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In his first major move since taking over as Chairman-CEO of Reader's Digest Association in April, Thomas O. Ryder last week reorganized the struggling publisher and direct marketer into four divisions.

Analysts, however, are viewing it as a small first step.

The key objectives behind the restructuring, Mr. Ryder told employees, are to broaden the appeal and range of its products beyond its older, loyal base of customers to include younger customers; achieve cost savings; and free up funds for new products by converting underperforming or underused assets to more serviceable forms.

He also said the company will be aggressively looking to acquire or launch new businesses.


Analysts, however, are unimpressed, noting RDA won't detail restructuring costs and plans for raising capital until mid-September and isn't presenting phase two of the plan until late this year or early next.

"The fact that [Mr. Ryder] isn't telling us until December or January how he plans to grow the company tells me we shouldn't expect any improvement until then," said Dennis McAlpine, media analyst for Josephthal & Co.

"The fact that he is taking action to align reporting in a way that he views as more efficient and more reflective of what the company does is a positive, but whether or not it's the right answer remains to be seen," said Rudolf Hokanson, publishing and media information services analyst at CIBC Oppenheimer Corp.



The new divisions, according to a memo from Mr. Ryder to RDA staff, are Global Books & Home Entertainment Group; U.S. Magazine Publishing Group; International Magazine Publishing Group; and QSP, a school and youth fund-raising business now spun off into its own division.

Gregory C. Coleman, senior VP-worldwide publisher, was named senior VP-president of the U.S. Magazine Publishing Group, relinquishing global advertising responsibilities to Robert J. Krefting. Mr. Krefting, head of Holly Hill Publishing, a consulting and management company that works with venture capitalists, will return to magazines as senior VP-president of the International Magazine Publishing Group.

Senior VP-President of International Operations M. John Bohane will become senior VP-president of the Global Books & Home Entertainment Group. QSP President Thomas A. Belli will continue in that role.


By giving profit and loss responsibilities to each division head, RDA is making a break from the past structure that made departments responsible for providing functions across all products. For instance, manufacturing and printing reported directly to the CEO, rather than a magazine or books division head.

"We've needed to figure out how to grab hold of the magazines to make them grow," said Mr. Coleman, who now has responsibility for all business functions (circulation, fulfillment, production and advertising) of the U.S. magazines, including special-interest titles. "While the book and home entertainment portion is the largest segment of our business, Tom [Ryder] agrees with me that sufficient focus on the magazines has not been there for a long time."

In addition, Christopher Wilcox, senior VP and Reader's Digest editor in chief, assumes global editorial responsibility for Reader's Digest and Select Editions (formerly Condensed Books), an example of Mr. Ryder's streamlining two separate operations into one.

Thomas D. Gardner, VP-U.S. marketing, was named senior VP-business planning and development, responsible for strategic planning, new business development and acquisitions.

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