Reader's Digest files for Chapter 11

Talk about an American Icon -- the magazine had been in print since 1922. From the Washington Post:

Is Nothing Sacred in This Recession? Reader's Digest Set to File for Bankruptcy
Reader's Digest -- an American media icon of the 20th century, thanks to its inspiring, safe-for-family-reading articles and folksy, cornpone humor -- is planning to file for Chapter 11 bankruptcy reorganization.

Parent company Reader's Digest Association has had trouble since going private in 2007, cutting costs and trying to stay relevant in the post-ironic, niche-driven 21st-century media landscape, a place than can be tough sledding for an earnest, general-interest magazine. The magazine still maintains it is the world's largest paid circulation magazine, selling 8 million copies per month in the U.S.

According to the magazine's demographic research, the median age of a Reader's Digest reader is 52 and has a household income of about $58,000.

A bit more about going private:

Debt is hurting Reader's Digest; the bankruptcy plan -- which has been accepted by creditors -- allows it to cut debt from $2.2 billion to $550 million.

When a public company goes private, it has to buy back stock from shareholders to get it all out of circulation. To do so usually requires borrowing money. If you over-borrow and under-perform, then you get a debt problem. This is exactly what has happened to media giant Tribune in its $13 billion going-private transaction in 2007 and why it declared bankruptcy one year later.

They sure picked a bad time to go private -- the stock prices would have been a lot higher back in 2007 and the businesses value overstated. Chapter 11 allows them to restructure. The writing was very much on the wall back then -- people like Nouriel Roubini were warning about the ongoing recession but everyone was caught up in the bubble.