Bertelsmann Chairman Thomas Middelhoff confirmed that "it is true we are in talks with Microsoft on buying part of the Telekom cable network".

Rumours of such a bid had first surfaced in the German press last weekend.

Until recently Germany's television cable networks were run by Deutsche Telekom, the country's former telephone monopoly.

Cable strategy

Microsoft has already made a number of strategic investments in the cable industry. The company holds:

• a$5bn stake in US phone company AT&T, which owns cable operator TCI and has just made a successful bid for MediaOne.
• A 29.9% stake in UK cable company Telewest, as part of the deal with AT&T
• A 3% stake in UK rival NTL
• 11.5% of Comcast, one of the largest cable operators in the United States
• And is reportedly in talks with Britain's Cable & Wireless over taking a large stake in that company's cable network.

While Microsoft would supply the technology, Bertelsmann is trying to find new channels for its content.

The company's reach goes far beyond its German home market. Bertelsmann is the world's largest publisher of English-language books, and produces a large amount of television programming through its CLT-Ufa unit.

Mr Middelhoff said it was essential for the company "to get our content on every available electronic distribution channel".

"We've got to have access to television cable, to the Internet, the broadband cable."

Mr Middelhoff said he had no comment on media reports that Bertelsmann was considering a price of nine to 10 billion Deutschmarks for the entire network, compared to the DM 30bn Deutsche Telekom hopes to get.