Bertelsmann Posts 1st-Quarter Loss

Media giant Bertelsmann reported a first-quarter loss of about $450 million, citing a weak U.S. marketplace and continued costs from its purchase of the world’s biggest independent record company.

The closely held German conglomerate, which owns the Random House publishing unit and the Bertelsmann Music Group label, posted a profit of more than $2.8 billion a year earlier.

The company said its results suffered from the difficult economy and noted that last year’s figures included proceeds from the sale of its stake in AOL Europe.

In a statement, Bertelsmann executives said they still expect full-year operating profit to exceed last year’s performance.

Bertelsmann reported an operating loss of $66 million for the quarter, contrasted with profit of $23 million for the same period a year earlier. The company’s net loss included a $68-million charge from the integration of Zomba Music, the independent label that is home to such acts as Britney Spears and R. Kelly.

The company’s music operation laid off about 300 employees worldwide during the integration, sources said. Bertelsmann was forced to pay about $2.7 billion for Zomba last year after the label’s owner, Clive Calder, exercised a contract option BMG had agreed to several years earlier. The purchase is by far the most expensive label acquisition in music history.

Bertelsmann said it is carrying net debt of about $3.1 billion, primarily from the Zomba deal. Analysts say the media conglomerate probably will slash debt by selling its Bertelsmann Springer science and trade publishing division before laying out cash for additional acquisitions.