Middelhoff blaming exit on clash of Teuton titans

Bertelsmann unable to compete without flotation, exec sez

BERLIN — Ousted Bertelsmann CEO Thomas Middelhoff has admitted he clashed with the German media giant’s owners over his desire for an initial public offering that would have included part of the Mohn family’s controlling stake, and that the conflict may have caused his downfall.

“My scenario was to keep Bertelsmann at the top of world-class companies. That would have made it necessary to consider the 75% held by the Mohns,” Middelhoff said in an interview with German pubcaster ARD Tuesday. He added that Bertelsmann would not remain internationally competitive without the flotation.

According to Bernard Tubeileh, a media analyst at Merrill Lynch in Frankfurt, this conflict may have sparked Middelhoff’s ouster. “Middelhoff made the company’s IPO a central topic,” he said. “Seeing the collapse of Vivendi Universal and the general state of the stock markets, the Mohn family was probably put off by the idea.”

On Wednesday Middelhoff’s replacement, Gunter Thielen, reiterated that Bertelsmann will forge ahead with plans for the IPO in 2005.

The company will float the 25% stake in Bertelsmann held by Belgian investment bank Groupe Bruxelles Lambert but not the Mohn family stake.

“In agreement with all of the shareholders, we are continuing to prepare for a possible public listing of the GBL stake,” Thielen said in a letter to employees.

There is speculation, however, that Bertelsmann may eventually buy out GBL to the tune of $5 billion to avoid even a 25% public listing.

Thielen also announced the company would cut its debts, focus on its core businesses and consolidate its assets. He added that Bertelsmann had overstepped its “strict debt limit” when it was forced to buy U.S. record label Zomba after it exercised a put option; Bertelsmann reportedly paid $3 billion.

UFA streamlining

In related news, Bertelsmann’s pan-European broadcaster RTL Group is streamlining its UFA production banner holding company, it announced Thursday.

Munich-based HDTV will merge with Grundy Light Entertainment as part of restructuring to make the division more transparent and optimize synergies.

Grundy is UFA’s main producer of formats, including “Das Quiz” and “Family Feud.” HDTV, also an UFA-owned company, produces similar fare, like “Millionaer gesucht!” and lottery skein “SKL Show.”

Meanwhile, Bertelsmann on Thursday named Arnold Bahlmann as new CEO of its science and trade publishing arm Bertelsmann Springer.

Bertelsmann is still planning to put the division on the block to cut non-core assets.

Analysts expect the sale to raise $787 million. Bahlmann will continue to run Bertelsmann Capital, the group’s strategy and dealmaking arm, and hold a seat on the group’s executive board.

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