Reader's Digest Reorganizes its U.S. Book Business
Posted on July 27, 2001
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 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.