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Reader's Digest sold at token price
A venture capitalist who made millions from the TV company behind Bob the Builder has snapped up struggling Reader's Digest UK for a nominal sum.
Mike Luckwell acquired the magazine last week for a token price from Jon Moulton's Better Capital, which rescued it from administration in 2010.
Better Capital has decided to exit the business after investing £23 million, including the £13 million purchase price.
Mr Luckwell believes the title can help take "crumbs from Saga's table" by concentrating on the over-50s market and exploiting financial services opportunities.
He has pledged to continue monthly publication and said he hoped to strengthen the business but was unable to give any immediate assurances on jobs following the deal late on Friday.
Reader's Digest is sent to nearly half a million subscribers and regularly operates lucrative prize draws. It also markets a series of products to its customer base.
But it collapsed into a company voluntary arrangement in January last year after a severe decline in its book and CD selling business. It saw 95 out of 125 staff lose their jobs but allowed the magazine to continue trading while exiting unprofitable activities.
Better Capital said in a brief update in a trading statement that it had sold Reader's Digest to a "strategic trade buyer for a nominal sum".
Mr Moulton told the Daily Telegraph that "from the point of view of the fund, the business didn't justify the time and effort for us".
Mr Luckwell is thought to have amassed a personal fortune of more than £100 million after a series of profitable investments in the likes of Carlton Communications and advertiser WPP.
In 2005 he made £33 million from his stake in children's TV company HIT Entertainment, which owned the copyright to programmes such as Bob the Builder, which were sold around the world.
He said: "The publication of Reader's Digest will continue without interruption and its high editorial standards will be maintained."
Mr Luckwell hopes to use the business to bolster the database of his existing interests selling products, mainly DVDs, to the over-50s, taking it to a total 2.7 million names.
He wants to exploit the "huge, largely untapped" opportunities for this age group, emulating the business model of Saga.
Mr Luckwell said: "Saga cleverly focused on holidays and the financial sector for the over 50s but now has a finger in many pies.
"Today it has annual sales running into hundreds of millions and that merits a bit of competition since it's tough to name another big, analogous, success story."