Reader's Digest

In 1934, Wallace added a condensed book section as a regular feature to the magazine and it led to a Reader's Digest Condensed Book Club in 1950. In 1965, he purchased Funk and Wagnalls, publishers of the Literary Digest, and added their extensive line of encyclopedias, dictionaries, and reference works to his magazine's book publishing division.

Records, movies, and video sales were added, along with a direct mail sweepstakes competition that landed the Reader's Digest Association in trouble with the Federal Trade Commission until an agreement was reached in 1983. Their long-standing belief in the Golden Rule induced the Wallaces to fund the Reader's Digest Foundation, one of the greatest philanthropic institutions of its time. The foundation supported a variety of causes, including education, the arts, and major projects such as a new contemporary wing for New York City's Metropolitan Museum of Art and the effort to move Egypt's Abu Simbel temple up the Nile Valley to make way for the Aswan High Dam.

The Wallaces gradually passed on control of their magazine during the 1960s and 1970s. DeWitt died in 1981 and Lila in 1984. As biographer John Heidenry explained, a management struggle days before her death, Lila sought to return the magazine to "old fashioned American values." The once powerful magazine began to flounder without the Wallaces at the helm. The Reader's Digest Association began buying other magazines in 1986, but the new titles were plagued by mounting losses that hurt the magazine's once-enviable profit margin. Advertising losses, increasing competition, and the aging of its core readership dogged Reader's Digest into the 1990s, even in the profitable book and home entertainment groups. The company's stock price dropped from $56 in 1992 to $17 in 1998. An outside chairman and chief executive officer, Thomas Ryder, was hired to revitalize the magazine in 1998. Ryder began a cost-cutting campaign that included employee layoffs, a magazine redesign, the auction of 39 pieces from the magazine's prized art collection, and a self-admitted drop in Reader's Digest domestic circulation base from 15 to 12.5 million copies. At the end of the twentieth century, the magazine was discussing such possibilities as Reader's Digest made-for-television movies to attract a new and younger audience, along with a merger with another media corporation. Observers, however, could not help but notice that time may have finally caught up with Reader's Digest.

St. James Encyclopedia of Popular Culture, 2002 Gale Group.