Sony BMG stake may be for sale


COLOGNE, Germany -- Strategic restructuring at German media group Bertelsmann could mean the sale of the company's 50% stake in music label Sony BMG as well as the company's book club unit Direct Group.

Book clubs once were the foundation of Bertelsmann's business, but have had trouble finding the right business model in the digital age.

A joint venture with Sony requires the German group to hold onto the Sony BMG stake until August 2009, but Bertelsmann would be free to sell off after that. The stake has been valued at up to $1.5 billion.

A Bertelsmann spokesman declined comment Tuesday on a report in the Financial Times Deutschland that said CFO Thomas Rabe already has met with at least two major private-equity companies interested in buying the stake in Sony BMG, the label that includes such acts as Justin Timberlake, Britney Spears, Christina Aguilera and Alicia Keys.

Bertelsmann CEO Hartmut Ostrowski said he wants to make the German media giant a high growth machine. By 2015, Ostrowski wants annual revenue to jump from their current level of 20 billion euros ($30 billion) to 30 billion euros, and operating earnings before interest and taxes to soar from 1.9 billion euros ($2.9 billion) to more than 3 billion euros.

Bertelsmann divisions in sectors with low or no growth -- such as the music and book club industries -- will have a tough time meeting Ostrowski's ambitious targets.

"In most cases, you're not going to turn a lamb into a lion," Ostrowski said. He reportedly has ordered an audit of Direct Group to measure the value of the division, which operates about 60 book clubs worldwide.