Does not want to renew CEO's contract.

Germany's Bertelsmann has told its music business partner Sony Corp. it does not want to renew the contract of CEO Andrew Lack to run the unit, according to a Monday report in The New York Times citing unnamed executives.

Bertelsmann [BERT.UL] declined to comment on the report. Sony and Sony BMG officials could not immediately be reached.

Lack, a longtime television executive, helped engineer the merger of Sony's recorded music division with Bertelsmann's BMG last year, but his public candor about the difficulties facing the industry have raised eyebrows.

He told Reuters earlier this year, for example, that the music business has years of lost ground to make up, saying: "I don't think the prognosis is all that attractive going forward in '05, '06 and '07."

Lack also has been considered by some in the industry to be a candidate to take a bigger role at Sony Corp. after his friend Howard Stringer was promoted to be CEO of the Japanese consumer electronics conglomerate earlier this year.

Bertelsmann cannot unilaterally oust Lack, though the executives who spoke to the Times said Sony BMG Music Entertainment would be unlikely to keep a CEO who wasn't backed by both companies.

The company's second in charge, Michael Smellie, resigned earlier this year to return home to his family in Australia.

Sony BMG, home to Bruce Springsteen and Britney Spears, is the second largest seller of albums in the world with 21.5 percent of the market, ranking behind Vivendi's Universal Music.

The company lost some of its share of the market in North America, the world's largest region for music sales, slipping to 24.9 percent last year from 27.6 percent in 2003.

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