S&P cuts Reader's Digest to negative

Standard & Poor's said that it affirmed the B corporate credit rating on Reader's Digest Association, Inc. and revised the outlook on the company to negative from stable.

The outlook revision considers the company's weak first quarter results and the view that if the company's operating performance worsens, its liquidity could be meaningfully reduced, the agency said.

The B rating on Reader's Digest reflects the expectation that the company will continue to face secular pressure in its publications business, that its publishing business will remain highly competitive, that it will face mature growth prospects in its direct marketing business and that its direct marketing model will become increasingly uncompetitive, the agency added.

The rating also reflects the company's vulnerability to economic cyclicality and the dated image of the Reader's Digest flagship magazine, S&P said.

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