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Published: Friday, 9/4/2009

Reader's indigestion

THE nation's Great Recession has taken such a toll on familiar institutions that Americans have almost been immunized against shock. But this week brought news that seemed to suggest a shift in the nation's very foundations.

Reader's Digest filed for bankruptcy.

To be precise, Reader's Digest Association Inc., publisher of the famous booklet-sized magazine, has sought Chapter 11 protection. It turns out that the magazine shares some of the same problems of other print media facing a poor economy in the Internet age - falling circulation and an advertising slump.

With a worldwide circulation of 130 million, that seems incredible, but, as the Associated Press reported, its U.S. circulation has dropped from a peak of more than 17 million in the 1970s to just above 8 million last year. What happened to Middle America that it put aside the Reader's Digest?

Since 1922, the tightly edited magazine has been offering its general-interest mix of stories with a few laughs thrown in with features like "Humor in Uniform" and "Laughter, the Best Medicine." Reader's Digest may have presented a socially conservative, folksy, and unsophisticated view of the world, but it was the preferred reading of millions.

Times have changed. Americans have become more sophisticated and the conservative movement has acquired an edge. Reader's Digest, as comfortable as an old slipper, isn't about edge.

But none of those things are really the culprit. This episode is about another familiar feature of the modern American landscape - financial maneuvering. The company is saddled with $2.2 billion of debt, the result of a $1.6 billion leveraged buyout in 2007 by investors seeking to take the company private.

The good news is that the company, which has other successful ventures in its fold, expects to emerge from bankruptcy protection, which only affects U.S. operations, within 45 to 90 days after filing.

If that happens, bankruptcy - not laughter - will prove to be the best medicine.

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