Representatives from both Time Warner and Reader's Digest had no comment on a Business Week story claiming that the two publishing giants were discussing a merger between RD and parts of TW. Under the BW scenario, virtually all of RD would be merged with the direct marketing businesses of Time Inc., such as Time Life, Book-of-the-Month Club and Oxmoor House books, as well as Southern Progress magazines and specialty magazines. The Time Warner Trade Group would not be part of the new venture.
If the deal g s through as suggested, the combination would form a powerful global direct marketing company. Despite its recent problems, RD still owns one of the world's largest databases; it contains 60 million U.S. households, plus 50 million households worldwide. Time Life, meanwhile, generates approximately 40% of its revenues overseas and BOMC operates in more than 40 countries.
The product mix of the proposed venture would also mesh well. Time Life sells music and videos as well as books, the same combination marketed by RD. The deal would also lead to greater cross- promotion opportunities between the direct-marketing businesses and BOMC, which has about 4.5 million members.
According to BW, under the proposed plan, TW would become an equal partner with the foundations that currently own 72% of RD's stock. The number of shares held by the public is still to be determined.
The possible link with TW is just the latest development in RD chairman Thomas Ryder's efforts to revive the publisher's sagging fortunes. Earlier steps included a restructuring of the company that had as its goal reducing operating expenses by $350 million (News, Sept. 21, 1998). Ryder is expected to discuss how he plans to grow the company in a February 25 speech.
