FORM 10-Q

               SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C.  20549

     [X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
             OF THE SECURITIES EXCHANGE ACT OF 1934
                                
        For the quarterly period ended December 31, 1998
                                
                               OR
                                
    [  ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
             OF THE SECURITIES EXCHANGE ACT OF 1934
                                
        For the transition period from _______ to _______


                 Commission file number: 1-10434


              THE READER'S DIGEST ASSOCIATION, INC.
     (Exact name of registrant as specified in its charter)

                   Delaware                   13-1726769
        (State or other jurisdiction of         (I.R.S.
        incorporation or organization)         Employer
                                            Identification
                                                 No.)
                                                   
            Pleasantville, New York           10570-7000
        (Address of principal executive       (Zip Code)
                   offices)
                       

                         (914) 238-1000
      (Registrant's telephone number, including area code)

         ______________________________________________


Indicate by check mark whether the registrant (1) has filed all
reports  required to be filed by Section 13  or  15(d)  of  the
Securities Exchange Act of 1934 during the preceding 12  months
(or for such shorter period that the registrant was required to
file  such  reports), and (2) has been subject to  such  filing
requirements for the past 90 days.  Yes [X] No [  ]


As   of   January  29,  1999,  the  following  shares  of   the
registrant's common stock were outstanding:

Class  A  Nonvoting Common Stock, $0.01 par value:   85,594,496 shares
Class B Voting Common Stock, $0.01 par value:        21,716,057 shares



                                                               
     THE READER'S DIGEST ASSOCIATION, INC. AND SUBSIDIARIES
                                
                       Index to Form 10-Q
                                
                        December 31, 1998


Part I - Financial Information                                   Page No.

The Reader's Digest Association, Inc. and Subsidiaries
Financial Statements (unaudited):

 Consolidated Condensed Statements of Income
  for the three and six-month periods ended December 31, 1998
  and 1997                                                           3

 Consolidated Condensed Balance Sheets
  as of December 31, 1998 and June 30, 1998                          4

 Consolidated Condensed Statements of Cash Flows
  for the six-month periods ended December 31, 1998 and 1997         5

 Notes to Consolidated Condensed Financial Statements                6

Management's Discussion and Analysis
 of Financial Condition and Results of Operations                   10


Part II - Other Information                                         21


     THE READER'S DIGEST ASSOCIATION, INC. AND SUBSIDIARIES
           CONSOLIDATED CONDENSED STATEMENTS OF INCOME
  Three and six-month periods ended December 31, 1998 and 1997
              (In millions, except per share data)
                           (unaudited)


<TABLE>
                                               Three-month period ended   Six-month period ended
                                                       December 31,             December 31,
                                                    1998         1997        1998        1997
<S>                                               <C>           <C>       <C>         <C>
Revenues                                          $781.0        $812.5    $1,356.0    $1,373.9

Product, distribution and editorial expenses       272.3         297.8       484.8        501.3
Promotion, marketing and administrative
 expenses                                          409.8         428.3       755.7        799.7
Other operating items and impairment losses         31.0           ---        31.0         70.0

Operating profit                                    67.9          86.4        84.5          2.9

Other income, net                                   75.8           0.4        63.2          6.6

Income before provision for income taxes           143.7          86.8       147.7          9.5

Provision for income taxes                          57.2          32.5        58.7         11.6

Income (loss) before cumulative effect of                                              
 change in accounting principles                    86.5          54.3        89.0         (2.1)

Cumulative effect of change in accounting                                              
 principles for pension assets                       ---           ---        25.3         ---

Net income (loss)                                 $ 86.5        $ 54.3    $  114.3     $   (2.1)

Basic and diluted earnings (loss) per share:                        

 Before cumulative effect of change in                                         
  accounting principles                           $ 0.80        $ 0.51    $   0.82    $   (0.03)

 Cumulative effect of change in accounting                                   
  principles                                         ---           ---        0.24          ---

 Basic and diluted earnings (loss) per share      $ 0.80        $ 0.51    $   1.06    $   (0.03)

Average common shares outstanding                  107.2         106.3       107.2        106.3

Dividends per common share                        $ 0.05        $0.225    $  0.275    $    0.45
</TABLE>


See accompanying notes to consolidated condensed financial
statements.


     THE READER'S DIGEST ASSOCIATION, INC. AND SUBSIDIARIES
              CONSOLIDATED CONDENSED BALANCE SHEETS
            As of December 31, 1998 and June 30, 1998
                          (In millions)
                           (unaudited)



                                                  December 31,   June 30,
                                                      1998         1998
Assets                                                          
Cash and cash equivalents                          $  185.3      $  122.8
Receivables, net                                      546.4         376.4
Inventories                                           144.3         162.2
Prepaid expenses and other current assets             329.3         311.2

Total current assets                                1,205.3         972.6

Property, plant and equipment, net                    267.8         285.4
Other noncurrent assets                               330.9         306.0

Total assets                                       $1,804.0      $1,564.0

Liabilities and stockholders' equity                            
Accounts payable                                   $  162.5      $  172.1
Accrued expenses                                      417.7         377.4
Income taxes payable                                   67.3          21.0
Unearned revenue                                      412.2         355.4
Other current liabilities                              69.3          90.0

Total current liabilities                           1,129.0       1,015.9

Other noncurrent liabilities                          311.5         289.5

Total liabilities                                   1,440.5       1,305.4

Capital stock                                          22.3          16.6
Paid-in capital                                       144.6         144.8
Retained earnings                                     929.2         845.0
Accumulated other comprehensive loss                  (37.3)        (49.8)
Treasury stock, at cost                              (695.3)       (698.0)

Total stockholders' equity                            363.5         258.6

Total liabilities and stockholders' equity         $1,804.0      $1,564.0


See accompanying notes to consolidated condensed financial
statements.


     THE READER'S DIGEST ASSOCIATION, INC. AND SUBSIDIARIES
         CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
       Six-month periods ended December 31, 1998 and 1997
                          (In millions)
                           (unaudited)


                                                     Six-month period ended
                                                          December 31,
                                                       1998         1997
Cash flows from operating activities                             
Net income (loss)                                     $ 114.3      $ (2.1)
Depreciation and amortization                            33.5        23.1
Other, net                                              (93.3)      (82.7)

Net change in cash due to operating activities           54.5       (61.7)

Cash flows from investing activities                             
Proceeds from maturities and sales of short-term
 investments and marketable securities, net              (4.1)        9.1
Proceeds from other long-term investments, net            1.0        46.6
Proceeds from sales of property, plant and equipment     79.0         3.8
Payments for business acquisitions                      (32.7)        ---
Other, net                                              (13.1)      (15.4)

Net change in cash due to investing activities           30.1        44.1

Cash flows from financing activities                             
Short-term borrowings, net                               (0.1)       57.9
Dividends paid                                          (30.1)      (48.5)
Other, net                                                8.2         2.7

Net change in cash due to financing activities          (22.0)       12.1

Effect of exchange rate changes on cash                  (0.1)       (1.1)

Net change in cash and cash equivalents                  62.5        (6.6)

Cash and cash equivalents at beginning of period        122.8        69.1

Cash and cash equivalents at end of period            $ 185.3      $ 62.5


See accompanying notes to consolidated condensed financial
statements.


     THE READER'S DIGEST ASSOCIATION, INC. AND SUBSIDIARIES
      NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
              (In millions, except per share data)
                           (unaudited)

(1)  Basis of Presentation

The company reports on a fiscal year beginning July 1.  The three-
month  periods  ended December 31, 1998 and 1997 are  the  second
fiscal  quarters  of  fiscal  year 1999  and  fiscal  year  1998,
respectively.

The accompanying consolidated condensed financial statements have
not  been  audited, but in the opinion of management,  have  been
prepared   in  conformity  with  generally  accepted   accounting
principles applying certain judgments and estimates which include
all adjustments (consisting only of normal recurring adjustments)
considered   necessary  to  present  fairly   such   information.
Operating  results  for any interim period  are  not  necessarily
indicative  of  the  results for an entire year  because  of  the
seasonality of the company's business.

(2)  Basic and Diluted Earnings (Loss) Per Share

Basic  earnings  (loss)  per share is computed  by  dividing  net
income (loss), less preferred stock dividend requirements of $0.3
in  each  of the three-month periods ended December 31, 1998  and
1997,  and  $0.7 in each of the six-month periods ended  December
31, 1998 and 1997 by the weighted average number of common shares
outstanding during the period.  Diluted earnings (loss) per share
is  computed by dividing net income (loss), less preferred  stock
dividend  requirements, by the weighted average number of  common
shares  outstanding  during  the period,  assuming  exercise  and
conversion of stock options.  A weighted average number of common
shares  of  107.5  and  106.5 for the three-month  periods  ended
December 31, 1998 and 1997, and 107.5 and 106.6 for the six-month
periods  ended December 31, 1998 and 1997, respectively was  used
for the computation of diluted earnings (loss) per share.

