Media giant digitizing biz, expanding
German media giant Bertelsmann on Wednesday unveiled longterm plans to reshape its operations, including a digital makeover and expansion into high-growth regions including China — possibly powered by an initial public offering.
This is one option being considered by new chairman and CEO Thomas Rabe, who took the reins at the beginning of the year.
The company is changing its legal structure to that of a Kommanditgesellschaft auf Aktien (KgaA), a cross between a joint stock corporation and limited partnership in which the Mohn family, which controls 100% of the group, would remain in charge of the executive board while allowing new shareholders or limited partners to potentially buy shares.
Rabe said raising equity through an IPO or share sale was one of several options the company was weighing but no decisions are likely before fall.
Bertelsmann flirted with the stock market a decade ago — a move championed by former CEO Thomas Middelhoff — before deciding to remain a family business.
“We are in a good starting position for the next phase in the group’s development,” Rabe said. “Our primary goal is to grow the company faster, and to make it more digital and international.”
Rabe’s future strategy includes consolidation and strengthening of Bertelsmann’s vast asset portfolio, accelerating the digitalization of core businesses, establishing new growth platforms and expanding into new countries.
“On this basis, we will reshape Bertelsmann over the next five to 10 years,” Rabe said.
The plan follows a companywide discussion on its future direction initiated by Rabe in his first few months on the job in which he spoke with managers and employee reps from Bertelsmann’s key divisions.
Conglom is also entering the rapidly growing global education business.
Rabe added that the group would invest in global businesses that have longterm growth potential and benefit from developments in digital media.
“Examples of this are our successful music rights business and new activities in the field of education. At the same time, we will widen our footprint in countries like India, China and Brazil,” he said.
In 2011, Bertelsmann generated most of its revenue from ad sales-driven operations, particularly those of the pan-European RTL Group of TV channels as well as TV production, the rapidly growing e-book business and the service sector.
High ratings and airtime bookings at RTL Group channels, numerous bestsellers at Random House; popular G+J magazine brands; and customized outsourcing solutions for businesses all helped Bertelsmann maintain or improve strong market positions.
Overall, revenue climbed 1.2% to €15.3 billion ($20.4 billion), while net profit slipped 2.7% to $620 million, a lower dip than forecast.
Revenue growth in its core businesses were offset by planned start-up losses for new businesses and a weak performance by some of its printing operations, as well as declines in replication and direct-marketing operations.
On the executive front, Bertelsmann will see a first next month when RTL Group co-topper Anke Schaeferkordt becomes the first female on Bertelsmann’s executive board.
In April, Schaeferkordt, head of RTL Germany, and Guillaume de Posch, RTL Group chief operating officer, will replace outgoing chief exec Gerhard Zeiler at the broadcasting group.