Reader's Digest snapped up for just £1


Reader's Digest UK in administration

Reader's Digest has been sold for just a quid. Once a stalwart of dentist waiting rooms up and down the land, the venerable magazine publisher now passes from one venture capital player - Jon Moulton, whose Better Capital paid £14m for it in 2010 - to another VC operator.

Its new owner snaps it up for less than the price of a posh packet of crisps. A good buy?

Title fatigue

You can't argue at the price. New proprietor Mike Luckwell is the millionaire businessman behind Bob the Builder, the children's TV show. Luckwell now has plans to re-position the publication as a rival to Saga, whose over 50's grip extends from magazines to holidays to insurance products.

Reader's Digest UK is thought to have close to half a million subscribers (though many are increasingly grey and white-haired). "Saga is a gigantic company and I wouldn't mind a few of their crumbs," Mr Luckwell is quoted by Sky.

However trust in the Reader's Digest UK brand - separate to the still-successful US operation - has been damaged in the past. The Trading Standards Institute took the publication to task several years ago, accusing it of preying on the vulnerable and elderly with regular misleading bulk mailshots.

Makeover needed

Its traditional fare of recipes-to-jokes-to-prize draws-to-13 things-your-GP-won't-tell you advice looks increasingly tired and un-focused. So some 21st-century digital publishing gloss will need to be sloshed over it and a hard look taken at its direct marketing roots if it's to stay relevant.

Jon Moulton's Better Capital - Moulton almost bought MG Rover from BMW in 2000 - threw millions at the brand in an attempt to drag it into the 21st century.

Moulton though drew some flak for not taking on the responsibility of a hefty £125m pension fund deficit, eventually placed in the hands of the Pension Protection Fund. In the 1990s the UK readership of Reader's Digest was around two million.

The US business, also struggling, is not connected to Luckwell's purchase.

Life in an old dog?

So, should Saga be worried? The over 50s are thought to control around 50% of UK income and 76% of its financial wealth, according to a recent report published by Saga itself. Then there's increasingly life expectancy.

Don't bet on an early death for Reader's Digest just yet.