Bertelsmann to Stanch Loss

German media company Bertelsmann AG is rolling its money-losing
online book sales unit into its considerably larger book and music club
business in a cost-cutting move that reflects intense competition from

The action includes the closing of the London headquarters as well as its
Danish and Norwegian operations. Job cuts are expected but have not yet been
announced. is said to be Europe’s No. 2 online bookstore behind

“We have no details (on job cuts), yet we cannot exclude that it will
happen,” a Bertelsmann spokesman was quoted as saying in published reports.

The decision comes after privately held Bertelsmann scrubbed plans late last
year to take the online book unit public as a separate company. It also
follows a Borders Group decision in early April to relaunch its business in a partnership with Amazon.

The reorganization will trim costs by slashing overlapping administrative and
marketing operations with Bertelsmann’s book club division, according to a

Bertelsmann is hoping for more cross-selling, boosting online sales by
attracting more club members and winning new club members from customers
surfing the Web.

Bertelsmann is combining the two groups under the worldwide retail unit
DirectGroup, which includes the music operation BMG.

The club division has also become a financial drain in recent years, although
division chief Klaus Eierhoff was quoted this week as saying that it should
return to profitability, excluding, next year.

“It doesn’t matter if in terms of a pure Internet player we are No. 1 or No.
2,” he told the Associated Press. “The question in 2001 is whether you can
offer all services to your customers through all channels.”

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