Reader's Digest Gobbles Up Allrecipes.com for $66M

  |  March 31, 2006   |  Comments

The company hopes the buy will help jump-start its multi-platform strategy.

The Reader's Digest Association (RDA) has agreed to buy online food and cooking community site AllRecipes.com for $66 million, in an effort to spice up its brand with digital media.

Under the terms of the deal, Allrecipes.com will become a portal to Reader's Digest's other food-related Web sites, the companions to magazines such as "Taste of Home," "Light & Tasty" and "Every Day with Rachael Ray." Allrecipes.com's ad sales force will sell all food-related digital advertising for the parent company, and also promote the firm's cookbooks, magazines and other food-related businesses on the Web. Currently, RDA works with rep firm Winstar Interactive Media.

"Our acquisition of Allrecipes.com will provide us with a valuable digital platform to further leverage our position as the country's leading food and cooking publisher," said Eric Schrier, president and CEO of RDA, in a statement. "It will enable us to bring together online communities from the various RDA properties using the common platform of an industry-leading food and cooking affinity."

Schrier, who just became CEO in January, was the main driver behind the deal. "He said right off the bat that making digital a part of everything we do is going to be central to our strategy going forward," said William Adler, VP of global communications at RDA. "His intention is to greatly accelerate our move in the digital arena… I think you'll see us move quickly in other ways that have to do with the Internet. "

Adler pooh-poohs the notion that going after an online audience is aimed at helping RDA reach younger people. That's because, he said, the company already serves 20-somethings and 30-somethings through its various properties, though he acknowledges many believe Reader's Digest is for old fogies.

"No, we didn't make this move to address that perception, but this move does reflect that that perception is out of date," said Adler.

The company says it's pursuing a strategy of reaching out to various affinity groups and touching those audiences on a variety of different platforms. Allrecipes.com is RDA's first major Internet acquisition. The company sees opportunities for creative ad packages that encompass online, print and direct marketing. Though the "Taste of Home" properties don't take advertising, they work with advertisers through direct marketing and events. Executives from both companies will huddle in the coming weeks to determine how cross-platform advertising sales should be handled.

"It's complex, but it's a good kind of problem to have," said Adler. "It's exactly what we want to be tackling."

AllRecipes.com is a cooking and community site where users post recipes which are then rated and reviewed by other home cooks. The site has more than 1.8 million registered members and attracts 6 million unique visitors a month, who view more than 70 million page views. Recipes posted number more than 30,000, according to the company.

The site also features editorial content, including some contributions by sponsors. Advertisers include PepsiCo's Quaker, McCormick & Co., Weight Watchers and the National Pork Board.

The deal calls for Bill Moore, CEO of Allrecipes.com, to report to Bonnie Bachar, RDA's president of U.S. magazines, North America. Allrecipes.com's approximately 50 employees will stay on and continue operating the unit in its current Seattle location. Reader's Digest anticipates that Allrecipes.com will contribute approximately $4 million of EBITDA in the first year.

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ABOUT THE AUTHOR

Pamela Parker

Pamela Parker is a former managing editor of ClickZ News, Features, and Experts. She's been covering interactive advertising and marketing since the boom days of 1999, chronicling the dot-com crash and the subsequent rise of the medium. Before working at ClickZ, Parker was associate editor at @NY, a pioneering Web site and e-mail newsletter covering New York new media start-ups. Parker received a master's degree in journalism, with a concentration in new media, from Columbia University's Graduate School of Journalism.

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