Reader”™s Digest Association employees braced for more layoffs even as the first fleet of moving vans lined up at the gates of Chappaqua Crossing recently to begin the company”™s relocation to White Plains and Manhattan and end its 71-year presence in Chappaqua.
“It”™s the end of an era,” said Fran Osborne, president of the New Castle Historical Society in Chappaqua, who sadly saw the vans arrive June 18 for the first move of about 100 Reader”™s Digest employees to the Westchester One in downtown White Plains. As part of its bankruptcy reorganization plan approved early this year, RDA has leased about 143,000 square feet of space on three floors of the office tower at 44 S. Broadway.
“It”™s going to be in a series of waves over the course of the summer,” a spokesman for RDA in Manhattan said of the corporate departure from Chappaqua. “It has begun.”
RDA President and CEO Mary Berner last fall said 525 company employees and contractors would make the move to White Plains, while the remaining 125 employees in Chappaqua would move with corporate headquarters to Manhattan. RDA has subleased about 86,000 square feet of space from another downsized magazine publisher at 750 Third Ave. in Grand Central Square, a twin-tower midtown office center, where RDA”™s Manhattan operations will be consolidated.
The serial moves, though, might affect fewer employees than was projected last year. Two trade publications, Media Week and Folio, reported this month that RDA plans to cut 10 percent of its worldwide work force, which totaled about 3,500 employees at the start of 2009 before the company filed its Chapter 11 bankruptcy petition.
Both publications quoted an internal company memo from Berner, who reportedly said the cuts were made to ensure the company”™s financial future. “To that end, we”™ve made the difficult but necessary decision to reduce headcount at many areas of the company,” Berner was quoted.
Folio said about 270 positions will be cut. A source in Westchester said 150 jobs are affected in Chappaqua, reducing staff numbers there to 435. That is down from 1,100 RDA employees when RDA”™s landlord, Summit/Greenfield, bought the 114-acre Reader”™s Digest campus for $59 million in late 2004. Osborne said a report has circulated among Reader”™s Digest alumni that the company, whose first and enduring product was condensed versions of articles found through library research, is closing its research department.
RDA spokespersons could not reached for comment on the reported layoffs.
In Chappaqua, some RDA employees on their last day of work before the move to White Plains stopped at the New Castle Historical Society, in the former Horace Greeley house on King Street, to view again an exhibit that has drawn international visitors. “Reader”™s Digest: The Local Magazine That Conquered the World,” affectionately chronicles the rapid success, business evolutions and international growth of the company by chiefly focusing on its remarkable and long-married founders, DeWitt and Lila Wallace.
“I”™m not in this to make money,” DeWitt Wallace is quoted in the exhibit. “If I wanted to make money, I”™d be selling shoes. Or hosiery!”
The Wallaces did make money in their novel enterprise from the start. Launching their digest of condensed magazine articles in February 1922 from their Greenwich Village basement apartment with a speakeasy as their upstairs neighbor and speakeasy patrons recruited to help wrap address mailers, the Wallaces financed their direct-mail venture with $3 annual subscriptions from 1,500 subscribers. By the end of that first year, circulation had climbed to 7,000.
Moving to Pleasantville soon after its launch, Reader”™s Digest grew to 700 employees by 1936 when construction began at the Chappaqua property. The landmark Reader”™s Digest building, completed in 1939, was modeled on buildings in Colonial Williamsburg, Va., where DeWitt Wallace in later years sent employees on educational trips for which he paid. ?Fran Osborne”™s late husband, Philip, came to Reader”™s Digest from Time as an assistant managing editor in 1977. He stayed for 23 years, witnessing the company”™s decline from its golden years under the leadership of the Wallaces.
Reader”™s Digest went public on the New York Stock Exchange in 1990, several years after the deaths of its founders, but returned to private ownership with its $2.6-billion purchase led by Ripplewood Holdings L.L.C. in 2007.
After the company passed from control by the Wallaces, who had no heirs, “It really changed,” Osborne said. For her husband, who had witnessed a similar decline at Time magazine, “It was extremely difficult for him to see what happened when the company was at the end of an era,” she said.
“The Wallace treated employees like family. Businesses can”™t afford to do that anymore.”
RDA by the end of this year will leave behind about 287,000 square feet of office space at Chappaqua Crossing. The campus will be left with three tenants, Fiber Media and Northern Westchester Hospital, each leasing 35,000 square feet, and Mount Kisco Medical Group, which leases 25,000 square feet.
The property owner, Summit/Greenfield, has asked town of New Castle officials to lift restrictions on the commercial campus that limit occupancy to four tenants and require one tenant to lease at least 200,000 square feet. “There”™s no 200,000-sqaure-foot user in the market right now looking for space,” said Geoffrey Thompson, a spokesman for the property owner.
Town officials have delayed a decision on opening the campus to multiple smaller tenants until the town board completes its review of Summit/Greenfield”™s proposal to redevelop the property with 278 multifamily housing units. Though the developer has proposed to restrict residency in 246 units to those 55 and older, town officials have said they do not want the project age-restricted.
