Proceed with Caution on Bertelsmann Buyout

At long last, everybody’s favorite German media conglomerate, Bertelsmann, has swallowed hard and admitted that it bit off a lot more than it could chew on the Internet.

Bertelsmann has decided to put a couple of its online properties, notably its BOL.com bookselling site, up for sale. So line up if you want to buy a money-losing online operation with limited name recognition — a site, mind you, that a company with all the multichannel momentum in the world can’t make turn a profit.

Thanks, But No Thanks

What, no takers? Shocking. The fact that Bertelsmann’s intentions to sell the BOL site were made public seems to indicate that a quick deal couldn’t get done with supposed suitor Amazon.com.

No doubt the price tag is at issue. Throughout the dot-com bubble expansion period, Bertelsmann was said to be pumping millions of dollars into beefing up its online properties. And it has done so with some success.

Some BOL holdings have already become tightly knit with the book clubs that sell the books that the company also publishes. This is what multichannel retailing is supposed to be all about.

But for the most part, Bertelsmann appears ready to give up on the whole experiment. So who wants it?

Enticing Option

For a company like Amazon, the ability to boost overseas sales must be very tempting. But does Amazon, or any company like it, really need to take on a money-losing operation? It’s unlikely.

Besides, Bertelsmann doesn’t exactly have the Midas touch when it comes to the Web. The company is a major owner of BN.com, which can pretty much be counted on to produce red ink around the end of every fiscal quarter. The company says it isn’t selling its BN.com stake, but we’ll see how long that lasts.

Try, Try Again

Then there’s the great Napster experiment. You know the one. It’s where Bertelsmann invests millions in Napster, then waits to see whether it can buy Napster’s remnants in bankruptcy court for a few million dollars more.

It’s all very confusing and very ugly. After all, Bertelsmann did with its cash infusion in just a few short months what record labels and even Metallica couldn’t: shut Napster down forever.

So potential buyers should be cautious, and they should be realistic. If Bertelsmann had years to make BOL profitable and all the ingredients necessary to cook up a multichannel meal to keep consumers happy, what chance does a third party have to make it work?

What do you think? Let’s talk about it.