Time Inc. to Buy Youth Sub Fundraising Business From Reader’s Digest for $110M

By Chandra Johnson-Greene and Dylan Stableford
Friday, August 29, 2008

Time Inc. recently announced that it has agreed to acquire QSP Inc., a school and youth groups fundraising company that sells magazine subscriptions, from the Reader’s Digest Association for $110 million in cash.

For RDA, says president and CEO Mary Berner, the move is “consistent with our strategy to focus on our core competencies, which include growing our portfolio of publishing businesses and building multi-platform communities of customers based on our branded content.

Time Inc. predicts fundraising will be “a growing area for subscriptions across the magazine publishing industry.” QSP is the largest school fundraising company in North America.

RDA and Time Inc. jointly ran QSP after it was founded in 1963. RDA bought Time Inc.’s share in 1971.

A Viable Deal for the Entire Industry?

The sentiment among circulators regarding the deal seems to be mostly positive. “I’m happy that Time Inc. purchased QSP,” David Ball, VP, consumer marketing at Meredith, told CM. “I think it is great that a publishing company owns them rather than a company outside of our business. I think that Time Inc. will have a greater incentive to see that QSP continues to be an important source of subscriptions for the industry.

“It is my understanding that school plan subscriptions have always been considered quality circulation by advertisers. They reach an important demographic group and there is no question about the sales tactics involved with this source.”

8020 Publishing’s consumer marketing VP Laura Simkins agrees: “I’ve always thought of QSP as a high quality subscription agent (and at a positive remit, no less)—consumers are actively choosing your publication, which I think is of value to advertisers.”

Others, however, feel that the deal will only benefit Time Inc. in the long run. “We think Time Inc. will eventually ruin this good business because they’ll structure deals so heavily in favor of Time Inc. titles, that all others will eventually leave,” says one source.

Another circulator says there’s no reason to expect titles’ sales shares to change. “QSP remains its own business proposition (in a competitive fundraising market) and, presumably, wants to operate in a way that maximizes profit—not Time Inc. subs.”

But there still may be call for concern. “What’s more worrisome are potential uses a giant multi-title publisher like Time Inc. could derive from the subscription data,” the second source adds. “Will it be used to mail offers to competing titles? Will QSP’s purchase data be used to enhance Time Inc. models?”
Time Inc. declined to comment further until the deal is complete.