Bertelsmann Sells US Book and Music 'Clubs'

15 July 2008

GUTERSLOH, Germany: Media giant Bertelsmann has inked a deal to sell its struggling North American mail order books and music businesses to private investment group Najafi.

Financial details have not been released by the Phoenix, Arizona-based purchaser, but it says it is confident it can build up the Direct Group North America unit, despite increased competition from online retailing.

Says ceo Jaim Najafi: "We have extensive experience in the online world and think we can change the nature of this business and grow it dramatically.

"We also think we can extend the club model to other products and services. We have never shied away from difficult businesses."

For Bertelsmann the sale is part of a strategic overhaul as it looks to dispose of its less profitable operations to pay down debt.

Revenue at its US book and music clubs slipped around about 10% last year to $1.42 billion (€895m; 715m), while memberships fell to about 13 million customers from some 16 million in 2005.

The European direct mail clubs are not included in the deal and Bertelsmann says it will review their future separately. It has also mulling the sale of its 50% stake in music giant Sony BMG.

Data sourced from Wall Street Journal Online; additional content by WARC staff