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Thursday, Sep. 17, 1998
Reader's Digest plans changes
Magazine wants younger readers, reduced costs
By ERIC QUINONES
Associated PressNEW YORK -- The publisher of Reader's Digest is going after younger readers and slashing costs to stop the erosion of its profits and stock price.
Stock in Reader's Digest Association Inc. jumped 10 percent Wednesday on the company's plan to cut $300 million to $350 million in costs over the next three years. The cuts include reducing direct mailings and scaling back its book publishing, video and music businesses, which have failed to find new customers.
The company also is paying an undisclosed amount to buy American Woodworker magazine and Good Catalog Co., which publishes nine catalogs selling health and fitness, home furnishing, gardening and other products.
Reader's Digest hopes cross-promotions with those catalogs will help attract younger people to its magazine, whose readers average about 47 years old. In addition, the large-size and Spanish-language versions of the magazine will get a bigger push.
Reader's Digest is the most widely read popular magazine, with a U.S. circulation of 14.7 million, but its primary audience of older readers has been shrinking.
New chief executive Thomas Ryder has launched a three-pronged attempt to reverse the company's declining fortunes after previous management unsuccessfully tried to expand the Reader's Digest brand with such ventures as television production alliances and broader musical offerings.
Ryder reorganized the company into four business divisions in July, three months after arriving from American Express Co.'s publishing business, and has promised more streamlining efforts and acquisitions.
In its last fiscal year ended in June, profits plunged 87 percent to just $17.9 million, hurt by restructuring costs, while revenue slid 7 percent to $2.63 billion. The company expects slightly higher profits in the current year.
Reader's Digest stock was up $1.81 at $19.93 per share Wednesday on the New York Stock Exchange, but it is down sharply from its 52-week high of $31.50 last October, despite Wall Street optimism about Ryder.
The latest shakeup includes auctioning some of the company's valuable art collection -- a plan announced Tuesday -- and selling some real-estate holdings. The sales together are expected to fetch at least $200 million.
In addition, some corporate support tasks, such as warehouse jobs, will be shifted outside the company. Reader's Digest would not say how many of its 5,600 employees might lose their jobs.
The third phase of Ryder's turnaround plan will be announced in January.Post your comments about local news eventsFront Page || Main Index || News || Business || Texas || South Texas Outdoors || Birdwatching || Sports || Entertainment || Selena || Education || South Texas Attractions || World Wide Web