(3)  Inventories
                                       December 31,   June 30,
                                          1998          1998
                                                      
Raw materials                            $ 13.9        $ 21.8
Work-in-progress                           24.6          24.7
Finished goods                            105.8         115.7
                                         $144.3        $162.2

(4)  Revenues by Business Segments and Geographic Areas
<TABLE>
                                    Three-month period ended  Six-month period ended
                                          December 31,             December 31,
                                      1998          1997         1998        1997
<S>                                 <C>          <C>           <C>         <C>
BUSINESS SEGMENTS                                                         
Reader's Digest Magazine            $ 175.7      $ 187.1       $  343.3    $  359.2
Books and Home Entertainment
 Products                             452.9        476.5          825.2       828.5
Special Interest Magazines             27.3         25.0           50.2        46.3
Other Businesses                      125.1        123.9          137.3       139.9

Total revenues                      $ 781.0      $ 812.5       $1,356.0    $1,373.9
                                                                          
GEOGRAPHIC AREAS                                                          
United States                       $ 364.8      $ 387.2       $  621.3    $  635.7
Europe                                297.5        306.8          519.5       524.5
Pacific and Other Markets             118.7        118.5          215.2       213.7

Total revenues                      $ 781.0      $ 812.5       $1,356.0    $1,373.9
</TABLE>
                                
                                
(5)                            Comprehensive Income (Loss)

Effective  July  1,  1998,  the  company  adopted  Statement   of
Financial  Accounting Standards No. 130, "Reporting Comprehensive
Income."   The company has determined that at June 30,  1999,  it
will  display  comprehensive income (loss)  in  the  Consolidated
Statement of Changes in Stockholders' Equity.  Accumulated  other
comprehensive  loss  as  reported in the  Consolidated  Condensed
Balance  Sheets  as  of  December 31, 1998  and  June  30,  1998,
represents   foreign  currency  translation   adjustments.    The
components  of comprehensive income (loss), net of  related  tax,
for the three-month periods ended December 31, 1998 and 1997, and
for  the six-month periods ended December 31, 1998 and 1997  were
as follows:

<TABLE>
                                              Three-month period ended    Six-month period ended
                                                    December 31,               December 31,
                                                 1998          1997         1998         1997
<S>                                            <C>            <C>          <C>         <C>                            
Net income (loss)                              $  86.5        $ 54.3       $114.3      $ (2.1)
Change in:                                                                            
 Foreign currency translation adjustment           7.4          (7.2)        12.5       (13.7)
 Net unrealized gains on certain investments       ---           ---          ---         0.2
                                                                                      
                                               $  93.9        $ 47.1       $126.8      $(15.6)
</TABLE>

(6)            Other Operating Items and Impairment Losses

In  the  second  quarter  of  1999, the  company  recorded  other
operating items and impairment losses of $31.0 ($21.5 after  tax,
or $0.20 per share) composed of the following:

1.    The company recorded charges of $51.3 ($33.7 after tax,  or
  $0.32 per share) (second quarter 1999 charges) composed primarily
  of  severance  costs  associated with cost  reduction  and  re-
  engineering activities and costs related to the discontinuation
  of  certain unproductive businesses.  These actions  cover  the
  separation  of  more  than  700 employees  from  the  worldwide
  workforce in substantially all functional areas of the company,
  and  are expected to be substantially completed by December 31,
  1999.  As of December 31, 1998, approximately one-half of these
  employees had been separated from the workforce.

2.    The  company  adjusted the remaining accrual balances  from
  charges  originally recorded in 1998, 1997 and  1996.   Several
  actions initiated by prior management and included in these prior
  charges are not expected to be completed in connection with the
  new  long-term  strategy of the company.  This  resulted  in  a
  benefit  of  $35.0  ($22.2  after  tax,  or  $0.21  per  share)
  (adjustments to prior balances) in the second quarter of  1999.
  The  accrual  balances remaining from the 1998, 1997  and  1996
  charges  relate principally to ongoing severance  payments  and
  contract termination costs.

3.    The company also recorded impairment losses of $14.7 ($10.0
  after  tax, or $0.09 per share) relating principally to certain
  computer hardware and software that will no longer be used in the
  company's   operations  and,  to  a  lesser  extent,  leasehold
  improvements, furniture and fixtures that were written off as a
  result of the headcount reduction and re-engineering activities.

In   addition  to  finalizing  further  components  of  the   re-
engineering  plan discussed above and estimated costs  associated
with those actions, the company is currently reviewing additional
potential  re-engineering activities.  As a result,  the  company
expects to record additional other operating items and impairment
losses during the next 12 months.

The  following table summarizes the components of other operating
items  and impairment losses for the second quarter of 1999.   In
addition,  the  components of the second  quarter  1999  charges,
current  activity,  as  well  as accrual  balances  remaining  at
December 31, 1998, were:

                                           Other                     
                                         Operating                   
                                         Items and   Current     Balance
                                        Impairment   Activity   Remaining
                                          Losses
                                                                
Employee severance benefits               $44.9      $ (6.5)     $ 38.4
Contract terminations                       4.8         ---         4.8
Other                                       1.6         ---         1.6
                                                                
Second quarter 1999 charges               $51.3      $ (6.5)     $ 44.8
Impairment losses                          14.7                 
Adjustments to prior balances             (35.0)                
                                                                
Total other operating items and
 impairment losses                        $31.0                 

As  described in Note TWO to the company's consolidated financial
statements  included in its 1998 Annual Report  to  Stockholders,
the  company  recorded charges of $70.0 in the first  quarter  of
1998  relating  to the discontinuation of certain businesses  and
the realignment of business processes and operations, charges  of
$35.0  in  the fourth quarter of 1997 relating primarily  to  the
realignment  of the organization and operations, and  charges  of
$204.0  in the third quarter of 1996 relating to the streamlining
of  the  company's  organizational structure  and  the  strategic
repositioning  of  certain  businesses.   The  current  activity,
adjustments to prior balances discussed above, as well as accrual
balances remaining at December 31, 1998, were:

                              Balance at      Current                 Balance
                             June 30, 1998   Activity   Adjustments  Remaining
                                                                       
Employee retirement and                                                
 severance benefits             $  59.6       $(10.8)    $ (27.1)       $ 21.7
Other items                        24.2         (6.1)       (6.2)         11.9
Business repositioning              3.9         (1.1)       (1.7)          1.1
                                                                       
Total                           $  87.7       $(18.0)    $(35.0)        $ 34.7

(7)   Debt

As described in Note NINE to the company's consolidated financial
statements  included in its 1998 Annual Report  to  Stockholders,
the  company  is a party to a Competitive Advance  and  Revolving
Credit Facility Agreement (the credit agreement) of up to $300.0.
Under  the credit agreement, the company must comply with certain
financial  covenants, including a minimum level  of  consolidated
tangible  net  worth.  At December 31, 1998, no  borrowings  were
outstanding  under  the credit agreement.  In  addition,  various
international subsidiaries of the company have available lines of
credit totaling $59.8.  At December 31, 1998, loans in the amount
of $3.4 were outstanding under international lines of credit at a
weighted average interest rate of 8.8%.

(8)  Change in Accounting for Pension Assets

Effective  July  1,  1998, the company  changed  the  method  for
calculating the market-related value of pension plan assets  used
in  determining  the return-on-asset component of annual  pension
expense  and the cumulative net unrecognized gain or loss subject
to  amortization.  The company believes that the  new  method  is
more widely used in practice and preferable because it results in
pension  plan  asset  values that more closely  approximate  fair
value,  while still mitigating the effect of annual market  value
fluctuations.  In addition, the new method facilitates the global
management  of  the company's pension plans as it  results  in  a
consistent methodology for all plans for this calculation.   This
change  resulted  in a noncash benefit in fiscal  1999  of  $40.5
($25.3 after tax, or $0.24 per share) representing the cumulative
effect  of the change related to years prior to fiscal  1999  and
$4.8  and $9.5 in lower pension expense ($3.0 and $5.9 after tax,
or $0.03 and $0.06 per share) related to the three- and six-month
periods ended December 31, 1998, respectively as compared to  the
previous  accounting  method.   Had  this  change  been   applied
retroactively,  pension expense would have been reduced  by  $3.9
and  $7.9 ($2.5 and $4.9 after tax, or $0.02 and $0.05 per share)
in  the  three-  and six-month periods ended December  31,  1997,
respectively.

