Bertelsmann, Europe’s biggest consumer media group, has announced it would be willing to sell out of the music business for around £1 billion.

The German company, which also owns broadcaster Five and publisher Random House, said its joint venture partner, Sony, would need to offer a similar valuation to that paid by Guy Hands when he bought out EMI for £2.1 billion last year. On similar multiples, SonyBMG, of which it owns half, is worth around £1 billion.

Bertelsmann has to decide in August of next year whether it wants to buy, sell or stick with its half share in Sony BMG, the company behind Bruce Springsteen and Leona Lewis – as it tries to boost its anaemic growth rate.

Thomas Rabe, chief financial officer, said: “What we will do depends on price. Of course the EMI price is a good price for a seller, but we would not be interested in selling if we were offered a figure based on the current valuation of Warner Music. The market is undervaluing music assets.”

Bertelsmann wants to boost its organic revenue growth to 4 per cent annually, after it reported annual results that showed an overall improvement of 0.4 per cent to €18.8 billion in 2007. Progress was hampered by a 7 per cent decline in its music business, and 7.9 per cent decline in its book, film and music clubs, particularly in North America.

Harmut Ostrowski, presenting his first set of results since becoming chief executive in January, said that the company’s businesses “were growing weakly or not at all” and conceded that the 0.4 per cent improvement was “not sufficient”. He promised to make €5 billion for acquisitions available “in the next five years”.

Target areas are “education services, internet, business services, and TV production,” the chief executive said - a strategy that appears to rule out a move by TV arm RTL on the £2.7 billion rated ITV. Insiders describe ITV as “too expensive” even at its current 64.5p a share.

The expectation, though, is that Bertelsmann will offload its half share in Sony BMG, and that the company is trying to talk up the price. Advised by JP Morgan, Bertelsmann has also canvassed private equity firms if they would be interested in the belief that Sony may also be unwilling to go for a buyout.

Despite the collapse in sales, Bertelsmann’s half of Sony BMG earned €93 million, up by €3 million, helped largely by cost cuts in marketing and sales. Its best selling albums were The Best Damn Thing, from Avril Lavigne, and As I Am by Alicia Keys, both of which sold around 5 million.

Guy Hands bought EMI for £2.1 billion excluding debt, while publicly listed Warner Music is worth $770 million as Wall Street has lost confidence in the music business. SonyBMG is larger than both EMI and Warner Music in recorded music, but lacks a publishing business, representing songwriters, so its overall valuation is roughly equivalent.

Bertelsmann is also selling its struggling US book, CD and film club businesses, with Morgan Stanley advising. Only three years ago, the company spent $400 million buying Colombia House, a mail order CD business, but failed to predict the decline of the format. Bertelsmann took a €291 million charge yesterday on the US business.

Profits improved by 3.7 per cent on a like-for-like basis to €1.8 billion, while all borrowings at the private company ended the year at €7.5 billion, down from €8.5 billion a year ago.

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