Even before private equity firm Ripplewood Holdings loaded Reader’s Digest with untenable levels of debt, the company had grown over-reliant on direct marketing of books, music and video to its vast subscriber list, where it ran into fierce competition from Amazon and others.  Whatever new ownership structure emerges from the current bankruptcy proceedings, the key challenge for Reader’s Digest will remain how to manage its flagship publication for continuing profitability while the internet continues to sap away readers and advertisers.
Lesson learned: Focus on keeping your core business profitable and healthy.
