Thursday, November 08, 2007
Bringing down the house of Reiman. . . one "ripple" at a time
by Samir Husni
In the age of mergers and acquisitions, promises are rarely kept and previous owners/founders usually live to see the day that their babies lose their DNA and the original parents end up disowning the products emotionally after they have disowned them financially.
Reader's Digest Association is a good example. RDA bought Reiman Publications (Country, Taste of Home, etc.) in 2002. (RDA paid $760 million for Reiman Publications; click here to order the book that tells the whole story of the sale, the history of Reiman's "no ad" approach and more.)
The changes in the company started from that point on, with redesigns and repositioning of several of the titles. That was attempted to force growth, but it didn't work. Then Ripplewood Holdings bought RDA, taking over in early 2007, and began accelerating the changes even more.
Now, according to sources knowledgeable with what Ripplewood is doing, the process of de-branding of Reiman Publications has started. . . and started big time.
The Milwaukee Journal Sentinel reported on June 19 that Ripplewood renamed Reiman Publications. It's now RDA Milwaukee. "Reiman as an entity is going to go away," company President Barbara Newton told the paper shortly before she lost her job.
According to my sources the RDA release reflected the fact that "Reiman is not a known brand. The brand is in the magazine names."
So how is Ripplewood changing the Reiman brand? Well let me count the ways:
1. No leadership in Greendale, home of Reiman Publications:
Ripplewood terminated Barb Newton, Reiman Publications president, after deciding they don't need a President in Greendale anymore, that they can run the whole thing from New York! So they now have nearly 500 people nearly a thousand miles away without a direct "leader". However, RDA spokesman William Alder told the Journal Sentinel that this change represents "a re-upping of the commitment to work with the folks there (in Greendale)."
2. The end of the "No Advertising" model:
Reiman Publications created one of the most successful magazine publishing models ever-one that was strictly dependent on circulation revenues. When RDA bought it, the company was extremely profitable. It published 13 national titles reaching more than 16 million paid subscribers. . . without a single advertisement.
Now, Ripplewood has decided to remove that unique aspect; it has started carrying advertising. The first ad brought in $60,000 for the Select Comfort Bed ad that's included in the current issue of five of the company's magazines-Country, Birds & Blooms, Backyard Living, Reminisce and Farm & Ranch Living.
One of my sources feels that $60,000 ad will cost the company more than $6 million in renewals. Why? Because the no-ad approach was-more than anything else-the one thing that made the magazines "different".
It was by far the magazines' most talked-about element over the years. Now, with the removal of that unique element, this source believes renewals will drop off so fast that what started out as a Ripple will end up being a title wave!
Amazingly, the Ripplewood folks don't feel the "no advertising" approach is essential to their success. In fact, their reaction to this unique approach of publishing is "utter disbelief that Reiman Publications has had this huge circulation and hasn't bothered to sell advertising up till now," a reliable source told me.
3. Readers are no longer the number one customer:
According to my sources, the Reiman Publications' empire that was built on reader input is now heading toward a complete U-turn. In fact, an internal e-mail from one of the RDA managers last winter stated, "I don't care what the reader wants. . . this is what I want!"
That's not far from reflecting the current feeling at Ripplewood. One of its managers recently stated, "We need to turn over this circulation base anyway; we need to attract a much younger, more vibrant audience."
In short, "the magazines just haven't been the same for more than a year. And now with the inclusion of ads, they're really not going to be the same," my source said.
Am I surprised? NO. Why not? Well, the top 14 people who were in charge of Reiman Publications are no longer employed at Reader's Digest Association. So, since most of these top people have been replaced by RDA's chosen people. . . didn't RDA pay all that money to buy themselves?
A final thought, a wise person summed for me this whole process of mergers and acquisitions as follows:
"The bottom line is this: Small companies do things that benefit the customer. Corporations do things that benefit the stockholders. Small companies think long-term. Corporations think short-term, as in quarterly reports. Small companies really get to KNOW their customers to sustain growth. Corporations aren't much interested in getting to know the customers and concentrate on maintaining growth through what they learned works for other audiences."