The bankrupt Reader’s Digest Association might be ready to abandon the 120-acre campus in Westchester County that it has called home for the past 70 years.
Cushman & Wakefield has been hired to help the struggling magazine publisher find new space for its headquarters.
“We’re just doing our homework now,” said an RDA spokesman of the real estate review.
“One option is to see if it is possible to renegotiate the leases [at the current location] and the other is to look at other space nearby that would be cheaper and potentially better.”
RDA’s founders, the husband-and-wife team of DeWitt and Lila Wallace, had put the company in its current headquarters in 1939. The rolling campus is physically situated in Chappaqua, NY, but the company uses a Pleasantville address because the Wallaces thought the name was a better fit for their folksy magazine aimed at Middle America.
In 2002, former CEO Thomas Ryder sold the sprawling compound to Summit Development, a Norwalk, Conn.-based developer, in a sale-leaseback arrangement in which the company raised cash by selling its headquarters, but leases the space from the new owner. It’s an arrangement similar to what the New York Times Co. did with its Eighth Avenue headquarters in January when it ran into a cash crunch.
Years ago, all of RDA was based in the Westchester headquarters, but over the past decade RDA has increased its presence in Manhattan.
To be sure, while the Pleasantville grounds are idyllic, they are also costly because RDA still shoulders a lot of the property’s upkeep costs.
What’s more, the company isn’t using all of the space it has available to it.
“The facilities are so large that we don’t use a lot of it,” said the spokesman.
In addition to the Westchester property, there’s also 100,000 square feet of real estate in Manhattan that is in play, including ad-sales offices at 260 Madison Ave. and Rachael Ray‘s office on East 34th Street, where the company recently constructed new test kitchens for the magazine Everyday with Rachael Ray.
RDA in mid-August entered into a pre-packaged bankruptcy as a way to get out of its $1.6 billion debt load, and has put all its major contracts under review for possible jettisoning down the road.
The company, now headed by CEO Mary Berner, is expecting to emerge from bankruptcy late this year or early next year.
Defections
The final report from management-consulting firm McKinsey & Co. is said to be just weeks away from landing on the desk of Condé Nast Chairman S.I. Newhouse Jr., but some company veterans are exiting even before the massive and inevitable cost cutting begins.
“If you’re a mid-level person, you’re very nervous,” said a source. “There will be a lot of layoffs in the next couple of months and people are really afraid their jobs will be cut. A lot of people are probably looking.”
The personnel cutbacks are expected to be in the 10 percent to 15 percent range, one insider estimated, as editors and publishers try to cut their overall budgets by 25 percent.
In the latest defection, Tina Brown, founder of the political news site The Daily Beast, has raided her former boss’s empire to hire Jacob Bernstein, son of Vanity Fair contributor and author Carl Bernstein and screenwriter Nora Ephron.
Jacob Bernstein’s a former Memo Pad reporter at Women’s Wear Daily who left to work at New York magazine but returned to WWD and the Fairchild division of Condé Nast as a feature writer.
Losing a reporter to a nascent media operation — even one headed by Brown, who’s got $18 million in backing from IAC’s Barry Diller — can’t be seen as a good thing for Condé Nast, which is heading toward what could be a record loss in 2009.
Cost reductions of at least 25 percent, along with layoffs, are expected to begin shortly after Newhouse gets the McKinsey report.
Bernstein isn’t the only defection. Teen Vogue, which according to some insiders is losing millions a year and will only narrowly avoid getting shut down, has also lost a few key staffers to Hearst.
The magazine’s accessories director, Taylor Tomasi Hill, is heading to Marie Claire as a style and accessories director, while Joanna Hillman, Teen Vogue’s senior fashion market editor, is heading to Harper’s Bazaar.
Admittedly, Bernstein and the Teen Vogue de fections are mid-level rather than top of the masthead. Still, in the past it would have been hard to lure people away from what was once regarded as a maga zine paradise where people hoped to finish their careers.
“I don’t think it’s a trend,” said one insider, “but if a good job comes up, people are a lot more willing to listen.”
Tokyo bound
Jake Schlesinger, The Wall Street Journal’s Washington deputy bureau chief, is going to become Japan editor-in-chief.
Schlesinger, who penned the book “Shadow Shoguns,” will leave for Tokyo by mid-December. He’ll report to editors Jason Rogers and Nikhil Deogun.
Replacing him in Washington will be the British-born, former media reporter Matthew Rose, who moved to the DC bureau in 2006.