Bertelsmann earnings drop 66%

Napster settlement dents profits

Citing one-off costs due to legal expenses, German media giant Bertelsmann on Wednesday posted a 66% drop in net profit to E132 million ($194 million) in the first nine months of the year.

The publishing and TV conglom reached an out-of-court settlement with record labels this year in connection with P2P music-swapping platform Napster and sustained one-time costs of $141 million related to antitrust proceedings against IP Deutschland, the German ad sales firm owned by its RTL Deutschland division.

Bertelsmann’s revenue in the first nine months, excluding acquisitions and exchange rate fluctuations, climbed 1.2% to $19.5 million. However, including acquisitions and exchange rate fluctuations, company revenue actually dropped by 2%.

“For the full year, we expect to exceed the results of fiscal 2006 in terms of revenues and operating results adjusted for portfolio and exchange rate effects,” said chief financial officer Thomas Rabe.

Adjusted third-quarter revenue from July to September was $6.3 million, the same level as in the previous year, while operating profit rose 11.7% to $462 million.

Buoyed by the sale of BMG Music Publishing and its stake in French pay TV satcaster TPS, adjusted operating profit (before interest and tax and not including special items) in the first nine months rose 13.6% to $1.5 billion.

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