(9)  Sale of Artwork

In November 1998 the company sold important works of art from its
collection  which  resulted in a gain on the  sale  of  property,
plant  and  equipment of $85.3 ($53.3 after  tax,  or  $0.50  per
share)  recorded in other income, net in the three- and six-month
periods ended December 31, 1998.

(10)  Sale of Operations in South Africa

On  December  31, 1998 the company sold its operations  in  South
Africa  which  resulted in a non-cash loss of $7.9,  ($6.1  after
tax,  or  $0.06 per share) recorded in other income, net  in  the
three-  and six-month periods ended December 31, 1998.   The  net
loss  included  a  write-off of $9.5 which was  transferred  from
foreign currency translation adjustments as a result of the sale.

(11)  Subsequent Event

On  January  29, 1999, the company entered into an agreement  for
the sale and leaseback of its Canary Wharf office facility in the
United  Kingdom,  for  a  sales price  of  59.2  pounds  sterling
(approximately $100.0).  This transaction will be recorded in the
third quarter of fiscal 1999.


     The Reader's Digest Association, Inc. and Subsidiaries
              Management's Discussion and Analysis
        of Financial Condition and Results of Operations
          (Dollars in millions, except per share data)


Results of Operations

Three-Month  Period Ended December 31, 1998 Compared With  Three-
Month Period Ended December 31, 1997


Items Affecting the Comparability of Reported Results

Other Operating Items and Impairment Losses
Management's   discussion  and  analysis,  as  it   pertains   to
geographic  and business segment information, has been  presented
excluding  the  net  effect  of the  second  quarter  1999  other
operating items and impairment losses of $31.0 ($21.5 after  tax,
or  $0.20  per  share)  in  order to analyze  the  results  on  a
comparable  basis.   The  other operating  items  and  impairment
losses  recorded in the second quarter of 1999 were  composed  of
the following:

1.    The company recorded charges of $51.3 ($33.7 after tax,  or
  $0.32 per share) composed primarily of severance costs associated
  with  cost  reduction and re-engineering activities  and  costs
  related   to   the  discontinuation  of  certain   unproductive
  businesses.  These actions cover the separation of more than 700
  employees  from  the worldwide workforce in  substantially  all
  functional  areas  of  the company,  and  are  expected  to  be
  substantially completed by December 31, 1999.

2.    The  company  adjusted the remaining accrual balances  from
  charges  originally recorded in 1998, 1997 and  1996.   Several
  actions initiated by prior management and included in these prior
  charges are not expected to be completed in connection with the
  new  long-term  strategy of the company.  This  resulted  in  a
  benefit of $35.0 ($22.2 after tax, or $0.21 per share)  in  the
  second quarter of 1999.  The accrual balances remaining from the
  1998,  1997  and  1996  charges relate principally  to  ongoing
  severance payments and contract termination costs.

3.    The company also recorded impairment losses of $14.7 ($10.0
  after  tax, or $0.09 per share) relating principally to certain
  computer hardware and software that will no longer be used in the
  company's   operations  and,  to  a  lesser  extent,  leasehold
  improvements, furniture and fixtures that were written off as a
  result of the headcount reduction and re-engineering activities.

In   addition  to  completing  further  components  of  the   re-
engineering  plan discussed above and estimated costs  associated
with those actions, the company is currently reviewing additional
potential  re-engineering activities.  As a result,  the  company
expects to record additional other operating items and impairment
losses during the next 12 months.  In the long-term, the combined
effect of these actions is expected to reduce annual revenues  by
at  least  $200.0 and reduce the company's annual  expense  base,
excluding  other  operating items and impairment  losses,  by  at
least $300.0 to $350.0 by the end of fiscal 2001.

Other Income, Net
In  the  second quarter of 1999, the company recorded a  gain  of
$85.3  ($53.3  after  tax, or $0.50 per share)  on  the  sale  of
important  works  of  art  from  the  company's  collection.   In
addition,  on December 31, 1998, the company sold its  operations
in  South Africa, which resulted in a non-cash loss of $7.9 ($6.1
after tax, or $0.06 per share).

Revenues/Operating Profit
Worldwide  revenues for the second quarter of 1999  decreased  to
$781.0,  or by 4%, compared with $812.5 in the second quarter  of
1998.   Excluding  the  adverse  effect  of  changes  in  foreign
currency exchange rates, revenues decreased 3%.  This decline was
primarily attributable to lower unit sales within Books and  Home
Entertainment  Products,  in particular  in  the  United  States,
principally  caused  by lower mail quantities  within  individual
mailings,  as  well as a reduction in the number  of  promotional
mailings  during the quarter.  Customer response  to  promotional
mailings improved in certain developed European markets; however,
customer  response levels in certain product lines in the  United
States were lower.  Lower revenues in the United States and, to a
much  lesser  extent, in the United Kingdom and in Russia,  where
operations were scaled back in response to the devaluation of the
ruble,  were moderately offset by higher revenues in Germany  and
growth in Brazil.

The  company reported worldwide operating profit of $67.9 in  the
second  quarter of 1999, compared with operating profit of  $86.4
in the second quarter of 1998.  Excluding the items affecting the
comparability of reported results, second quarter 1999  operating
profit  was $98.9, a 14% improvement over the same period a  year
ago.   This  increase occurred primarily because the  decline  in
revenues was more than offset by lower product costs resulting in
part  from sales of a higher-priced product mix and lower product
development costs, and lower promotional expenses as a result  of
the  reduction in the mail quantities within individual  mailings
and  the number of promotional mailings.  To a lesser extent, the
company  benefited  from  the termination  of  certain  strategic
alliances and the elimination of spending on certain unprofitable
initiatives.  This benefit was partially offset by one-time costs
relating  to  inventory write-offs associated with product  lines
that   are   being  discontinued.   Overhead  expenses  increased
slightly  compared  with a year ago, principally  resulting  from
higher  incentive compensation expenses which were largely offset
by a reduction in pension costs and, to a lesser extent, benefits
from re-engineering activities principally in the United States.

Other Income, Net
Other  income, net, increased in the second quarter  of  1999  to
$75.8, compared with $0.4 in the prior year.  Excluding the items
affecting  the  comparability of reported results, other  income,
net  in  the  second quarter of 1999 was a net expense  of  $1.6.
This  decrease  was  principally a result of  losses  on  foreign
exchange  transactions and hedging activity, as well  as  foreign
exchange translation losses resulting from the devaluation of the
Russian  ruble,  which were partially offset  by  lower  interest
expense in the second quarter of 1999.

Income Taxes
For  the second quarter of 1999, the reported tax rate was 39.8%.
Excluding  the  items  affecting the  comparability  of  reported
results in 1999, the overall effective tax rate was 37.5% for the
second quarter of 1999 and 1998.

Change in Accounting Principles
In  the  first  quarter  of fiscal 1999, the  company  adopted  a
preferred  method  for  calculating the market-related  value  of
pension  plan  assets  used  in determining  the  return-on-asset
component  of  annual  pension expense  and  the  cumulative  net
unrecognized gain or loss subject to amortization.   This  change
reduced  pension expense for the second quarter of 1999  by  $4.8
($3.0 after tax, or $0.03 per share).

Basic and Diluted Earnings per Share
The company reported net income of $86.5, or $0.80 per share,  in
the second quarter of 1999, compared with net income of $54.3, or
$0.51  per  share, in the second quarter of 1998.  Excluding  the
items  affecting the comparability of reported results  in  1999,
basic  and  diluted earnings per share was $0.56  in  the  second
quarter of 1999.


