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.