Bertelsmann reworks Direct Group

Company split across Atlantic

BERLIN — Bertelsmann is splitting its direct-to-customer business division Direct Group into two regions, North America plus Europe and Asia, following the exit of CEO Ewald Walgenbach.

The acquisition of Columbia House established Direct Group as the U.S.’s leading direct marketer of music and DVDs. The company recently added U.S. book club company Bookspan to the fold.

Fernando Carro will replace Walgenbach as Direct Group CEO but now overseeing only Europea and Asia while continuing to report to Bertelsmann chairman and CEO Gunter Thielen.

Across the pond, the group’s book, DVD and music club business will be overseen by Random House. Stuart Goldfarb will manage Bertelsmann Direct North America as president and CEO and report to Random House chairman/CEO and Bertelsmann executive board member Peter Olson.

Bertelsmann said bringing Bertelsmann North America under the Random House roof would “spark new growth throughout the group.”

Company added that there were good growth opportunities for Direct Group in Eastern Europe and Asia and that the “new structure will allow for an even closer strategic interlinking of club, bookselling and Internet activities.”

Carro was a member Direct Group’s executive board and held several exec positions at the division, most recently as managing director of the Spanish and the German clubs.

The new Direct Group operates media clubs and bookstores in 23 countries, including well-known brands such as Der Club in Germany, France Loisirs in France and Circulo de Lectores in Spain.

With millions of members in the U.S. and Canada, Bertelsmann Direct North America is the largest direct marketer of music, DVDs and books in the U.S. and home to BMG Music Service, Columbia House, Doubleday Book Club, Book-of-the-Month Club, Mystery Guild and Black Expressions as well as a number of special interest and lifestyle book clubs.

Walgenbach, who will oversee Direct Group’s reorganization, is leaving Bertelsmann to join private equity company BC Partners. Walgenbach was chief operating officer during Thomas Middelhoff’s tenure as Bertelsmann chairman/CEO. He moved to Direct Group in 2003 and lead the then money-losing unit out of the red.

Last year Direct Group posted e2.7 billion ($3.7 billion) in revenue and an operating profit of $150 million.

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