Hoping to take advantage of kids' interest in technology, Reader's Digest Children's Publishing is launching its Book & DVD program this month.

Harold Clarke, president and publisher for RD Books and Music, said the new line will be anchored in books, but will look to find the "sweet spot where interactivity meets really good storytelling." He noted that each book and DVD pairing is designed to work separately as complements to each other. "One is not just a bonus to the other, and one must not detract from the other."

The Book & DVD program will offer several formats, including flashcards and simple board books with accompanying DVDs and more traditional storybooks with DVDs, offering titles for children roughly from infancy to age eight. The suggested retail price range is $11.99 to $17.99. The first titles in the lineup—Fisher-Price Flashcards and DVD and Elmo's Easy as ABC lift-flap-book-and DVD—are just hitting store shelves.

Currently, the majority of titles are branded, exploiting partnerships with Sesame Workshop, Fisher-Price and Hasbro, and other branding agreements are in the works. Reader's Digest plans to publish at least two titles per list with distribution in the mass merchants as well as the book trade. As the line expands, Clarke expects that the company will develop original material as well.

Looking for Growth in '06

New initiatives and improved cost controls were two of the key factors cited in stabilizing the company's finances for the fiscal year ended June 30. Total company revenue in the year was flat at $2.39 billion, while a number of one-time charges resulted in a net loss of $91 million compared to net income of $49 million in fiscal 2004. RD is projecting that revenue will increase in the low- to mid-single digits this year, while profit gains will be in the mid-teens.

In reviewing book-related businesses in fiscal 2004, RD said profits in the U.S. Book, Home and Entertainment group improved "significantly" in the year, due to the elimination of several unprofitable lines; the launch of new products, such as the themed music player; and strong sales of Extraordinary Uses for Ordinary Things. Results at Books Are Fun, however, fell 8% in the year, which the company attributed to lower average sales per event at schools and fewer events in the corporate sector. Turnover in BAF's sales force was cited as the main reason for the poor performance.