Bertelsmann Selling E-Commerce Assets

Bertelsmann AG is the latest big media company beating a retreat from the e-commerce jungle. The German company is reportedly in talks to sell some of its online book selling businesses, possibly to e-tailer .

Also about to go, reports said, are its interest in music swapping service Napster and its stake in, the struggling US competitor to

According to The Guardian, Reuters and The Wall Street Journal, Bertelsmann is in early talks to sell off its network of sites, which sell books and music in Europe. The Journal said Bertelsmann held preliminary talks with about it, but that a sale had yet to be discussed in detail. However, wire reports also said Bertelsmann was holding talks with other potential buyers for the European-based’s assets. is part of Bertelsmann’s DirectGroup, which houses book clubs and a number of online commerce and marketing efforts. At one time, DirectGroup claimed more than 50 million customers and members for its book and music clubs and its e-commerce sales business, helped by its acquisition of e-mail marketer in May of 2001.

As for how Bertelsmann might dispense with its 35.2 percent stake in , a number of press reports said a sale of those assets was not seen as big a priority as selling the unit. The New York-based (which is separate from the offline book retailer), has been struggling to slash its red ink in order to remain somewhat competitive with Amazon.

A spokesman for DirectGroup wasn’t immediately available to comment. Beyond confirming it was looking at its options for the division, the company would not comment directly on the reports.

“As for the division’s strategic priorities, our key message is: DirectGroup is concentrating on becoming profitable – as a group – in its core businesses and markets (Europe, America, Asia), based on future-proof business models,” a statement from spokesman Gerd Koslowski said.

“Most of our clubs all over the world are already operating at a profit. Meanwhile, we are looking into strategic options for all ventures – successful as they are – that are not part of our immediate core business.”

The news comes about a month after Bertelsmann ousted its CEO and chief new media architect Thomas Middelhoff after a dispute with majority shareholders over the company’s direction. His replacement, Gunter Thielen as chief executive, has made no secret of his plans to slash money-losing operations from the company. The developments appear to be taking place in parallel with French media conglomerate Vivendi Universal, which also ousted its CEO and is now looking to sell off some new media and e-commerce assets.

Bertelsmann’s BOL investment, along with CD-selling play CDNOW and its stakes were considered keys to DirectGroup’s status as a
major player in e-commerce. But many companies’ new media/old media
strategies are in serious retrenchment as debts pile up and revenues slow to
a trickle amid a brutal advertising recession.

One report said if is not sold to onetime rival, it may be closed down altogether. Same too with its stake.

And then there’s the Napster problem. A report in Financial Times’ Web site said the company may be close to pulling the plug on the music-swapping site it once lent as much as $85 million.

Napster is now seeking a lifeline in bankruptcy proceedings that could
ultimately spell the end of the fabled music swapping system, depending on
how a judge rules. If a new auction for Napster’s assets is ordered, it
could turn out, given reports of Bertelsmann’s dying interest, that
Napster’s end is near.

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