MIDDELHOFF OUSTED

Middelhoff is the third major player in the last month to be removed from the top position at a media giant.

Middelhoff, who took over as Bertelsmann CEO in 1998 and is largely credited with transforming the German publishing group into a media giant, will be replaced by management board member Gunter Thielen.

Thielen currently heads Bertelsmann's media services division Arvato as well as the Bertelsmann Foundation, the organization that holds a majority stake in Bertelsmann.

Middelhoff had long battled with Bertelsmann's traditional old guard as he went on a crusade to modernize the newspaper and book publisher and build an empire to challenge the likes of AOL Time Warner and Disney.

Bertelsmann's conservatively-minded shareholders had grown increasingly concerned about Middelhoff's nature and grand plans for the Internet as the media industry grapples with tumbling advertising revenues.

Middelhoff’s exit follows the ouster of two other high-profile media chiefs this month—Vivendi Universal CEO Jean-Marie Messier and AOLTW COO Robert Pittman.

"The reasons for the departure were differences in views between the Chief Executive and the supervisory board over the future strategy of Bertelsmann and over cooperation between the supervisory board and management," Bertelsmann said in a statement

After taking over Bertelsmann in 1998, Middelhoff launched a rapid international expansion aimed at stripping the company of its print-services and trade publications businesses and focusing on music, TV and the Internet.

In February 2001, Middelhoff spearheaded the $4 billion acquisition of a majority stake in Europe's No. 1 broadcaster, RTL Group. Last month, Bertelsmann's BMG division announced a $3 billion deal to take full control of Zomba. Middelhoff was also behind Bertelsmann's alliance with controversial file-swapper Napster.

Most of Bertelsmann's expansion drive has been financed by the sale of Bertelsmann's stakes in AOLTW and AOL's European arm, AOL Europe. Middelhoff bought into AOL on Bertelsmann's behalf in 1994—a deal that ended up making the company billions and secured Middelhoff's ascension to CEO four years later.