a deal could not be done, the UK publisher said it would not be able to meet its pension obligations and would not be able to continue operations. Administrators said the magazine, which was founded in 1938 and has more than 500,000 UK subscribers, would continue to trade while a buyer was sought.
It had agreed a deal with the Pension Protection Fund to pay off a small part of the deficit, but the regulator vetoed the agreement. Reader's Digest had agreed a deal with the Pension Protection Fund to pay off a small part of the deficit, but the regulator vetoed the agreement.
The administrators will now look for a buyer for the UK firm, which was established in 1938. As a deal could not be done, the UK publisher said it would not be able to meet its pension obligations and so could not sustain operations.
Prize draws
The UK edition of Reader's Digest was founded 16 years after the US version.
In many cases its readers have been, quite literally, dying off, and nobody has been replacing them Nick HighamBBC correspondent
Having begun as a collection of condensed articles, it started to include original content and is now mostly made up of specially commissioned pieces.
More recently it became known for its prize draws. The administrators said last week's draw took place as scheduled, with the prize fund kept in a trust, but arrangements for future draws were to be reviewed.
The magazine also became associated with free gifts - from pens and alarm clock radios to encyclopaedias - as it looked to lure new readers.
However, Reader's Digest has failed to shake off its image as a publication favoured by older people and in dentists' and doctors' waiting rooms.
Despite attempts to modernise, including launching an online edition, its readership in the UK has fallen dramatically from about two million in the 1990s.
"In many cases its readers have been, quite literally, dying off, and nobody has been replacing them," said BBC correspondent Nick Higham.
"And the underlying business, like lots of other magazines has struggled, as people bought fewer of them as they migrated to the internet. That has made life very difficult."
The company says Reader's Digest is the largest-selling subscription magazine in the world. The group also sells books, other magazines, recorded music and home videos.
Cash flow
The pensions crisis is just the latest problem to hit the publisher.The pensions crisis is just the latest problem to hit the publisher.
The US parent group, Reader's Digest Association (RDA), filed for Chapter 11 bankruptcy protection last year after struggling with interest payments on a $2.2bn (£1.4bn) debt. It now expects to come out of Chapter 11 shortly.The US parent group, Reader's Digest Association (RDA), filed for Chapter 11 bankruptcy protection last year after struggling with interest payments on a $2.2bn (£1.4bn) debt. It now expects to come out of Chapter 11 shortly.
The UK arm had experienced a cash flow problem for some time, a company spokesman said, and this had been exacerbated by higher-than-normal contributions to the severely underfunded pension fund.The UK arm had experienced a cash flow problem for some time, a company spokesman said, and this had been exacerbated by higher-than-normal contributions to the severely underfunded pension fund.
The world-famous magazine has just over 500,000 subscribers in the UK.
Do you read Reader's Digest? For how long have you been a fan? What is your oldest edition of the magazine? Send us your comments and pictures.Do you read Reader's Digest? For how long have you been a fan? What is your oldest edition of the magazine? Send us your comments and pictures.
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