Geographic Areas

United States
Revenues  in the United States decreased from $387.2 in  1998  to
$364.8,   or  by  6%,  in  1999.   This  decrease  was  primarily
attributable   to  lower  unit  sales  within  Books   and   Home
Entertainment Products, moderately offset by sales of  a  higher-
priced  product  mix and revenues from the Good Catalog  Company,
which was acquired in October 1998.  Books and Home Entertainment
Products  revenues  declined in most  product  lines  principally
because  of  the  timing of promotional mailings, lower  customer
response to promotional mailings in certain product lines,  lower
mail  quantities  within mailings and,  to  a  lesser  extent,  a
reduction  in certain types of mailing activities.  Although  the
company  has returned to traditional promotional formats  in  the
United  States,  customer  response rates  appear  to  have  been
unfavorably affected by negative publicity concerning sweepstakes
marketing  methods  employed by other  companies  in  the  United
States.  In addition, certain products offered in certain product
lines in 1999 did not have as broad an appeal as those offered in
the  prior  year.   In 1999, the company reduced mail  quantities
within mailings based on expected product strength and the desire
to  reduce  marginally  profitable mailing activities.   Revenues
declined  particularly in general books and, to a lesser  extent,
music products.  Revenues in both product lines decreased because
of  lower  mail quantities within individual promotional mailings
in  1999.  In addition, a general books mailing was sent  earlier
than in the prior year which caused the revenues to be recognized
in  the  first quarter of 1999, and a music products mailing  was
sent  later than in the prior year which will cause the  revenues
to  be  recognized in the third quarter of 1999.  Higher  average
prices  in Books and Home Entertainment Products were the  result
of  postage  and handling price increases across several  product
lines,  in  anticipation of postal rate increases, and a  higher-
priced  mix  of  products  offered  in  1999.   Operating  profit
improved  in  1999,  compared with 1998,  primarily  because  the
decline in revenues was offset by lower promotional expenses  and
product  costs  as a result of the reduction in  mail  quantities
within individual mailings and, to a lesser extent, the number of
promotional  mailings,  the  termination  of  certain   strategic
alliances and the elimination of spending on certain unprofitable
initiatives.  In addition, overhead expenses were lower  in  1999
principally because of a reduction in pension costs and  benefits
from re-engineering activities.

Europe
Revenues in Europe decreased from $306.8 in 1998 to $297.5, or by
3%, in 1999.  Excluding the positive effect of changes in foreign
currency  exchange rates, revenues decreased 6%.  Lower  revenues
in  the  United Kingdom, Russia and most other developed  markets
were  moderately offset by higher revenues in Germany.   Improved
customer  response  to promotional mailings in certain  developed
markets  in 1999, which was attributable largely to a  return  to
traditional promotional formats and the elimination of the  least
profitable  names from mailings, partially offset the decline  in
revenues from the strategic reduction in mail quantities  in  the
current  year.  Revenues declined principally in Books  and  Home
Entertainment Products and, to a lesser extent, because of  lower
circulation  revenues for Reader's Digest Magazine  in  developed
markets, particularly in the United Kingdom and Germany.   Within
Books and Home Entertainment Products, lower unit sales primarily
within  video  products,  general books  and  series  books  were
moderately offset by sales of a higher-priced product mix in most
product lines, most notably video products.  The decline in video
products  was the result of a reduction in the number of mailings
and  lower mail quantities within individual mailings, moderately
offset  by sales of a higher-priced product mix in 1999.  General
books  revenues declined as a result of the same factors and  the
scaling  back  of  operations  in  Russia  in  response  to   the
devaluation  of  the ruble, moderately offset by higher  customer
response to mailings and an additional promotional mailing within
the  quarter as compared to a year ago in Germany.  The reduction
in  series  books revenues was caused by a series that  is  being
phased  out  as  well as a reduction in the number  of  mailings.
Operating  profit improved significantly in 1999,  compared  with
1998,  as a result of improved performance in Germany because  of
higher customer response to promotional mailings containing lower
mail  quantities.  In addition, the decline in revenues was  more
than  offset by lower product costs resulting in part from  sales
of  a  higher-priced  product mix and lower  product  development
costs,   and  lower  promotional  expenses  from  the   strategic
reduction  in  the number of promotional mailings  and  the  mail
quantities within individual mailings.

Pacific and Other Markets
Revenues in Pacific and Other Markets remained level with a  year
ago  at  $118.7.   Excluding the adverse  effect  of  changes  in
foreign   currency  exchange  rates,  revenues   increased   10%.
Revenues  increased primarily as a result of expansion in  Brazil
and,  to  a lesser extent, from improved sales in Canada compared
to  the  prior year when a postal strike was in effect.  Revenues
increased  predominantly  within  Books  and  Home  Entertainment
Products,  principally  because of higher  unit  sales  in  music
products  and,  to  a  lesser extent, sales  of  a  higher-priced
product mix within general books.  Higher sales in music products
were  attributable primarily to growth in Brazil.  General  books
revenues  increased  because of sales of a higher-priced  mix  of
products  sold  in  1999 predominantly in Canada  and  Australia.
Operating  profit improved in 1999, compared with 1998, primarily
because  of growth in Brazil, the timing of promotional  expenses
compared  with the prior year and a reduction in mail  quantities
within individual mailings in certain markets.

Corporate Expense
Corporate  Expense  in the second quarter of  1999  increased  to
$11.9 compared with $5.5 in 1998, primarily as a result of higher
incentive compensation expenses.

Business Segments

Reader's Digest Magazine
Revenues  for Reader's Digest Magazine decreased from  $187.1  in
1998  to $175.7, or by 6%, in 1999.  Excluding the adverse effect
of changes in foreign currency exchange rates, revenues decreased
5%.  The decrease in revenues was primarily attributable to lower
circulation  revenues caused by a lower number  of  copies  sold,
moderately offset by a higher average price per copy.   A  higher
number  of advertising pages sold in 1999 was offset by  a  lower
average   rate   per  page.   Lower  circulation  revenues   were
principally  caused  by lower circulation levels  in  the  United
States   and  circulation  declines  in  several  major  markets,
particularly  the United Kingdom and Germany.  A  higher  average
price per copy, predominantly in European markets, resulted  from
selective  price  increases as well as the mix  of  subscriptions
sold.   A  higher number of advertising pages sold in the  United
States  at  a  lower average rate per page caused  by  the  lower
circulation  levels, was offset by a lower number of  advertising
pages sold in European and Pacific markets.  Operating profit for
Reader's Digest Magazine declined in the second quarter  of  1999
compared with the same period a year ago.  The decrease primarily
reflects  the  effect  of lower circulation  revenues,  partially
offset  by the timing of promotional expenses in certain  markets
as well as lower promotional expenses in the United States and  a
reduction  in  pension costs.  In order to improve  the  relative
profitability  of Reader's Digest Magazine, on October  1,  1998,
the  company  announced that it will reduce  the  rate  base  for
Reader's  Digest  Magazine in the United States from  15  million
copies  per  issue to 13.3 million for the January  through  June
1999  issues,  then  to 12.5 million copies with  the  July  1999
issue.

Books and Home Entertainment Products
Revenues for Books and Home Entertainment Products decreased from
$476.5  in 1998 to $452.9, or by 5%, in 1999.  Changes in foreign
currency exchange rates had no effect on the decline in revenues,
which occurred predominantly in the United States, and which  was
partially  offset by the acquisition of the Good Catalog  Company
in  the  United States.  Revenues decreased primarily because  of
lower unit sales in general books and, to a lesser extent, series
books  and  video  products.  Lower unit  sales  were  moderately
offset by sales of a higher-priced product mix across all product
lines,  notably in video products and general books. The decrease
in  general  books unit sales was caused by lower mail quantities
within  individual  mailings and a reduction  in  the  number  of
mailings  in  the  United  States  and  Europe,  as  well  as   a
promotional  mailing in the United States that was  sent  earlier
than in the prior year which caused the revenues to be recognized
in  the first quarter of 1999.  Higher average prices for general
books  were  attributable to the mix of  products  sold  in  many
markets, and postage and handling increases in the United States.
Series books revenues declined because of a series that is  being
phased  out  in  certain markets as well as a  reduction  in  the
number of mailings.  The decline in video products was the result
of  lower  mail  quantities  within  individual  mailings  and  a
reduction in the number of mailings, largely offset by sales of a
higher-priced  mix  of  products in 1999.  Operating  profit  for
Books and Home Entertainment Products increased significantly  in
1999,  compared  with  1998.   This increase  occurred  primarily
because  the  decline in revenues was more than offset  by  lower
product  costs  resulting in part from sales of  a  higher-priced
product   mix   and  lower  product  development   costs,   lower
promotional  expenses as a result of the reduction  in  the  mail
quantities   within  individual  mailings  and  the   number   of
promotional  mailings,  the  termination  of  certain   strategic
alliances and the elimination of spending on certain unprofitable
initiatives.  In addition, overhead expenses were lower  in  1999
principally  from a reduction in pension costs and benefits  from
re-engineering activities in the United States.

