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Friday, July 27, 2001
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Reader's Digest Reorganizes its
U.S. Book Business
The Reader's Digest Association, Inc. reported that in
the second half of its fiscal year, most of the company's
U.S. core businesses had sharp reversals. The area most
affected was U.S. Books and Home Entertainment (BHE),
notably single-sales products. This contributed to a decision
to restructure the U.S. BHE business, which will include
an unspecified number of layoffs. At
the same time, an industry-wide advertising slump affected all
of the company's U.S. magazines, including Reader's Digest
and especially the smaller special interest publications.
The company announced several moves to reduce costs and improve
profitability:
- Acceleration of global re-engineering efforts to remove $150 million
from the cost base through Fiscal 2004. This includes $100 million in
previously announced supply-chain initiatives, plus process changes and
reductions in force. Most of the re-engineering savings are expected
to be realized after Fiscal 2002.
- A top-to-bottom reorganization of U.S. BHE, replacing the old structure
with six strategic business units built around customer affinities:
entertainment, health, home, reading, trade publishing and Young
Families. The new organization is designed to be lean and
entrepreneurial to improve efficiency and time to market.
- Ceasing publication of Walking effective with the September/October
issue and selling its subscription list assets. The magazine had been
unprofitable. Unlike the company's other U.S. titles, it did not have
adequate sources of new subscribers.
``The most significant of these moves, in the long term, is the
transformation of our U.S. BHE business,'' said Thomas O. Ryder, Reader's
Digest Chairman and CEO. ``Its
new organization is designed to reduce risk, to respond more
quickly to opportunities and to operate more profitably.''
The Reader's Digest Association, Inc., is a global publisher
and direct marketer. Products include Reader's Digest, the
most widely read magazine in the world. Revenues were $2.6 billion
for the fiscal year ended June 30, 2000. Global headquarters
are located at Pleasantville, New York.
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