Bertelsmann sells Direct Group North America

Najafi buys direct-to-consumer division

BERLIN – German media giant Bertelsmann has agreed to sell its direct-to-consumer division Direct Group North America to Phoenix-based private investment group Najafi Companies.

Deal is expected to close later this year.

Serving millions of members through its club catalogs and online services, including brands such as Book-of-the-Month Club and Columbia House, Direct Group North America is one of the largest direct marketers of books, CDs and DVDs in the U.S. and Canada.

The companies declined to disclose financial details of the deal.

Bertelsmann’s book clubs have been a vital part of the company since the post-war years, when under the leadership of company patriarch Reinhard Mohn the group embraced the mail-order book business, resulting in dramatic growth of the publishing company during the 1950s and paving the way for its transformation into a leading global media conglom.

Bertelsmann has been reviewing its direct business divisions around the world but said it had not yet made a decision on whether to sell its Direct Group business in Europe.

Last year the company split the Direct Group into two regions, North America, which it placed under the roof of its Random House unit, and Europe and Asia, which remained part of Bertelsmann’s main Direct Group division under the management of Fernando Carro.

Bertelsmann’s chief financial officer Thomas Rabe, who oversees Direct Group North America, had already announced the company’s intention to sell Direct Group North America at Bertelsmann’s annual press conference in March as part of its international strategy. Rabe stressed that Bertelsmann remained committed to the U.S. market and would now redirect resources to other business opportunities.

Najafi Companies CEO Jahm Najafi said his group would “work closely with Direct Group North America’s management team to ensure the future success and growth of the company. We believe that the winning combination of great brands and dedicated employees signals an exciting new chapter in this company’s story.”

Move is very much in line with the strategy of new Bertelsmann chief exec Hartmut Ostrowski, who hinted as early as December that Bertelsmann might sell its U.S. book and music clubs as it narrows its focus on TV.

The company’s pan-European broadcaster RTL Group remains the conglom’s main moneymaker and Bertelsmann looks eager to expand its international TV holdings.

Bertelsmann is also looking at pulling out of its Sony BMG music business and selling its 50% stake to the Japanese media giant.

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