Bertelsmann boss is ousted

Bertelsmann is the world's third-biggest media group

Thomas Middelhoff, boss of German media giant Bertelsmann, has resigned following a dispute with shareholders over the company's strategic direction.

Bertelsmann said Guenter Thielen, head of the company's media services division, would take over as chief executive.

Bertelsmann will probably shift down a gear

Media analyst

The company said Mr Middelhoff's departure was because of "differences of opinion between the chief executive officer and the supervisory board about the future strategy of Bertelsmann".

Analysts said the move signalled a pulling back from ambitious expansion plans, which included internet investments and flotation on the stock market.

"They will probably shift down a gear but they won't be pulling off the road," said Bernhard Tubeilah, media analyst at Merrill Lynch.

"It does mark a slight change of direction in the corporate culture."

Telekom speculation

Bertelsmann would not comment on a report in Germany's Berliner Kurier newspaper that Mr Middelhoff is to become chief executive of former German telecoms monopoly Deutsche Telekom.

Ron Sommer was ousted from the top job at Deutsche Telekom two weeks ago, ostensibly because of his failure to restore the firm's collapsed share price.

An interim boss was appointed in his place.

Mr Middelhoff is reported to be close to German chancellor Gerhard Schroeder, who is widely believed to have engineered the departure of Mr Sommer.

Growth plans

Mr Middelhoff has headed Bertelsmann, the world's third-biggest media firm after AOL Time Warner and Vivendi Universal, since 1998.

He oversaw an expansion drive financed in part by the sale of the firm's stake in AOL's European division to AOL Time Warner.

Bertelsmann's BMG music division last month took over the Zomba record label, which includes Britney Spears and the Backstreet Boys in its stable of best-selling pop acts.

Earlier this year, the company also struck a deal to buy the assets of online song-swapping service Napster.

But an attempt to buy a stake in UK broadcaster Carlton Communications fell through, as did a mooted merger with music group EMI.

Privately-owned Bertelsmann's existing assets include the US publishing group Random House, and a stake in European TV broadcaster RTL.