Analysis from Reuters:

Bertelsmann's new "safe pair of hands" boss has taken just six weeks to kill off some of the wilder ventures in his far-flung media empire, but kicking what remains into shape will be a far greater challenge.

By unpicking ousted CEO Thomas Middelhoff's handiwork, Gunter Thielen is demolishing his predecessor's centralized management, exiting e-commerce headache BOL and leaving behind the ultimate problem child — maverick music service Napster.

But Thielen has a long way to go. In first half results, the German media group said its operating margin was 1.8 percent, some distance from its 4 percent to 5 percent year-end target and way off its goal of reaching 10 percent in time for a flotation.

However, four of its seven divisions topped the year-end target, suggesting Thielen needs to turn his attentions to three divisions — ailing music arm BMG, the book clubs and e-commerce division DirectGroup and the media services unit Arvato. "It's back to basics and Thielen is doing all the right things so far. To be honest, there are no synergies to be had between such diverse units and he needs to take a portfolio management approach," said one analyst.

Thielen, a conservative manager seen as the complete opposite of Middelhoff, has said his pet projects for the foreseeable future will be BMG and DirectGroup — both of which reported negative operating margins in the first half.

By contrast, Arvato is seen as a division "in transition" under a new chief, and is at least posting positive margins.

Thielen, 60, does not exactly have a lot of time on his hands, however. Facing a possible flotation in 2005, the new CEO needs to spruce up the privately-owned group well before then. In preparation, he is due to hold workshops with investment banks shortly to discuss what needs to be done, sources said....