June 18, 1997


Mr. James P. Schadt
Chairman and Chief Executive Officer
The Reader's Digest Association, Inc.
Pleasantville, NY 10570-7000

Dear Jim:

This Agreement sets forth the terms and conditions under
which The Reader's Digest Association, Inc. (the "Company")
agrees to continue to employ you and you agree to continue
to serve as an executive of the Company.

1.      The term of this Agreement shall be from the date
first written above until September 30, 2000; provided,
however, that the term of this Agreement shall be
automatically extended for one year on each anniversary of
the date first written above unless the Board of Directors
of the Company shall determine otherwise and notify you in
writing one month in advance of such anniversary of such
determination.  The expiration date described in this
paragraph, as it may be extended, is hereinafter referred to
as the "Agreement Expiration Date".  Upon expiration or
termination of this Agreement, you may continue as an
employee of the Company on an "at-will" basis, subject to
the determination of the Board of Directors.

2.     During the term of this Agreement, you shall serve as
Chairman of the Board and Chief Executive Officer of the
Company, and you shall devote substantially all of your
business time to the business and affairs of the Company,
reporting only to the Board of Directors of the Company with
such authority and responsibilities as are typical for
executives in your position at similarly situated companies
in the industry.

3.     The Company shall pay you an annual base salary at a
rate at least equal to your current annual base salary and
you shall continue to participate in the Company's employee
benefits plans and programs (including, but not limited to,
incentive compensation, retirement, welfare and perquisite
plans and programs) on at least substantially the same basis
as your current participation, as such salary or
participation may be increased or supplemented from time to
time; provided, however, that your annual base salary and
employee benefits participation may be reduced as part of
and consistent with a good faith senior management-wide
reduction, but only if the extent of your reduction is no
greater than that of other senior management personnel; and
provided further, however, that the Company may replace,
substitute or supersede any current employee benefits with
benefits that are in good faith believed by the Company to
be at least comparable.

4.     Reference is made to the agreement dated April 1,
1996 (the "Termination Agreement") between you and the
Company relating to payments and benefits that you will
receive in connection with a termination of your employment
with the Company under certain circumstances.  Unless
otherwise defined in this Agreement, terms that are defined
in the Termination Agreement shall have the same meanings
when used in this Agreement.

(a)     The Company may terminate your employment at any
time for any reason.

(b)     If your employment is terminated by you for Good
Reason or if your employment is terminated by the Company
other than for Cause, then, in lieu of any continuing
payments or benefits hereunder, you shall receive the
payments and benefits provided for in the Termination
Agreement under the terms and conditions of the Termination
Agreement, except that the Severance Period under the
Termination Agreement shall be the greater of:

      (1)     the period of two years immediately following
the Date of  Termination; or

      (2)     the period commencing on the Date of
Termination and ending on the Agreement Expiration
Date.

(c)     During the Severance Period described in Paragraph
4(b) and so long as the Company honors its obligations to
you, you shall not, without the prior written consent of the
Company, become a proprietor, director, partner, or employee
of, or consultant or advisor to, or otherwise become
connected with, any business that is in direct competition
with the Company (other than as a stockholder with a non-
substantial interest in any such business).

5.     While you are employed, you will be indemnified by
the Company to the fullest extent permitted by law for acts
taken within the scope of your employment.

6.     This Agreement, together with the Termination
Agreement, constituted our entire understanding with respect
tot he subject matter hereof and supersedes any prior
agreements, written or oral, with respect thereto.  This
Agreement shall be governed and interpreted in accordance
with the laws of the State of New York applicable to
contracts executed in and to be wholly performed within that
State.

                              Very truly yours,

                              THE READER'S DIGEST
ASSOCIATION, INC.



                              /s/  GLENDA K. BURKHART
                              Glenda K. Burkhart
                              Senior Vice President,
                              Strategic Planning and
                              Human Resources


Agreed to and accepted
as of June 18, 1997.



/s/  JAMES P. SCHADT
James P. Schadt