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And that's exactly where Grune is headed. After reclaiming his office, he axed three top executives and replaced them with managers who had worked under him previously. On his earlier watch, the company did indeed hum. He dumped unprofitable subsidiaries and added new specialty magazines. He took Digest public in 1990, and in three years revenues shot up, to $2.9 billion from $2 billion. But when he left in 1994, the company's descent had already begun.
Insiders say Grune played a role in ousting Schadt, his handpicked successor, and then dismantled much of what Schadt had set in motion. Two weeks after Grune returned, the company pulled the plug on a costly Internet search engine called LookSmart. "Over the last few months Grune has basically disowned everything his predecessor did," says Dennis McAlpine, an analyst with Josephthal & Co. Digest says it is just returning to basics. "In the last few years we drastically reduced our testing," says Thomas Gardner, vice president of U.S. marketing. "Our general philosophy was to focus on new initiatives and not on our core business."
So Reader's Digest has returned to the tried and true. "We don't publish things because we think they are a good idea," says Gardner. "We publish them because our customers tell us it is." Last year research showed that customers would buy a book called Foods That Harm Foods That Heal. They did--2.2 million copies were sold worldwide. It is also targeting new areas, such as young families. The company says it expects to turn the corner in 1999, given the long lead times in the business.
Grune, a former Marine, is supposed to be an interim CEO, but he has dug in deep, and has reportedly told staffers not to call him "interim" anymore. A spokeswoman states that the company hopes a new CEO will be in place by July. That won't be soon enough for the chorus of critics down the river.
--Reported by Valerie Marchant/Pleasantville