* Company confirms CFO Rabe to become CEO
* CEO Ostrowski will not to be chairman (Adds comments, background)
By Nicola Leske
FRANKFURT, Oct 10 Bertelsmann , Europe's largest media company, said its Chief Financial Officer Thomas Rabe will take over as chief executive at the start of next year, succeeding Hartmut Ostrowski.
Ostrowski, who took the helm in 2008, will take a seat on Bertelsmann's supervisory board, the company said, adding Ostrowski was making the switch for personal reasons.
The move comes as a surprise as Ostrowski's term ran until December 2012, although Bertelsmann -- best known for its TV arm RTL and publisher Random House -- has traditionally decided to extend contracts for top jobs a year before they end.
In March, Ostrowski said he was happy to continue his work until retirement, which at Bertelsmann would have been in seven years, when he turns 60.
It was an open secret that CFO Rabe had been on the lookout to become a CEO at Bertelsmann or elsewhere. But whenever he was in talks to leave, the media group had persuaded him to stick it out at Bertelsmann.
The tall and lanky Rabe, who towers over Ostrowski, had been in talks to lead commercial broadcaster ProSieben PSMG_p.DE, RTL's main rival in Germany, but was persuaded to stay.
Later Rabe was touted as a potential candidate to head German retail group Haniel, but again he ended up staying with Bertelsmann.
"It's high time that he takes on this position," said a person who has worked closely with him but declined to be named. "All in all he has been a financial officer for 11 years, first at RTL Group then for all of Bertelsmann ... I think he is what the company needs right now," the person said.
Rabe and Ostrowski were known to be at odds partly due to their different styles and personalities, but company sources have said the two had put their differences to rest.
Ostrowski has spent almost his entire career working for Bertelsmann at the group's headquarters in the small northern German town of Guetersloh, less than 20 kilometers (12 miles) from Bielefeld, where he was born.
He made a name for himself running Bertelsmann's services unit arvato, which became the group's fastest-growing business, branching out from media-related services into call centres, financial clearing houses and mobile services -- setting himself up for the CEO post.
As CEO Ostrowski had been welcomed as stable and dependable, especially during the financial crisis, but he was also seen by some analysts as lacking vision.
Rabe, on the other hand, was born in Luxembourg, worked internationally, speaks several languages and is known to be a sharp, analytical thinker.
"He really goes out and digs in, for example when Bertelsmann ended the music joint venture with Sony , he found a nugget that he could grow," the person said, referring to Bertelsmann music rights publishing arm, which is prospering under Rabe's leadership.
Rabe is known for his love of music having played bass in a punk rock band in his youth. When time permits, he can be seen cycling through Berlin, where he lives part time.
Rabe earned the respect of the Mohn family, which controls the company founded over 175 years ago, when he managed the buyout of Belgian investor GBL.
At Bertelsmann he diligently worked on reducing its mountain of debt to a manageable pile, leaving the group free to again consider acquisitions.
Rabe, 46, previously worked for the EU Commission in Brussels and Germany's Treuhandanstalt, the federal agency that privatized East German enterprises.
"He really is brilliant," a company source said, adding: "I think we are in for an interesting time". (Editing by David Holmes)