Reader's Digest shareholder seeks bigger say

A minority shareholder of Reader’s Digest Association is seeking greater voting power in the company, saying it is unhappy with the way the business is being run, according to a regulatory filing.

Highfields Capital Management, an investment firm based in Boston, Massachusetts, wants to exchange its 9.6% stake in Reader’s Digest’s non-voting shares for an equivalent amount of voting shares held by the company’s largest shareholder, Wallace-Reader’s Digest Funds. Highfields also owns 3.5% of the company’s voting shares.

The philanthropic funds, which were started by the founders of Reader’s Digest magazine, own about 50% of the voting shares Reader’s Digest Association, which also publishes books and other magazines in addition to Reader’s Digest.

Reader’s Digest remains a huge magazine with 12.6 million in circulation, but some of its other titles have struggled. Last week the company decided to shut down New Choices, a health and lifestyle magazine aimed at older readers.

In the filing with the Securities and Exchange Commission, Highfields Capital said it had expressed ‘‘frustration’’ in a letter to the Wallace funds about ‘‘the apparent unwillingness’’ of Reader’s Digest Association’s managers to act more aggressively in overseeing its portfolio of businesses.

Highfields Capital also said it wanted the company to focus on its own businesses and that ‘‘in no event should the company make any substantial acquisitions’’.

Highfields also suggested that the company issues dlrs 250 million (€286m) in bonds in order to buy back shares in the hope of lifting their value.

Reader’s Digest shares were off 19 cents at dlrs 23.01 in late trading yesterday on the New York Stock Exchange, well off their 52-week high of dlrs 32.62.

Highfields Capital’s opposition to acquisition activity could hamper Reader’s Digest’s reported interest in buying Reiman Publications, a privately held magazine publisher based in Greendale, Wisconsin.

Reiman’s magazines, which do not take advertising, have major appeal with rural audiences. The folksy titles such as Taste of Home and Birds & Blooms cover cooking, crafts and country living.

The New York Post reported on Monday that Thomas Ryder, the chief executive of Reader’s Digest Association, was hoping to buy Reiman in a deal worth up to dlrs 800 million (£915m).

Highfields Capital and Reader’s Digest Association declined to comment.