Bertelsmann shuffles director-to-customer units

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COLOGNE, Germany -- Less than a week after settling the long-running Napster lawsuit with a $130 million payoff to the National Music Publisher Association, German media giant Bertelsmann has announced a shakeup of its entire direct-to-customer business.

Bertelsmann on Monday said the move would split its Direct Group division -- responsible for the company's music, DVD and book clubs -- in two, following the resignation of Direct Group CEO Ewald Walgenbach.

The North American business -- which includes music/DVD clubs Columbia House and BMG Music Service and book clubs Bookspan, Doubleday Book Club, Book-of-the-Month Club, Mystery Guild and Black Expressions -- will become part of Bertelsmann's U.S. publishing group Random House. Stuart Goldfarb will stay on as head of the North American division, renamed Bertelsmann Direct North America, reporting to Random House chairman and CEO Peter Olson.

Fernando Carro will head up the remainder of Direct Group's business, its European and Asian operations, reporting directly to Bertelsmann CEO Gunter Thielen and, starting in 2008, his successor Hartmut Ostrowski. Carro has held several positions at Direct Group, including heading up its Spanish and German club businesses.

Walgenbach, who has run Direct Group since 2002, will step down at the end of the year to take up a position at private investment group BC Partners. In his time at Direct Group, Walgenbach restructured the money-losing division and returned it to the profit zone in 2003. Last year Direct Group booked revenues of €2.7 billion and had an operating (EBIT) profit of €110 million.
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