Late on Friday, three-quarters of the British staff of Reader’s Digest were made redundant and it was confirmed that insolvency proceedings were to begin.

Nearly three years after Jon Moulton’s Better Capital private equity firm first rescued Reader’s Digest, the announcement was made that the magazine’s CD, DVD and bookselling arm were finally done for.

90 of the 120 UK staff were made redundant with immediate effect on Friday afternoon.

In its 1990’s heyday, the magazine had two million readers. That figure now sits at below 400 000 and continues to fall. However, the magazine remains profitable, and will not yet suffer the same fate and will continue to be published and distributed as normal. For how long though is anyone’s guess.

The initial Moulton deal back in April 2010 was controversial because the tycoon refused to take responsibility for the company’s £125 million pension fund deficit. That meant that those that had yet to retire lost 10% of their entitlement. The fund – which has 1 600 members – was accordingly placed into the Pension Protection Fund.

With Friday’s announcement came the news that an undisclosed amount of money had already been pumped into the business, “without adequate returns,” and the direct marketing division was placed into a company voluntary arrangement – allowing some of the debt to be written off.

Better Capital said in a statement:

Very substantial early cost-cutting enabled an improvement in profitability.

However, a faster than expected decline in the business’s direct marketing sales of CD’s, DVD’s and books has continued to make trading difficult. No easy route to long-term viability for the direct marketing business exists.

[Source: Guardian]