Special Interest Magazines
Revenues  for Special Interest Magazines increased from $25.0  in
1998 to $27.3, or by 9%, in 1999, principally as a result of  the
acquisition of American Woodworker magazine in the second quarter
of 1999.  Excluding American Woodworker, revenues increased 1% in
1999, as higher advertising revenues were largely offset by lower
circulation   revenues.   Within  advertising  revenues,   higher
advertising  rates  in 1999 were moderately  offset  by  a  lower
number  of  advertising pages sold.  The decline  in  circulation
revenues  was principally in one magazine because of the shifting
of  an  issue from the second quarter into the third  quarter  in
1999.   Operating  results improved in 1999  compared  with  1998
primarily as a result of higher advertising revenues, the  timing
of expenses, and a reduction in pension costs.

Other Businesses
Revenues  for Other Businesses increased from $123.9 in  1998  to
$125.1,  or  by 1%, in 1999, primarily resulting from  growth  at
QSP,  the  company's youth fund-raising organization, principally
because  of higher unit sales of music products.  Growth  at  QSP
was   partially  offset  by  a  reduction  in  activity  in   the
merchandise  catalog product line worldwide.   Operating  results
improved in 1999 compared with 1998 primarily as a result of  the
growth at QSP and lower product costs and promotional expenses in
the merchandise catalog product line.


Six-Month  Period Ended December 31, 1998 Compared With Six-Month
Period Ended December 31, 1997


Items Affecting the Comparability of Reported Results

Other Operating Items and Impairment Losses
As  discussed in the three-month period ended December  31,  1998
compared  with  the  three-month period ended December  31,  1997
above,  in the second quarter of 1999 the company recorded  other
operating items and impairment losses of $31.0 ($21.5 after  tax,
or  $0.20 per share).  In the first quarter of 1998, the  company
recorded  other  operating items of $70.0 ($51.8  after  tax,  or
$0.49 per share).

Management's   discussion  and  analysis,  as  it   pertains   to
geographic  and  business segment information, has  been  written
excluding  the effect of the second quarter 1999 other  operating
items  and  impairment losses and the first  quarter  1998  other
operating  items in order to analyze the results on a  comparable
basis.

Other Income, Net
In the second quarter of 1999, the company recorded a gain on the
sale  of important works of art from the company's collection  of
$85.3  ($53.3  after tax, or $0.50 per share).  In  addition,  on
December  31,  1998,  the company sold its  operations  in  South
Africa,  which  resulted in a non-cash loss of $7.9  ($6.1  after
tax, or $0.06 per share).

Revenues/Operating Profit
Worldwide  revenues for the six-month period ended  December  31,
1998  decreased to $1,356.0, or by 1%, compared with $1,373.9  in
the  six-month  period ended December 31,  1997.   Excluding  the
adverse  effect  of changes in foreign currency  exchange  rates,
revenues remained level with a year ago.  Lower unit sales within
Books  and  Home  Entertainment Products  and  lower  circulation
revenues for Reader's Digest Magazine were offset by sales  of  a
higher-priced  product  mix within Books and  Home  Entertainment
Products.   The decrease in unit sales was principally caused  by
lower  mail quantities within individual mailings as  well  as  a
reduction  in the number of promotional mailings in fiscal  1999.
Customer  response  to promotional mailings improved  in  certain
developed European markets; however, customer response levels  in
certain  product  lines in the United States were  lower.   Lower
revenues  in  the  United States, the United  Kingdom  and  other
developed  European  markets were offset by  higher  revenues  in
other  major developed international markets and growth in  Latin
America.

The  company reported worldwide operating profit of $84.5 in  the
six-month period ended December 31, 1998, compared with operating
profit  of $2.9 in the six-month period ended December 31,  1997.
Excluding  the  items  affecting the  comparability  of  reported
results  in fiscal 1999 and 1998, operating profit was $115.5  in
the six-month period ended December 31, 1998, compared with $72.9
in  the  six-month period ended December 31, 1997.  This increase
occurred primarily because the decline in revenues was more  than
offset by lower promotional expenses as a result of the reduction
in  the mail quantities within individual mailings and the number
of  promotional mailings, lower product costs resulting  in  part
from  sales  of  a  higher-priced product mix and  lower  product
development  costs, and, to a lesser extent, the  termination  of
certain  strategic alliances and the elimination of  spending  on
certain  unprofitable initiatives.  Overhead  expenses  decreased
because  of a reduction in pension costs and, to a lesser extent,
benefits from re-engineering activities principally in the United
States  and  the  benefits  of  cost-containment  initiatives  in
developed  markets resulting from actions taken in  prior  years,
which  were  partially  offset by higher  incentive  compensation
expenses.   The  improvement  in operating  profit  was  slightly
offset  by losses at the company's operations in Russia  stemming
primarily  from  the  economic  turmoil  that  resulted  in   the
devaluation of the ruble.

Other Income, Net
Other  income,  net,  increased in  the  six-month  period  ended
December 31, 1998 to $63.2, compared with $6.6 in the prior year.
Excluding  the  items  affecting the  comparability  of  reported
results, other income, net in the six-month period ended December
31,  1998  was  a  net  expense  of  $14.2.   This  decrease  was
principally  a  result  of  foreign exchange  translation  losses
resulting from the devaluation of the Russian ruble and losses on
foreign exchange transactions and hedging activity.  In addition,
other  income,  net, in the six-month period ended  December  31,
1997 included gains from sales of certain investments.

Income Taxes
For  the  six-month period ended December 31, 1998, the  reported
tax  rate was 39.8%. For the six-month period ended December  31,
1997,  the  reported  tax  rate was 122%.   Excluding  the  items
affecting  the comparability of reported results in  fiscal  1999
and  1998, the overall effective tax rate was 37.5% for the  six-
month periods ended December 31, 1998 and December 31, 1997.

Change in Accounting Principles
In  the  first  quarter  of fiscal 1999, the  company  adopted  a
preferred  method  for  calculating the market-related  value  of
pension  plan  assets  used  in determining  the  return-on-asset
component  of  annual  pension expense  and  the  cumulative  net
unrecognized   gain   or  loss  subject  to  amortization.    The
cumulative  effect of adopting this change, for  years  prior  to
fiscal  1999, was a benefit of $40.5 ($25.3 after tax,  or  $0.24
per share).  In addition, this change reduced pension expense for
the  six-month period ended December 31, 1998 by $9.5 ($5.9 after
tax, or $0.06 per share).

Basic and Diluted Earnings (Loss) per Share
The company reported net income of $114.3, or $1.06 per share, in
the six-month period ended December 31, 1998, compared with a net
loss  of $2.1, or $0.03 per share, in the six-month period  ended
December 31, 1997.  Excluding the cumulative effect of change  in
accounting principles for pension assets and the items  affecting
the  comparability of reported results in fiscal 1999  and  1998,
basic  and  diluted earnings per share was $0.58 in the six-month
period ended December 31, 1998, compared with $0.46 per share  in
the six-month period ended December 31, 1997.

The company's operations in Russia were significantly affected by
the  general  economic turmoil and resulting devaluation  of  the
ruble  in  the  six-month period ended  December  31,  1999.   In
response  to  the  Russian economic situation, the  company  took
actions  to  scale back its operations in Russia.  The  company's
operations in Russia generated a net loss of $15.8, or $0.15  per
share  in the six-month period ended December 31, 1998, primarily
as a result of the economic turmoil.

Geographic Areas

United States
Revenues  in the United States decreased from $635.7 in  1998  to
$621.3,   or  by  2%,  in  1999.   This  decrease  was  primarily
attributable   to  lower  unit  sales  within  Books   and   Home
Entertainment Products, moderately offset by sales of  a  higher-
priced  product  mix and revenues from the Good Catalog  Company,
which  was acquired in October 1998.  Lower circulation  revenues
for  Reader's  Digest  Magazine were  largely  offset  by  higher
advertising  revenues.   Books  and Home  Entertainment  Products
revenues  declined in most product lines principally  because  of
lower  customer  response  to  promotional  mailings  in  certain
product  lines, lower mail quantities within individual  mailings
and,  to a lesser extent, a reduction in certain types of mailing
activities.   Although  the company has returned  to  traditional
promotional formats in the United States, customer response rates
appear  to  have been unfavorably affected by negative  publicity
concerning  sweepstakes  marketing  methods  employed  by   other
companies  in  the United States.  In addition, certain  products
offered in certain product lines in 1999 did not have as broad an
appeal  as those offered in the prior year.  In 1999, the company
reduced mail quantities within mailings based on expected product
strength  and the desire to reduce marginally profitable  mailing
activities.  Lower revenues from unit sales of music products and
general  books were moderately offset by a higher-priced  product
mix across all product lines.  The decrease in music products was
caused  by  lower  customer  response  to  mailings,  lower  mail
quantities within the mailings and a mailing that was sent  later
than  in  the  prior  year which will cause the  revenues  to  be
recognized in the third quarter of 1999.  General books  revenues
decreased  primarily  because  of lower  mail  quantities  within
individual  promotional mailings in 1999.  Higher average  prices
in  Books  and  Home Entertainment Products were  the  result  of
postage  and  handling  price increases  across  several  product
lines,  in  anticipation of postal rate increases, and a  higher-
priced mix of products offered in 1999.  Lower circulation levels
for  Reader's  Digest  Magazine  in  1999  caused  a  decline  in
circulation  revenues, as well as a decrease in the average  rate
per  advertising page sold.  The effect of this  lower  rate  per
advertising  page  was more than offset by  a  higher  number  of
advertising  pages sold.  Operating profit improved significantly
in  1999,  compared with 1998, primarily because the  decline  in
revenues  was more than offset by lower promotional expenses  and
product  costs  as a result of the reduction in  mail  quantities
within individual mailings and, to a lesser extent, the number of
promotional  mailings,  the  termination  of  certain   strategic
alliances and the elimination of spending on certain unprofitable
initiatives.  In addition, overhead expenses were lower  in  1999
principally  because of a reduction in pension costs  and,  to  a
lesser extent, benefits from re-engineering activities.

