Report: BMG Entertainment Considers Layoffs to Gain Profitability

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BMG Entertainment may fire hundreds of employees as part of a cost-cutting initiative to meet German parent Bertelsmann AG's drive to boost profitability, according to a report in The Wall Street Journal.


Executives at BMG Entertainment are slated to meet next week in Madrid, Spain, and will discuss the cuts as part of the agenda.


A $17.6 billion company, BMG Entertainment is the global music division of Bertelsmann. It has more than 200 record labels in 54 countries. These include Arista Records, Ariola and RCA Records.


Online, BMG has more than 37 music and lifestyle Web sites under the click2music.com canopy. In addition, the company owns music publishing companies as well as CD- and cassette-manufacturing firms. Overall, BMG Entertainment employs more than 5,000 people.


The Journal reported that BMG Entertainment is expected to post losses of more than $150 million for the year. Difficulties in the German and U.S. markets are being held responsible for the red ink. Write-downs on Internet investments and management changes at Arista were also blamed.


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