German giant to sell stake to Sony
German media giant Bertelsmann is reportedly in talks to sell its half of joint-venture music company Sony BMG to Sony Corp.Bertelsmann and Sony established Sony BMG in 2004, bringing together their music businesses. The companies initially agreed to hold onto their stakes in the joint venture until 2009, but German daily Frankfurter Allgemeine Zeitung, without citing sources, said a sale looked likely to take place this year. Sony, which holds an option to buy should Bertelsmann decided to sell its stake, wants to take over the entire company, according to the paper. No agreement has yet been reached on a price. The Financial Times Deutschland reported in March that Bertelsmann had discussed the sale of its Sony BMG stake with at least two private equity companies. BMG’s artist rosters include Alicia Keys, Leona Lewis and Avril Lavigne. Bertelsmann and Sony have declined to comment on the report. Revenue at the BMG unit fell 27% in 2007 to $2.25 billion while operating profit dropped 46% to $144 million. Bertelsmann topper Hartmut Ostrowski said when he took office in December that the company was prepared to examine options for all units that fail to post organic growth. The chief exec is said to be keen to exit the music business, as Internet downloads have caused sales to fall. Sony BMG is not the only Bertelsmann division up for sale. Ostrowski is looking to divest the group’s North American book and music club biz. The faltering Direct Group, which handles its direct-to-customer business in Europe and Asia, is under review as well. Over the years, Bertelsmann has grown increasingly dependent on its pan-European broadcasting division, RTL Group, the media conglom’s main revenue engine. It also controls publishing assets such as Random House and Gruner + Jahr.
Want Entertainment News First? Sign up for Variety Alerts and Newsletters!