Europe
Revenues in Europe decreased from $524.5 in 1998 to $519.5, or by
1%, in 1999.  Excluding the positive effect of changes in foreign
currency  exchange rates, revenues decreased 3%.  Lower  revenues
in  the  United Kingdom, most other developed markets and Russia,
where  operations were scaled back in response to the devaluation
of  the  ruble, were largely offset by higher revenues in Germany
and  France.  Improved customer response to promotional  mailings
in  certain  developed  markets in 1999, which  was  attributable
largely  to a return to traditional promotional formats  and  the
elimination   of  the  least  profitable  names  from   mailings,
partially  offset  the  decline in revenues  from  the  strategic
reduction  in  mail  quantities in the  current  year.   Revenues
decreased  within Books and Home Entertainment Products  and  for
Reader's  Digest  Magazine.  Within Books and Home  Entertainment
Products,  lower  unit sales principally of  video  products  and
series  books, were moderately offset by a higher-priced  product
mix,  predominantly  in video products and  general  books.   The
decline  in video products was the result of a reduction  in  the
number  of  mailings and lower mail quantities within  individual
mailings,  moderately offset by sales of a higher-priced  product
mix  in  1999.   Series books revenues declined  primarily  as  a
result of the same factors and because of a series that is  being
phased  out  in  certain  markets.  Revenues  for  general  books
benefited  from  a significantly higher-priced  mix  of  products
offered  in  1999.   Within  Reader's Digest  Magazine,  revenues
decreased  primarily  because of circulation  declines  in  major
markets,   particularly  in  the  United  Kingdom  and   Germany.
Operating  profit improved significantly in 1999,  compared  with
1998,  as a result of improved performance in Germany because  of
higher customer response to promotional mailings containing lower
mail  quantities.  In addition, the decline in revenues was  more
than  offset by lower product costs resulting in part from  sales
of  a  higher-priced  product mix and lower  product  development
costs,   and  lower  promotional  expenses  from  the   strategic
reduction  in  the number of promotional mailings  and  the  mail
quantities  within individual mailings.  These improvements  were
partially offset by losses at the company's operations in  Russia
stemming primarily from the economic turmoil that resulted in the
devaluation of the ruble.

Pacific and Other Markets
Revenues  in Pacific and Other Markets increased from  $213.7  in
1998  to $215.2, or by 1%, in 1999.  Excluding the adverse effect
of changes in foreign currency exchange rates, revenues increased
13%.  Revenues increased principally as a result of expansion  in
Latin  America,  particularly  in  Brazil.    Revenues  increased
primarily  within Books and Home Entertainment Products,  because
of  higher  unit sales in most product lines, most notably  music
and  video  products and, to a lesser extent, sales of a  higher-
priced product mix within general books.  Higher unit sales  were
attributable to growth in music and video product sales in  Latin
America, particularly in Brazil.  Revenues also increased  within
these  product lines in Australia because of the timing  of  mail
dates and shipments as well as the number of promotional mailings
compared  with the prior year, and improved customer response  to
promotional  mailings.  General books revenues benefited  from  a
higher-priced  mix  of products sold in 1999.   Operating  profit
improved in 1999, compared with 1998, primarily because of higher
revenues,  lower  promotional expenses  as  a  result  of  higher
customer  response  rates  and the benefits  of  cost-containment
initiatives in developed markets resulting from actions taken  in
prior years.

Corporate Expense
Corporate Expense in the six-month period ended December 31, 1998
increased to $20.3, compared with $16.4 a year ago, primarily  as
a result of higher incentive compensation expenses.

Business Segments

Reader's Digest Magazine
Revenues  for Reader's Digest Magazine decreased from  $359.2  in
1998  to $343.3, or by 4%, in 1999.  Excluding the adverse effect
of changes in foreign currency exchange rates, revenues decreased
3%.  The decrease in revenues was primarily attributable to lower
circulation  revenues  slightly offset  by  a  higher  number  of
advertising  pages sold at a lower average rate per page  in  the
six-month  period  ended  December 31, 1998.   Lower  circulation
revenues  were principally caused by lower circulation levels  in
the  United  States  and circulation declines  in  several  major
markets,  particularly the United Kingdom and  Germany.   In  the
United States, the effect of a significantly higher number of  ad
pages sold was moderately offset by a lower average rate per page
because  of  the  lower circulation levels  in  1999.   Operating
profit for Reader's Digest Magazine decreased slightly in the six-
month  period  ended  December 31, 1998 compared  with  the  same
period a year ago.  The decrease primarily reflects the effect of
lower  circulation  revenues,  which  was  largely  offset  by  a
corresponding decrease in promotional expenses and a reduction in
pension costs.  In order to improve the relative profitability of
Reader's  Digest  Magazine,  on  October  1,  1998,  the  company
announced  that it will reduce the rate base for Reader's  Digest
Magazine in the United States from 15 million copies per issue to
13.3  million for the January through June 1999 issues,  then  to
12.5 million copies with the July 1999 issue.

Books and Home Entertainment Products
Revenues for Books and Home Entertainment Products remained level
with  a  year  ago  at $825.2.  Excluding the adverse  effect  of
changes  in  foreign currency exchange rates, revenues  increased
1%,  principally attributable to growth in the company's  Pacific
and  Other Markets, which was largely offset by declines  in  the
United   States.    Sales   of  a  higher-priced   product   mix,
particularly  in  general  books  and  video  products,  and  the
acquisition of the Good Catalog Company in the United  States  in
October  1998,  were largely offset by lower  unit  sales  within
general books, series books and video products.  The decrease  in
general  books  was  caused primarily by  lower  mail  quantities
within  individual  promotional mailings in 1999  in  the  United
States,  largely offset by a significantly higher-priced  mix  of
products offered in the six-month period ended December 31, 1998,
as  well  as  by  postage and handling increases  in  the  United
States.   The decline in video products was the result  of  lower
mail quantities within individual mailings and a reduction in the
number  of  mailings,  as  well as  lower  customer  response  to
mailings  in  the United States, largely offset  by  sales  of  a
higher-priced  product  mix  in  1999.   Series  books   revenues
declined  primarily as a result of lower mail  quantities  within
mailings  and a reduction in the number of mailings, and  because
of  a  series  that  is  being phased  out  in  certain  markets.
Operating  profit  for  Books  and  Home  Entertainment  Products
increased  significantly  in 1999,  compared  with  1998.   These
operating   results   increased  primarily   because   of   lower
promotional  expenses  as  a result  of  the  reduction  in  mail
quantities   within  individual  mailings  and  the   number   of
promotional mailings, lower product costs resulting in part  from
sales   of   a  higher-priced  product  mix  and  lower   product
development costs, the termination of certain strategic alliances
and   the   elimination  of  spending  on  certain   unprofitable
initiatives.  In addition, overhead expenses were lower  in  1999
principally  because of a reduction in pension costs  and,  to  a
lesser  extent,  benefits from re-engineering activities  in  the
United States.

Special Interest Magazines
Revenues  for Special Interest Magazines increased from $46.3  in
1998  to $50.2, or by 8%, in 1999 principally as a result of  the
acquisition of American Woodworker magazine in the second quarter
of 1999.  Excluding American Woodworker, revenues increased 4% in
1999,  primarily  because of higher advertising  revenues.   This
increase  was  principally attributable to a higher average  rate
per  advertising  page  sold in 1999 as a  result  of  rate  base
increases  for several magazines.  Operating profit  improved  in
1999  compared  with  1998 primarily as a result  of  the  higher
advertising revenues and a reduction in pension costs.

