EXHIBIT 99.1
The Reader's Digest Association, Inc.
Media: William Adler, (914) 244-7585 william.adler@rd.com
Investor Relations: Richard Clark, (914) 244-5425 richard.clark@rd.com
READER'S DIGEST ASSOCIATION TO ACQUIRE ALLRECIPES.COM,
WORLD'S LARGEST ONLINE HOME COOKS COMMUNITY;
RDA EXPANDS LEADING POSITION IN FOOD AND COOKING CATEGORY
AND EXTENDS ITS REACH VIA THE INTERNET
PLEASANTVILLE, N.Y., March 31, 2006 - The Reader's Digest Association, Inc.
(NYSE: RDA) today announced an agreement to acquire Allrecipes.com, an online
community food and cooking website that leverages an active and growing network
of home cooks to generate revenue from advertising sponsorships and retail
licensing. The purchase price is approximately $66 million, and the transaction
will be funded using existing debt capacity. RDA expects to complete the
acquisition in its fourth fiscal quarter ending June 30, 2006. The announcement
was made by Eric Schrier, President and CEO of RDA.
"We are thrilled that Allrecipes.com will become part of the Reader's
Digest family of companies," Schrier said. "We own the world's largest food
publishing franchise in Taste of Home, along with a fast-growing tapestry of
other food and cooking activities. Our acquisition of Allrecipes.com will
provide us with a valuable digital platform to further leverage our position as
the country's leading food and cooking publisher. It will enable us to bring
together online communities from the various RDA properties using the common
platform of an industry-leading food and cooking affinity."
Allrecipes.com was launched eight years ago as a place for home cooks
to "meet" and share their favorite recipes. Since its launch, it has become the
world's largest online community of home cooks - totaling more than 1.8 million
registered members - making it America's favorite Web destination for everyday
and holiday recipes. Each month the site attracts an average of 6 million unique
visitors who collectively view more than 70 million page views; during peak
holiday months, traffic spikes to more than 9 million unique visitors and 111
million page views. It also includes 30,000 of America's favorite recipes, which
are created, tested and reviewed by participating home cooks.
"We are delighted to be joining forces with one of the world's
marquee publishing and marketing companies," said Bill Moore, CEO of
Allrecipes.com. "Our business is a natural fit with Reader's Digest as it is
such a major player in the food and lifestyle categories. We expect to take
advantage of powerful synergies and marketing opportunities, and we believe that
this alliance will accelerate our growth both in the United States and abroad.
Together, we have the potential to increase the scale of the Allrecipes.com
audience, revenues and already high profit margins. And we have the content and
technology to expand into other lifestyle affinities."
Moore will report to Bonnie Bachar, RDA's President of U.S. Magazines
in its RD North America segment. Bachar said the Allrecipes.com acquisition
supports RDA's new strategy of deepening customer relationships built around
affinities like food, and reaching new and existing customers through multiple
channels.
"As publisher of Taste of Home, the country's highest-circulation
food magazine, as well as other magazines and books on food and cooking topics,
we have been seeking additional platforms to leverage our content, and the Web
is clearly our number one target for this expansion," Bachar said. "The
acquisition of this small but fast-growing company supports our goal of
strengthening RDA's portfolio with new properties that can contribute to
long-term topline growth."
For RDA, Allrecipes.com represents the company's first major Internet
acquisition and continues an overall strategy of building direct marketing and
advertising programs across multiple media platforms. The site will act as a
portal for RDA's existing food websites, which support its magazine properties
like Taste of Home and Light & Tasty. The Allrecipes.com advertising sales force
will sell RDA digital advertising related to food, and RDA's cookbooks and
magazines will be sold on the Allrecipes.com website.
RDA's other food-related activities include Every Day with Rachael
Ray, Taste of Home's cooking schools, an online Taste of Home recipe finder, and
Taste of Home Entertaining, a new national party plan business that is being
launched coast to coast in the United States this spring. In addition to its
five food magazines, the company markets at retail dozens of magazine specials
on food, diet, cooking and wellness. It also sells millions of cookbooks every
year and created an international best-selling proprietary diet book and
website, ChangeOne. Reader's Digest magazine is a major vehicle for food
advertising, and the company expects to accelerate its online advertising growth
in that category.
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Michael S. Geltzeiler, Senior Vice President and Chief Financial
Officer of RDA, said, "The company anticipates that Allrecipes.com will
contribute approximately $4 million of EBITDA in the first year, with an
expected earnings-per-share impact of $(0.01) to neutral. The acquisition should
not have a material impact on the company's other initiatives currently underway
to enhance shareholder value, including its $100 million share repurchase
program announced last year."
Geltzeiler added, "The company intends to pursue additional debt
capacity, most likely through the expansion of its revolver borrowings to
provide greater flexibility and liquidity, although this will not be necessary
to consummate this transaction. This acquisition is consistent with our
continuing practice of monetizing non-productive assets and strategically
balancing our portfolio with new assets that can actively contribute to profit
and topline growth."
Allrecipes.com, with more than 15 million annual visitors, is the
world's largest test kitchen, offering a window into the habits of home cooks
everywhere. The site is an indispensable resource for home cooks who are looking
for trusted recipes, everyday and holiday meal ideas, practical cooking tips,
and food advice. The company is based in Seattle.
The Reader's Digest Association, Inc. is a global publisher and
direct marketer of products that inform, entertain and inspire people of all
ages and cultures around the world. The company had consolidated revenues for
the fiscal year ended June 30, 2005, of $2.4 billion. Global headquarters are
located at Pleasantville, New York. For more information, please visit
www.rda.com.
This release may include "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements inherently involve risks and uncertainties that could cause actual
future results and occurrences to differ materially from the forward-looking
statements. The Reader's Digest Association, Inc.'s filings with the Securities
and Exchange Commission, including its reports on Forms 10-K, 10-Q and 8-K,
contain a discussion of additional factors that could affect future results and
occurrences. RDA does not undertake to update any forward-looking statements.
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