Reader's Digest Announces Reorganization

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In its first major move since Thomas O. Ryder took over as chairman and CEO in April, Reader's Digest Association Inc., Pleasantville, NY, this week announced a major reorganization and changes in senior management.


Operations are being restructured into four business units:


* U.S. magazine publishing group will be responsible for the flagship and special-interest magazines. It will be run by Gregory G. Coleman, who is currently senior vice president of worldwide publishing.


* International magazine publishing group will oversee the 47 editions of Reader's Digest outside the United States. It will be run by direct marketing veteran Robert J. Krefting who joined the company last week. Krefting's 30 years experience includes a stint as president of CBS Magazines (now Hachette/Filipacchi).


* Global books and home entertainment group will be run by M. John Bohane, who is currently senior president of international operations.


* QSP Inc., the company's school and youth fundraising business, will continue to be run by Thomas A. Belli.


The restructuring is part of a three-stage plan to put the 76-year-old direct marketer back on track after having seen response to its promotions and, consequently, its sales and earnings wane. How the organizational changes will translate into strategy, however, is something the company won't reveal until mid-September when it announces the second stage of its plan, said company spokeswoman Janice Conklin.


"Phase one is reorganizing so that we've got the right people in place with enough accountability," she said. "We needed a better pipeline. We'll tell you in September some of the things we're going to put through it."


As for possible changes in marketing strategy, Conklin would only say that in recent years, corporate emphasis had shifted, and as a result, had taken "budget and support away from some of our bread-and-butter stuff."


The company said its announcement this fall will explain how it plans to restructure costs and raise capital. In December or January, the company will present how it plans to build its business.


In a seven-page letter to employees, Ryder outlined four key objectives for overcoming the "very real and serious challenges" the company faces:


* Broadening Reader's Digest's product offerings to older customers and its appeal to the younger ones.


* Working "better, faster, cheaper" than competitors.


* Freeing money from under-performing assets to fund new products and programs.


* Investing in internally generated growth opportunities while acquiring new businesses that are a strategic fit.


Ryder said the new structure will "sharpen the focus… and create clearer accountability for financial and operating results."


Leaving the company will be Marcia Lefkowitz, senior vice president and president of Reader's Digest USA, and Richard Garvey, senior vice president of corporate planning and new business development.
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