Bertelsmann To Book Out Of Clubs

Two weeks before he officially takes over as the new chief exec, Bertelsmann’s Hartmut Ostrowski is said to be considering the sale of the company’s book, DVD and music clubs.

Reports in Financial Times Deutschland and its U.K. sister paper suggest he’d use a December 13 meeting of the company’s 600 executives to review the sluggish direct-to-customer businesses and consider focusing on faster-growing markets.

In his first strategy speech since being named as the man who’ll take over for current CEO Gunter Thielen on January 1, Ostrowski also looks set to confirm that the German media giant wants to buy the 10 percent of RTL television that it doesn’t already own.

Bertelsmann has already notified RTL, the leading European entertainment network with interests in 38 television channels and 32 radio stations, that it may be making an offer for the rest of the company.

Ostrowski may tell the Berlin meeting that some of the US$1.75 billion (euro 1.2 billion) earmarked for the RTL deal could be raised by selling off Direct Group.

Problems merging existing U.S. units with Columbia House, a record club bought in 2005, and Bookspan, a book club that Bertelsmann took over this year, could lead to a writedown of euro 100 million in 2007.

Alongside the possible sale of what is now Bertelsmann Direct North America, executives are debating whether to sell book businesses elsewhere.

Unfortunately for Ostrowski, the German book club has historically been seen as the heart of the company, making it hard for the Mohn family, which controls Bertelsmann, to agree to a sale.

The possible dissolution of much of the Direct Group comes after it recorded an operating loss of euro 35 million on sales of euro 1.2 billion in the first six months of 2007. It made a small profit in the same period last year.