Bertlesmann: Before, during and after Middelhoff

Case Studies | Case Study in Business, Management, Operations, Strategy, Case Study

ICMR HOME | Case Studies Collection

Case Details:

Case Code : BSTR061
Case Length : 18 Pages
Period : 1994 - 2003
Organization : Bertlesmann
Pub Date : 2003
Teaching Note :Not Available
Countries : Europe
Industry : Media, Entertainment, and Gaming

To download Bertlesmann: Before, during and after Middelhoff case study (Case Code: BSTR061) click on the button below, and select the case from the list of available cases:

Price:

For delivery in electronic format: Rs. 500;
For delivery through courier (within India): Rs. 500 + Rs. 25 for Shipping & Handling Charges

» Business Strategy Case Studies
» Business Strategy Short Case Studies
» View Detailed Pricing Info
» How To Order This Case
» Business Case Studies
» Case Studies by Area
» Industry Wise Case Studies
» Case Studies by Company

Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

<< Previous

"He (Middelhoff) stepped on a lot of backs in the company to get where he is, and he is trying to change a culture that has more than 100 years of history to it."¹

- A Bertelsmann Executive, in October 2001.

"It is a source of frustration to Bertelsmann's 82,000 executives and employees that star properties such as Whitney Houston, John Grisham, Westlife and Napster ring a bell with the person on the street, but the company that owns them is not on the A-list of corporate celebrities."

- A Guardian Magazine Article, in January 2002.

"The Bertelsmann businesses are very autonomous but Middelhoff ran into opposition as he tried to force them together. A lot of empires had been built up and their masters did not want to be shifted."²

- A Bertelsmann Source, in July 2002.

End of an Era

On July 28, 2002, Thomas Middelhoff (Middelhoff), Chairman and CEO of the Germany-based Bertelsmann AG, the fifth largest media company in the world, was ousted from his job. Gunter Thielen (Thielen), formerly head of Bertelsmann Arvato media services division, was appointed the new chairman and CEO.

These developments came as a shock to the media as well as industry analysts as Middelhoff was one of the most charismatic and strong-minded leaders in the European media industry. In fact, he was credited for having aggressively modernized Bertelsmann's traditional publishing, television (TV) and entertainment businesses. Analysts credited Middelhoff for the company's acquisition of Random House and RTL, which made it the leading player in the publishing and TV businesses in the world. According to reports, Middelhoff was forced to resign by the company's supervisory committee (representing the shareholders of Bertelsmann) over disagreements regarding a few strategic decisions.

In mid-2002, Middelhoff announced that he planned to offer the public the full stake in the company through a stock market issue in 2005. By so doing, Middelhoff hoped to help Bertelsmann expand its presence across the world and become the leading multinational media company in the world. However, the supervisory committee was apprehensive about these expansion plans.

Reportedly, it objected to the public offering to the bad stock market conditions during the early 2000s. Commenting on this, a Bertelsmann executive said, "I think the supervisory committee were not as visionary as Middelhoff and were nervous about expansion in the current climate."³ Commenting on his resignation, Middelhoff said, "Shareholders had mid and long-term development prospects that were different from mine. In this context, I had no choice but to resign."⁴ Following these developments, analysts felt that the company might cut down on its expansion plans. Since Thielen had close ties with the Mohn family, the plan to make Bertelsmann fully public-owned also seemed to have been buried for good.

Bertlesmann: Before, during and after Middelhoff - Next Page>>

Economics for Managers Textbook
Textbooks Collection

Economics for Managers Workbook
ICMR books Collection

Case Studies in Business Strategy Volume VI

Case Study Volumes Collection

1] As mentioned in the article "Thomas Middelhoff Faces the Music at Bertelsmann," www.redherring.com, October 01, 2001.

2] As mentioned in the article "Death of the American Dreams," The Guardian, July 30, 2002.

3] As mentioned in the article "Bertelsmann's UK Expansion in Doubt," http://media.guardian.co.uk, July 29, 2002.

4] As mentioned in the article "Former Bertelsmann Chief Defends Achievements," http://news.com.com, August 1, 2002.