You will be redirected back to your article in seconds

Hard times at Bertelsmann

Media company faces the global financial crisis

BERLIN — Bertelsmann, Europe’s biggest media conglom, is battening down the hatches as it faces the global financial crisis.

Bertelsmann has been hit especially hard by a EUR 337 million ($457 million) write down on U.K. channel Five, which is owned by its RTL Group.

RTL, Europe’s biggest broadcaster and Bertelsmann’s most profitable unit, saw net income plunge more than 65% to EUR 194 million ($263 million) earlier this month due to Five’s devaluation. The troubled web has now left a dent on the parent group’s bottom line.

Bertelsmann on Tuesday posted a 33.3% drop in net profit to $365.5 million while revenue remained largely unchanged at $21.8 billion.

The conglom also attributed shrinking profits to its troubled direct- to-customer division Direct Group.

“The global economic crisis with its implications for consumer behavior and advertising bookings will be a severe test for some areas of Bertelsmann,” said chairman and CEO Hartmut Ostrowski, speaking in Berlin Tuesday.

“Our focus is on safeguarding our businesses, our high profitability and our liquidity. This primarily means cost discipline and restraint in our investments, but also an increased focus on gaining market share and entrepreneurial innovations.”

Ostrowski added that management board members had decided to forgo their 2009 bonus payments, resulting in a 50% pay cut for most of them.

Chief financial officer Thomas Rabe said Bertelsmann, which also owns publishing giant Random House and magazine publisher Gruner and Jahr, would refrain from “bigger acquisitions” or divestitures.

Last year Bertelsmann sold its stake in Sony BMG as well as parts of the direct-to-customer operations that are bundled in Direct Group, which helped to slash debt by about $1.5 billion to $8.9 billion. This year, however, the privately held group will not be able to reduce its debt any further, Rabe said.

More Biz

  • Hand out image - Free of

    Philanthropy at the Core of Scooter Braun's Business

    BERLIN — Bertelsmann, Europe’s biggest media conglom, is battening down the hatches as it faces the global financial crisis. Bertelsmann has been hit especially hard by a EUR 337 million ($457 million) write down on U.K. channel Five, which is owned by its RTL Group. RTL, Europe’s biggest broadcaster and Bertelsmann’s most profitable unit, saw […]

  • Jeremy Piven

    'Entourage' Extra Claims Jeremy Piven Assaulted Her in New Allegation

    BERLIN — Bertelsmann, Europe’s biggest media conglom, is battening down the hatches as it faces the global financial crisis. Bertelsmann has been hit especially hard by a EUR 337 million ($457 million) write down on U.K. channel Five, which is owned by its RTL Group. RTL, Europe’s biggest broadcaster and Bertelsmann’s most profitable unit, saw […]

  • This, photo shows the 21st Century

    Comcast, Disney Keep Focus on 21st Century Fox Assets Despite AT&T-Time Warner Battle

    BERLIN — Bertelsmann, Europe’s biggest media conglom, is battening down the hatches as it faces the global financial crisis. Bertelsmann has been hit especially hard by a EUR 337 million ($457 million) write down on U.K. channel Five, which is owned by its RTL Group. RTL, Europe’s biggest broadcaster and Bertelsmann’s most profitable unit, saw […]

  • Scorpion-cbs TV Show

    How Scooter Braun Turned Luck With First Series 'Scorpion' Into Prolific TV Business

    BERLIN — Bertelsmann, Europe’s biggest media conglom, is battening down the hatches as it faces the global financial crisis. Bertelsmann has been hit especially hard by a EUR 337 million ($457 million) write down on U.K. channel Five, which is owned by its RTL Group. RTL, Europe’s biggest broadcaster and Bertelsmann’s most profitable unit, saw […]

  • Peter Thiel

    Billionaire Peter Thiel Sells Majority of Facebook Stake, Pocketing $29 Million

    BERLIN — Bertelsmann, Europe’s biggest media conglom, is battening down the hatches as it faces the global financial crisis. Bertelsmann has been hit especially hard by a EUR 337 million ($457 million) write down on U.K. channel Five, which is owned by its RTL Group. RTL, Europe’s biggest broadcaster and Bertelsmann’s most profitable unit, saw […]

  • Justin Bieber Ariana Grande Kanye West

    From Ariana to Watt: Catching Up With Scooter Braun's 20 Clients as SB Projects Turns 10

    BERLIN — Bertelsmann, Europe’s biggest media conglom, is battening down the hatches as it faces the global financial crisis. Bertelsmann has been hit especially hard by a EUR 337 million ($457 million) write down on U.K. channel Five, which is owned by its RTL Group. RTL, Europe’s biggest broadcaster and Bertelsmann’s most profitable unit, saw […]

  • Scooter Braun Team

    Meet the Six Key Execs Who Help Scooter Braun Care for Roster of Clients

    BERLIN — Bertelsmann, Europe’s biggest media conglom, is battening down the hatches as it faces the global financial crisis. Bertelsmann has been hit especially hard by a EUR 337 million ($457 million) write down on U.K. channel Five, which is owned by its RTL Group. RTL, Europe’s biggest broadcaster and Bertelsmann’s most profitable unit, saw […]

More From Our Brands

Access exclusive content