Reader's Digest, Time Warner merger a possibility

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Struggling publishing giant Reader's Digest Association is reportedly in talks with Time Warner to merge operations, according to a story in the upcoming Jan. 25 issue of Business Week. Reader's Digest Association CEO Thomas O. Ryder, in that position for less than a year, has a history with Time Inc. Chairman-CEO Don Logan. When he was heading American Express Publishing Corp. in the early '90s, Mr. Ryder oversaw the successful and lucrative deal that put the AmEx titles under Time Inc. management. Analysts say the merger makes sense strategically given the two companies' direct marketing and publishing units.

``Reader's Digest is definitely underexposed as an asset, and it has potential waiting to be developed,'' said Linda Bannister, media analyst at Edward D. Jones & Co., but added she would be surprised if the deal were to happen. One stumbling block to the deal is convincing the foundations that own 72% of Reader's Digest Association's voting shares that a joint venture with Time Inc. would be better than remaining independent. Lazard Freres Co. is advising the foundations; Reader's Digest Association is being advised by Goldman Sachs & Co.; while Time Warner has retained Morgan Stanley Dean Witter & Co., reports Business Week. When reached Jan. 14, Mr. Logan said he would not comment on rumors.

Copyright January 1999, Crain Communications Inc.

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