The growth plan unveiled February 25 by Reader's Digest chairman Thomas Ryder depends heavily on expanding the company's nonpublishing activities. Ryder hopes to be able to use RD's brand recognition and marketing muscle to sell such products as financial services and pharmaceuticals and vitamins to consumers. Ryder said the company is also prepared to invest $100 million to upgrade and expand its Web sites. The ultimate goal is to lift RD's revenues to $5 billion by fiscal 2004 and increase its pretax profits to between $500 million and $600 million. In the fiscal year ended June 30, 1998, RD had sales of $2.6 billion and pretax earnings of $100 million.
As the company expands its offerings, it will concentrate in five different areas -- home, health, family, finance and faith. The health area will be RD's first priority; the company said it will "significantly" expand its magazine and book publishing activities in this area as well as build its Web presence. A spokesperson for the company said no further details were available as to when the first new health publications will be ready or how they will be marketed. As part of its cost reduction program, RD had previously said it plans to dramatically reduce its retail book publishing program (News, Sept. 21, 1998).
Another part of RD's growth strategy, according to Ryder, is to "deepen the relationship we have with millions of customers who are 50 and older -- the fastest-growing and wealthiest demographic." The decision to target older consumers is a departure from RD's recent initiatives geared toward luring a younger audience. Ryder's announcement that RD will continue its geographic expansion is consistent with the company's long-standing policy of being a global publisher. In fiscal '98, international sales accounted for more than half of RD's total revenues. As part of its overseas growth, RD said it expects to have a partnership in place to open a direct-market book business in China by fiscal 2000.
While RD works toward implementing Ryder's goals, sources said the company continues to talk with Time Warner about a merger between RD and some of TW's publishing assets (News, Jan. 25). What effect such a merger would have on RD's new growth plans is uncertain.