Other Businesses
Revenues  for Other Businesses decreased from $139.9 in  1998  to
$137.3,  or by 2%, in 1999, primarily resulting from a  reduction
in  activity  in the merchandise catalog product line  worldwide,
largely offset by growth at QSP, the company's youth fund-raising
organization, principally because of higher unit sales  of  music
products.   Operating  profit  improved  significantly  in   1999
compared  with  1998 principally as a result of growth  and  cost
savings  at QSP and lower product costs and promotional  expenses
in the merchandise catalog product line.

Forward-Looking Information

Strategic Initiatives
The company is undertaking a three-phase strategy to build on its
fundamental  strengths and create growth opportunities  over  the
next three years.

In  July  1998, the company announced as the first step  in  this
strategy  a  global reorganization that included the organization
of  operations  into four business groups, the  restructuring  of
editorial  organizations,  the  establishment  of  new  reporting
relationships  and the reassignment of certain  executives.   The
second  phase  of  the  strategy, announced  in  September  1998,
targeted  the  restructuring  of  costs  and  the  conversion  of
underproductive  assets  to cash.  The  main  components  of  the
second   phase   of   the  strategy  were  the   elimination   or
rationalization  of unproductive businesses, activity-based  cost
reductions  and re-engineering, and maximizing the value  of  the
asset base of the company.

The  second phase of the strategy is currently underway, and  the
elimination  or  rationalization of  unproductive  businesses  is
still  on  track to be completed within the next 18 months.   The
company  has  decided to maintain its operations in  Scandinavia,
Finland  and Benelux and to consider re-engineering alternatives,
rather than sale or joint venturing alternatives, with respect to
those  operations.   The  company expects  to  record  additional
charges  to other operating items and impairment losses  in  1999
related  to cost reduction and re-engineering actions as  further
components of the plan and estimated costs associated with  those
actions  are  completed  and additional potential  re-engineering
activities are reviewed.

The  third  phase of the strategy is expected to be announced  in
February 1999 and will focus on plans to expand the business.

Year 2000 Readiness Disclosure
The year 2000 issue is the result of computer programs which were
written  using only two digits, rather than four, to represent  a
year.   Date-sensitive software or hardware may not  be  able  to
distinguish  between  1900  and 2000 and  programs  that  perform
arithmetic operations, comparisons or sorting of date fields  may
begin yielding incorrect results.  This could potentially cause a
system failure or miscalculations that could disrupt operations.

The  Company's State of Readiness.  The company has  developed  a
remediation  plan  for  its year 2000  issue  that  is  currently
underway and that involves three overlapping phases:

1)Inventory  -  This phase includes the creation of an  inventory
  of three functional areas:

     a)Applications and information technology (IT)  equipment  -
     These  include  all mainframe, network and desktop  hardware
     and  software,  including custom and packaged  applications,
     and IT embedded systems.

     b)Non-information  technology (non-IT)  embedded  systems  -
     These   include  non-IT  equipment  and  machinery.   Non-IT
     embedded  systems,  such as security,  fire  prevention  and
     climate   control   systems   typically   include   embedded
     technology, such as microcontrollers.

    c)Vendor  relationships  -  These include  significant  third
     party  vendors and suppliers of goods and services, as  well
     as vendor and supplier interfaces.

 The  United  States  and  developed international  markets  have
  fully  completed  the  inventory  phase,  except  for  packaged
  applications  in the United Kingdom, which are expected  to  be
  completed by February 1999.

2)Analysis   -  This  phase  includes  the  evaluation   of   the
  inventoried  items for year 2000 compliance, the  determination
  of  the  remediation  method  and resources  required  and  the
  development  of an implementation plan.  A significant  portion
  of  the  analysis  phase is complete in the United  States  and
  developed  international markets.  The analysis phase  for  the
  United  States and developed international markets is  expected
  to  be  completed by March 1999.  The United States  and  major
  developed  markets  substantially  completed  this  phase  with
  respect to non-IT embedded systems by December 1998.

3)Implementation   -   This   phase   includes   executing    the
  implementation plan for all applicable hardware  and  software,
  interfaces  and  systems.  This involves testing  the  changes,
  beginning   to  utilize  the  changed  procedures   in   actual
  operations,  testing in a year 2000-simulated  environment  and
  vendor  interface testing.  The implementation phase, including
  testing  for  certain critical applications, has  commenced  in
  the  United States and developed international markets, and  is
  expected to be completed by June 1999 for applications  and  IT
  equipment  and  non-IT  embedded systems.   The  implementation
  phase   for  the  United  States  and  developed  international
  markets with respect to vendor relationships is expected to  be
  completed by September 1999.

The  company's  operations in developing  international  markets,
including operations in Latin America, Eastern Europe and the Far
East,  have  substantially completed the inventory  and  analysis
phases  and plan to be fully complete with these phases by  March
1999.   The implementation phase has commenced in most developing
international  markets and is expected to be  completed  by  June
1999  for  applications  and  IT equipment  and  non-IT  embedded
systems.   The  implementation  phase  with  respect  to   vendor
relationships  in these markets is expected to  be  completed  by
September 1999.

The  company's  remediation plan for its year 2000  issue  is  an
ongoing  process  and the estimated completion  dates  above  are
subject to change.

The Risk of the Company's Year 2000 Issue.  Overall, at this time
the company believes that its systems will be year 2000 compliant
in  a  timely  manner  for several reasons.  Several  significant
marketing  and  fulfillment systems are  already  compliant.   In
addition,   the  company  extensively  utilizes  certain   shared
applications that should be remediated once and then deployed  to
all  appropriate  markets.  Also, comprehensive  testing  of  all
critical  systems is planned to be conducted in a simulated  year
2000 environment.  Additionally, critical fulfillment systems  in
the United States and several developed international markets use
a  one-digit field to denote the year, therefore the date  fields
for these systems are updated every 10 years and the year 2000 is
not an issue requiring separate attention.

The  company  believes that the risk of developing  international
markets' not being year 2000 compliant on a timely basis is  low,
primarily  because the majority of their custom applications  are
shared  systems  that  were developed in the  United  States  and
Canada and are currently year 2000 compliant.  In addition, since
most  of the equipment in these locations is relatively new there
is  less likelihood that the equipment is not currently year 2000
compliant.

The  company  believes  that the area of  greatest  risk  to  the
company  surrounding the year 2000 issue relates  to  significant
suppliers'  failing  to remediate their year  2000  issues  in  a
timely  manner.   The  company  has  relationships  with  certain
significant  suppliers  in  most of the  locations  in  which  it
operates.   These  relationships may be material  to  some  local
operations and, in the aggregate, may be material to the company.
The company relies on suppliers to deliver a broad range of goods
and  services  worldwide, including book  and  magazine  printing
services,  supplies of promotional materials and paper, warehouse
facilities,  lettershops  which  assemble  promotional  mailings,
customer  service  facilities, postal delivery services,  banking
services,  telecommunications and electricity.   The  company  is
conducting  formal communications with its significant  suppliers
in  all  locations to determine the extent to  which  it  may  be
affected  by  those third parties' plans to remediate  their  own
year 2000 issue in a timely manner.  The level of preparedness of
significant  suppliers can vary greatly from country to  country.
If a number of significant suppliers are not year 2000 compliant,
this  could  have  a  material adverse effect  on  the  company's
results of operations, financial position or cash flow.

The  Company's Contingency Plans.  The company is developing  its
country-by-country  contingency plans and expects  to  have  them
completed by June 1999.  To mitigate the effects of the company's
or significant suppliers' potential failure to remediate the year
2000 issue in a timely manner, the company would take appropriate
actions.   Such  actions  may  include  having  arrangements  for
alternate suppliers, re-running processes if errors occur,  using
manual  intervention  to  ensure the continuation  of  operations
where  necessary, and scheduling activity in December  1999  that
would  normally occur at the beginning of January  2000.   If  it
becomes  necessary  for  the company  to  take  these  corrective
actions,  it  is  uncertain,  until  the  contingency  plans  are
finalized,  whether  this would result in significant  delays  in
business  operations  or have a material adverse  effect  on  the
company's results of operations, financial position or cash flow.

