Word: digesting
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Dates: during 1990-1999
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Things are really nasty in Pleasantville these days. The Reader's Digest Association, best known for its pocket-size magazine, is in a state of protracted turmoil. The sputtering 76-year-old publisher founded to "inform, enrich, entertain and inspire people" has lately just incited a group of big-game-hunting shareholders, who want to see the Digest company restructured or sold. "This is a company that has been asleep," says Nell Minow, a principal of Lens, an activist Washington-based money manager with a substantial stake in the firm. "We are trying to bring them into the 20th century...
...midst of a historic bull run, Reader's Digest stock has gone south and its market value has fallen by half. Revenues stumbled 8%, to $2.8 billion, in fiscal 1997. Operating profits at the company, situated in the Hudson River valley, have fallen for the past four years, from $393.7 million to $227.8 million (adjusted for restructuring). In January, Digest posted a 35% drop in its second-quarter earnings--the sixth straight quarter of bad news...
When a company such as Reader's Digest performs so poorly for so long, shareholders usually revolt, forcing directors to make drastic changes. But in Digest's case, the board, which is supposed to be independent, is in the grip of the CEO. That would be George Grune, 68, who because of an unusual stock arrangement holds sway over enough voting shares to remove every Reader's Digest director. Grune's power source is his role as chairman of two charitable funds established by the company's childless founders, DeWitt and Lila Wallace, who died in 1981 and 1984, respectively...
...Jones & Co., Chase Manhattan Corp. and Sunbeam Corp., wants Grune gone. Says Lewis: "Grune is an ineffective manager, and I think the board of directors should expeditiously seek to replace him and/or to pursue the sale of the company." It's not quite the welcome back Grune anticipated when Digest lured him out of retirement to reclaim the CEO job last August. Grune declined requests for an interview...
President Clinton's strategy so far has been simple. Say almost nothing; buy time. The time has been needed to get past the first weeks of revelations, to let Clinton marshal his forces and to allow everybody to digest the thought of a goatish President unbuckling with an intern. But if Lewinsky testifies the way she is expected to, the President's "no comment" approach may not work anymore. Lewinsky was prepared two weeks ago to testify unequivocally to a sexual relationship with the President, though she denied that she and Clinton had engaged in intercourse...