NEW YORK — The parent company of Reader’s Digest has filed for Chapter 11 bankruptcy protection for the second time in less than four years, saying it needs to cut its debt so it can keep restructuring.
RDA Holding Co. says it will keep publishing the magazine, and it aims to be out of Chapter 11 in six months.
The circulation of Reader’s Digest has declined because of competition from the Internet – shrinking by nearly two-thirds since 1995 – but it is still one of the world’s most-read magazines.
The company said late Sunday that it plans to cut its debt load by 80 percent during the restructuring, leaving it with about $100 million in debt. It has already reached agreements with its secured lender and more than 70 percent of its secured note holders. A group of creditors has supplied $45 million in new financing to help Reader’s Digest go through the process as part of a $105 million loan to repay existing debt.
As revenue declines, Reader’s Digest has been selling off some of its assets. Its food Web site, Allrecipes.com, went for $175 million last year, and it sold its Every Day with Rachael Ray cooking magazine in late 2011. Meredith Corp., the publisher of Better Homes and Gardens magazine, bought both.
Reader’s Digest’s paid circulation fell 0.6 percent to 5.5 million at the end of last year, according to the Alliance for Audited Media. That was about where it stood after cutting guaranteed circulation in 2009. But in 1995, Reader’s Digest had circulation of more than 15 million.
The circulation-tracking company said Reader’s Digest is the fifth-biggest U.S. consumer magazine by circulation, behind two AARP publications, Game Informer Magazine and Better Homes and Gardens.
RDA’s Reader’s Digest Association Inc. filed for Chapter 11 protection in 2009 in the midst of a recession and the drop in advertising and circulation. The company emerged from bankruptcy in early 2010 with less debt but has still struggled.
Robert E. Guth, RDA’s president and CEO, said a “complex transformation” begun 18 months ago “has resulted in a more streamlined, more focused and more profitable business, but we have unfortunately been unable to align our debt levels correspondingly.”
The company also publishes Taste of Home magazine and has 21 brands globally. The bankruptcy filing covers only the company’s U.S. businesses.
It is looking for agreements to sell and license its international businesses and expects to finalize some deals in coming weeks.