A clash with shareholders cost Thomas Middelhoff his job at the helm of media giant Bertelsmann – even though the company made money while rivals like AOL Time Warner and Vivendi ran into trouble.
Not even one of the deals of the decade – reaping billions from selling a stake in AOL Europe at the height of the Internet bubble – could save Middelhoff from the same fate as Vivendi’s former chief Jean-Marie Messier and Robert Pittman, ousted as head of AOL Time Warner’s AOL division in a management shakeup.
Bertelsmann said Sunday that Middelhoff was leaving due to “differing views between the chief executive and the supervisory board over the future strategy” of the German company.
He was replaced by Gunter Thielen, who currently heads Bertelsmann’s printing and media services business Arvato as well as the Bertelsmann Foundation, which holds a majority stake owned by the Mohn family. The family controls three-quarters of the 167-year-old firm’s shares, and thus the board of directors.
The elevation of Thielen, who comes from one of the company’s more traditional businesses, raises questions about whether Bertelsmann will continue the global, Internet-focused course plotted by Middelhoff.
On Sunday, Bertelsmann said Thielen, a member of the management board since 1985, would pursue the company’s international strategy but didn’t elaborate on why Middelhoff was replaced. Company officials couldn’t immediately be reached Monday.
The company’s statement Sunday suggested earnings were not a source of contention. Operating earnings for the first half were at a “pleasing level,” it said, without giving details.
Middelhoff, 49, took over at the Guetersloh-based firm in 1998 after a speedy rise through the ranks. He built up its business at home and abroad, sealing landmark deals to take control of Luxembourg-based RTL, Europe’s biggest television company, and U.S. book publisher Random House.
His dealmaking helped the company avoid the debt problems of its rivals, especially the sale of 49 percent of AOL Europe for $6.8 billion just before tech stock prices collapsed. He also sold out of Munich-based Kirch Group’s money-losing pay TV venture well ahead of the company’s bankruptcy this year.
The extra cash helped Bertelsmann gear up for expansion, and earlier this year Forbes magazine called Bertelsmann “the least troubled media giant on earth.”
The company posted a net profit of 931 million euros between June and December last year, the first half of its fiscal year. Since January, it has switched its accounting period to match the calendar year to prepare for a stock market listing in 2005. By contrast, Vivendi lost 13.6 billion euros last year; AOL Time Warner lost $4.9 billion.
The music business, however, proved a rougher ride. Antitrust authorities blocked a merger of Bertelsmann Music Group with British rival EMI, and in June, Britney Spears’ record company, Zomba Music, exercised an option forcing unprofitable BMG to pay $3 billion for the 75 percent of the shares it didn’t already own in the U.S.-based music publisher.
German news media reported that Middelhoff was being considered for the top job at Deutsche Telekom, whose CEO, Ron Sommer, was fired earlier this month. Deutsche Telekom dismissed the reports as speculation, and Germany’s Bild newspaper reported Monday that Middelhoff hadn’t received such an offer, citing sources close to Middelhoff.
