Bertelsmann 'to consider asset sales'

The company will focus on more traditional businesses

German media powerhouse Bertelsmann is embarking on a strategic re-think that could see it ditch high-profile assets including a stake in the UK's Channel 5, analysts have said.

The re-evaluation of priorities follows the departure of former boss Thomas Middelhoff - the man who drove Bertelsmann's aggressive expansion, particularly into online ventures.

The new chairman and chief executive, Gunter Thielen, is said to have ordered a review of the Bertelsmann businesses, as part of an effort to determine the company's new focus.

Bertelsmann businesses

European broadcaster RTL (90% stake)

Publisher Random House

Magazine and newspaper publisher Gruner + Jahr

Music publisher BMG

Printing and media services company Arvato

Book and music clubs division DirectGroup

Scientific publisher Springer

"It's more of a back-to-basics move," Forrester Research's senior media analyst Rebecca Ulph told BBC News Online.

She added that the retrenchment was a continuation of the company's strategy since the beginning of the year.

"We have seen over the last six to nine months a re-focusing away from purely dot.com ventures," she said.

Comeback for old media

Under Mr Thielen, Bertelsmann is expected to concentrate more resources on its existing businesses, such as publishers Random House and Gruner + Jahr, and the European television broadcaster RTL.

Thielen will be a more conservative leader

"They will want to put their existing businesses on a profitable footing first," said Ms Ulph.

Both Random House and G+J have suffered from falling revenues in the midst of an economic slowdown and an advertising slump.

With regard to Random House, the company has already said that it will look to "manage our overhead costs in a prudent and disciplined manner".

Channel 5 for sale?

Speculation has also been rising about a possible sale of company assets.

JP Morgan analyst Mark Harrington said he would expect to see "net disposals" in the next 12 months from Bertelsmann and other media giants.

"They will look to build value," he added.

The days of Middelhoff's online deals could be over

The Financial Times newspaper reported on Tuesday that Bertelsmann was considering the sale of its stake in the UK television company Channel 5, held through RTL.

Following a proposed change in the UK laws, media baron Rupert Murdoch could be well-positioned to snap up UK TV assets, such as a stake in Channel 5.

However, Forrester's Ms Ulph argued that Bertelsmann had indicated on other occasions that it wanted to expand its holding in Channel 5.

"The media laws in the UK are also being reviewed again which would make it more difficult to sell [Channel 5]."

But she conceded that Channel 5 is not making money for Bertelsmann, which could make its position more vulnerable under the new regime.

There is also speculation that Mr Thielen will consider selling US magazines published by G+J.

Online pull-back

Although the company has abandoned marketing its online bookseller, Bol.com, it is not expected to pull out of its online ventures altogether.

"It will look to reduce costs, but will still focus on using online [means] to promote existing brands like its book and music clubs," said Ms Ulph.

Its publisher Random House will also continue to publish its bigger novels as e-books, she added.

"But it does not look good in the long-term for Napster."

Bertelsmann acquired the assets of online music-swapping service Napster earlier this year.

In 2000, Bertelsmann formed an alliance with Napster at a time when it was being sued by other major music publishers for breach of copyright laws.

Mr Middelhoff had been a firm supporter of the company's online businesses, and professed a visionary-like belief in the power of the internet.