Costs  to Address the Company's Year 2000 Issue.  The total  cost
of  the  company's remediation plan is estimated at approximately
$13.0  to $18.0 and is being funded through operating cash flows.
To  manage the cash flow effects of these incremental costs,  the
company has deferred certain IT development activities and system
enhancements.    Of  the  total  cost,  approximately   $2.0   is
attributable   to  new  hardware  and  software  that   will   be
capitalized.   The remainder will be expensed  as  incurred.   To
date,  approximately $8.0 of the total cost  of  the  remediation
plan has been spent, the majority of which was expensed.

Impact of the Euro Conversion
On January 1, 1999, 11 of the 15 member countries of the European
Union  established fixed conversion rates between their  existing
sovereign currencies ("legacy currencies") and a single  currency
called  the euro.  The legacy currencies are scheduled to  remain
legal  tender as denominations of the euro during the  transition
period  from  January  1, 1999 to December 31,  2001.   Beginning
January  1,  2002,  euro-denominated  bills  and  coins  will  be
introduced and by July 1, 2002, legacy currencies will no  longer
be legal tender.

The  company  has  initiated an internal analysis  regarding  the
business and systems issues related to the euro conversion and is
in  the process of developing a strategic plan to ensure that all
necessary modifications are made on a timely basis.  As the first
step,  to accommodate the introduction of the euro on January  1,
1999,  the company's operations in markets that are adopting  the
euro are currently, upon request, able to accept payments and pay
suppliers  in euros, and are able to indicate the euro equivalent
of  pricing  on  invoices.   During the  transition  period,  the
company  will be monitoring customer and competitor  reaction  to
the euro and will update the strategic plan as needed.

The  company  believes that the conversion to the euro  will  not
have  a  significant  impact on the marketing  strategy  for  the
company's European operations.  The euro is not expected to  have
a significant competitive impact, including the resulting need to
synchronize  prices between markets, primarily because,  for  the
most  part,  the  editorial content of the  company's  publishing
products  varies, the products are published in  local  languages
and  they  are sold principally through direct mail  rather  than
retail  channels.  These factors result in products that tend  to
be  unique  to each market that do not easily lend themselves  to
price comparisons across borders.  The estimated costs to convert
all  affected systems to the euro will not be finalized until the
company  has  completed  a  strategic  plan;  therefore,  it   is
uncertain  whether the costs of conversion will have  a  material
adverse  effect on the company's results of operations, financial
position or cash flow.


The  statements contained in this report, if not historical,  are
forward-looking statements, which involve risks and uncertainties
that  could  cause actual results to differ materially  from  the
financial  results  described in the forward-looking  statements.
These risks and uncertainties include:  the effect of potentially
more   restrictive  privacy  and  other  governmental  regulation
relating  to  the  company's marketing  methods;  the  effect  of
modified  and varied promotions; the ability to identify customer
trends; the ability to continue to create a broadly appealing mix
of  new  products;  the ability to attract  and  retain  new  and
younger magazine subscribers and product customers in view of the
maturing  of an important portion of the U.S. customer base;  the
ability  to  attract and retain subscribers and customers  in  an
economically   efficient   manner;  the   effect   of   selective
adjustments   in  pricing;  the  ability  to  expand   and   more
effectively utilize the company's customer database; the  ability
to  expand  into new international markets and to  introduce  new
product  lines  into  new and existing markets;  the  ability  to
expand  into  new  channels  of  distribution;  the  ability   to
negotiate and implement productive strategic alliances and  joint
ventures;  the  ability to contain and reduce  costs,  especially
through global efficiencies; the cost and effectiveness of the re-
engineering of business processes and operations; the accuracy of
management's  assessment of the current status of  the  company's
business;  the  evolution  of  the company's  organizational  and
structural capabilities; the ability of the company to respond to
competitive  pressures within and outside  the  direct  marketing
industry;  the effect of worldwide paper and postage  costs;  the
effect of postal disruptions on deliveries; the effect of foreign
currency  fluctuations; the effect of the year  2000  issue;  the
effect  of  the  transition  to the euro;  and  general  economic
conditions, particularly those in Russia.

Liquidity and Capital Resources

Cash  and cash equivalents, short-term investments and marketable
securities  increased  $66.7  to  $192.8  at  December  31,  1998
compared with June 30, 1998.  The increase was primarily a result
of  proceeds  from the sale of important works of  art  from  the
company's  collection  and  cash  flow  provided  from  operating
activities, partially offset by payments made for the acquisition
of  The Good Catalog Company and American Woodworker and dividend
payments.

In the second quarter of 1998, the company paid a $0.05 per share
dividend  on its common stock, compared with $0.225 per  share  a
year ago.  At the current rate, the annualized dividend is $0.375
per share in 1999 compared with $0.90 in 1998.

The  company  did not repurchase any shares of Class A  nonvoting
common stock in the second quarter of 1999.

The  company  is a party to a Competitive Advance  and  Revolving
Credit  Facility  Agreement amended as of June 2,  1998,  with  a
syndicate  of domestic and foreign banks (the credit  agreement).
The  credit  agreement, which expires in November  2001,  permits
competitive  advance  and revolving credit borrowings  of  up  to
$300.0  by the company and its designated subsidiaries.  Interest
rates can be based on several pricing options that can vary based
upon  operating  results of the company.   The  proceeds  of  the
borrowings may be used for general corporate purposes,  including
acquisitions, share repurchases and commercial paper backup.  The
credit  agreement contains certain restrictions on incurrence  of
debt,  liens  and guarantees of indebtedness.  The  company  must
also comply with certain financial covenants, including a minimum
level  of consolidated tangible net worth.  At December 31, 1998,
there were no borrowings outstanding under the credit agreement.

In  addition, various international subsidiaries of  the  company
have  available lines of credit totaling $59.8.  At December  31,
1998,  loans  in  the  amount  of  $3.4  were  outstanding  under
international lines of credit at a weighted average interest rate
of 8.8%.

The  company believes that its liquidity, capital resources, cash
flow and borrowing capacity are sufficient to fund normal capital
expenditures,  working  capital  requirements,  the  payment   of
dividends   and   implementation  of  the   company's   strategic
initiatives.
                   PART II.  OTHER INFORMATION


Item 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

At  the 1998 Annual Meeting of Stockholders of the company,  held
on  November 13, 1998, the following matters were voted on by the
stockholders:

Proposal  1:     Election of Directors to hold office  until  the
next  Annual  Meeting or until their successors are duly  elected
and  qualified.  Each nominee was elected by the  votes  cast  as
follows:

                                     For      Withheld
       Thomas O. Ryder           20,973,954    186,557
       Lynne V. Cheney           20,927,669    232,842
       M. Christine DeVita       20,910,188    250,323
       George V. Grune           20,856,241    304,270
       James E. Preston          20,926,086    234,425
       Lawrence R. Ricciardi     20,968,871    191,640
       C.J. Silas                20,935,078    225,433
       William J. White          20,961,646    198,865

Proposal  2:     Approval of amendment of the 1994  key  employee
long  term  incentive  plan  to increase  the  number  of  shares
awardable to a participant in any fiscal year and to provide  for
transferability of stock options.  The amendment was approved  by
the votes cast as follows:

                                           Broker
          For        Against    Abstain   Non-Votes
       19,898,682  1,204,451     57,378       ---

Proposal  3:Stockholder proposal to limit to two  the  number  of
Directors  affiliated  with  the foundations  which  control  the
company.  The proposal was rejected by the votes cast as follows:

                                           Broker
          For      Against      Abstain   Non-Votes
       2,144,744  18,290,423     85,097     640,247

Proposal 4:Stockholder proposal to retain an investment banker to
develop  a  plan  for  recapitalization of  voting  rights.   The
proposal was rejected by the votes cast as follows:

                                          Broker
          For      Against     Abstain    Non-Votes
       1,942,598  16,836,766    24,843    2,356,304


Item 6.   EXHIBITS AND REPORTS ON FORM 8-K.

(a)  Exhibits

     27   Financial Data Schedule

(b)  Reports on Form 8-K

     The company filed a report on Form 8-K dated January 8, 1999
     which  included  a copy of a press release relating  to  the
     election of a director to the company's Board of Directors.









                           SIGNATURES


Pursuant  to the requirements of the Securities Exchange  Act  of
1934  the registrant has duly caused this report to be signed  on
its behalf by the undersigned thereunto duly authorized.






                                        The Reader's Digest
Association, Inc.
                                        (Registrant)



Date:  February 5, 1999    By:          GEORGE S. SCIMONE
                                        George S. Scimone
                                        Senior Vice President and
                                        Chief Financial Officer
                                        (and authorized signatory)



                                
                                
                          EXHIBIT INDEX
                                
                                
                                                              
 Exhibit                                                        Page
                                                               
   27  Financial Data Schedule