Reader's Digest chairman Thomas O. Ryder made good on his May promise to improve the company's operating performance with the announcement last week that RD is reorganizing its U.S. books and home entertainment division, accelerating its global reengineering efforts and closing Walking magazine. RD is taking a $60 million charge in the fourth quarter to account for the restructuring, with about $30 million targeted for severance payments.

The most significant change is the "top-to-bottom" restructuring of the BHE group, which will now be organized into six business units: entertainment, health, home, reading, trade publishing and Young Families. Ryder explained that after a good start to fiscal 2001, a number of the company's core U.S. businesses had sharp reversals in the second half of the year and finished fiscal '01 substantially off budget.

According to RD spokesperson William Adler, the BHE group will now be focused around markets, not type of products. The health group, for example, will encompass all of RD's health publishing programs—general books and illustrated series as well as the company's health initiatives. The home unit will consist of all home publishing products (e.g., cooking, gardening) plus general reference books and illustrated books. The reading group will be home to Select Editions and other reading products. Trade publishing will consist of the company's children's publishing and adult trade activities, while Young Families will remain the publisher of children's products geared for purchase by parents. The entertainment group will include RD's music, video and catalogue businesses.

Adler said the job cuts in the BHE group at RD's Pleasantville, N.Y., headquarters would be relatively few. More details about the companywide restructuring will be presented on August 14, when the company releases year-end results.