Update: Reader's Digest Agreements Will Boost Book, Video Offerings

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Publisher and direct marketer Reader's Digest Association Inc., Pleasantville, NY, sealed two agreements that promise to expand the company's direct marketing offerings of videos and books and increase its customer database through direct response TV offers.


In one agreement, RDA will collaborate with CBS Productions to develop TV movies and mini-series based on Reader's Digest magazine articles. The move is expected to bolster RDA's direct mail offerings of video titles and give the company a prominent branding position on network TV. The terms of the three-year agreement were not disclosed.


"I think it's a solid branding opportunity for them," said Mandana Hormozi, an analyst at Lazard Freres & Co. LLC, New York.


The other agreement calls for RDA to promote books from IDG Books Worldwide Inc., Foster City, CA, through direct mail and catalogs. RDA will reprint and distribute IDG's "Teach Yourself Computers and the Internet Visually" in the United Kingdom, Canada and Australia and its "Teach Yourself the Internet and Worldwide Web Visually" in the United States and its territories. The terms of the book licensing agreement also were not disclosed.


RDA drops several bulk mailings each year in which it targets its book offerings to customers based on information from the company's 100 million-name database. The company also mails book catalogs and moves a small percentage of its book volume through retail channels.


IDA traditionally markets its books through retail channels, but it also distributes them through mail-order book clubs.


In the TV movie agreement, CBS is planning to advertise video versions of the series with direct response commercials at the end of each of the programs, which will be broadcast under the working banner of "Reader's Digest Presents" or "From the Pages of Reader's Digest." The shows will be based on personal dramas chronicled in the pages of the monthly magazine, which RDA said has 50 million U.S. readers. CBS currently is exploring the magazine's database of past articles in search of ideas for the shows, and also is examining articles the magazine has scheduled for future publication.


The number of shows to be produced and the schedule for their broadcast has not yet been determined.


CBS Productions will be responsible for financing, developing and producing the movies and will retain the movie rights for domestic and international distribution, music and merchandising. Reader's Digest will designate an executive producer for each project and will have the rights for video distribution. As part of the CBS agreement, Reader's Digest also will advertise the movies in its magazine.


Donna Pierpont, a spokeswoman for Reader's Digest, said the company planned to market the videos through a toll-free number, its web site (www.readersdigest.com) and through its music-and-video catalogs. The catalogs mail twice each year, in January and August. Pierpont said they reach "millions of customers" but would not provide specific circulation numbers for the mailings.


"The primary way to sell [the videos] would be through the TV shows when they air," she said. "The others would be ancillary ways."


Hormozi, the analyst from Lazard Freres, said it was too soon to estimate what the potential impact of the video deal would have on RDA's revenues, adding that the primary benefits could be expected to come from RDA's increased presence on TV.


In fiscal 1998, which ended last June 30, sales of Reader's Digest videos totaled $215.8 million, or 8.2 percent of Reader's Digest's total revenues of about $2.63 billion. The company markets videos on a variety of subjects, including travel, nature and educational topics.
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