Bertelsmann CEO Leaving

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Bertelsmann AG, Germany's biggest media company, said CEO Thomas Middelhoff is leaving over disagreements about strategy with the company's executive and supervisory boards.

Middlehoff, 49, will be replaced as chairman and CEO by Gunter Thielen, 59.

In a statement released Sunday, the company said: "The reasons for the separation are differences of opinion between the Chief Executive Officer and the Supervisory Board about the future strategy of Bertelsmann AG and the cooperation between the Executive Board and theSupervisory Board."

Middelhoff, who joined Bertelsmann in 1986, has been CEO since 1998. Thielen has been a member of Bertelsmann's executive board since 1985 and is CEO of the company's Arvato division. Thielen also heads the Bertelsmann Foundation, which holds a majority stake in Bertelsmann. The company said Siegfried Luther, Bertelsmann's chief financial officer since 1990, will be Thielen's deputy.

Middlehoff was widely perceived to be a forward-looking influence on the 167-year-old Bartelsmann, making waves recently by proposing to buy the assets of Napster, an online company sued by the music industry for allowing widespread pirating of music. He also was preparing the company to go public by 2005.

The news agency VWD reported that sources close to the situation said Middelhoff is set to become chief executive of

Deutsche Telekom AG

(DT) - Get Report

ADR" PRIMARY="NO" />. However Deutsche Telekom and Bertelsmann declined to comment. Former Deutsche Telekom CEO Ron Sommer recently stepped down under pressure from the German government, which owns 43% of the phone company.

Declining advertising sales at media giants

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and Vivendi Universal SA prompted departures of CEOs at those companies earlier this year. However financial woes apparently were not an issue at Bertelsmann, which said its first-half operating earnings were on target this year.

Privately held Bertelsmann owns RTL Group, the largest broadcasting company in Europe, along with Random House Inc., BMG Entertainment and U.S. magazine Inc.