Time Inc. Buys Subscription Source From Reader's Digest

QSP Used by Schools, Community Groups as Fundraiser

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NEW YORK (AdAge.com) -- QSP, the company that takes orders for magazine subscriptions as a way for schools and community groups to raise funds, is changing hands. Time Inc. will acquire the subsidiary from Reader's Digest Association for $110 million in cash.

Mary Berner, president-CEO of RDA, said the two companies look forward to a seamless transition for QSP's 400 employees. In a statement announcing the sale, she said, "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. has other similar services, such as Synapse Group and Time Distribution Services. Dawn Bridges, a spokeswoman for Time Inc., said there are no plans to merge QSP with its other services, including Maghound, an online service launching in September. "We are keeping it intact. We will use our consumer marketing expertise to help it increase growth," she said.

The companies said the transfer of the business will be completed soon after the receipt of regulatory approvals, possibly within 30 days.

David Ball, VP-consumer marketing at Meredith Publishing Group, said he thought the sale made sense for Time. "We use QSP and value them as one of the top quality subscription agents in the business," he said. "We also work with subscription programs that are run by Time Inc., and I think that QSP is a good fit with Time Inc. They have a dedication to the business and want to ensure that the magazine subscription business remains vital."

QSP has a dual focus. Considered a top-quality subscription agent for magazine companies, its primary role is a fundraising organization for schools, youth organizations and other nonprofits. Nearly every major magazine company uses QSP as a subscription channel. "It's a small, incremental channel," said William Adler, RDA spokesman, "but a very welcome one."

It is also a growing business. With mounting budget cuts at federal, state and local levels, nonprofit organizations increasingly rely on outside sources of funding. QSP partners with an organization, typically a school, where students sell magazine subscriptions, candy or other seasonal items. Schools keep most of the revenue and QSP receives a commission on the sales.

The company has come full circle. It was originally run by both Time Inc. and Reader's Digest when it was founded in 1963. Time sold its share to RDA in 1971. Over the past 40 years, QSP has raised more than $3 billion for schools and other nonprofit organizations.
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