German determined

Bertelsmann seeks entry to U.S. b'cast biz

NEW YORK — Bertelsmann badly wants in on the U.S. broadcast business if the country would open its doors to foreigners, execs of the German media giant said Thursday.

As U.S. entertainment companies push overseas and reshape their business through giant mergers, Bertelsmann is eager to ally with a U.S. television group, i.

“The law should be changed now that we have a global market,” said Michael Dornemann, co-chairman of major European broadcaster CLT/Ufa, in which Bertelsmann holds a 50% stake. The Internet, he pointed out, has no national boundaries.

The issue is “under discussion between Brussels and Washington,” he said. But Bertelsmann execs, speaking at a press briefing in New York, said they aren’t holding their breath, forecasting a minimum of five years before laws restricting foreign ownership of U.S. broadcast properties change.

Taking on AOL, Amazon

Bertelsmann also said it is planning a host of Internet spinoffs to raise cash and challenge the global e-commerce supremacy of America Online and Amazon.com.

Chairman and CEO Thomas Middelhoff said the company plans to merge two of its online search engines in Europe and take the combined company public early next year. One of the engines is a venture with U.S. group Lycos; the other is wholly owned by Bertelsmann magazine publisher Gruhner+Jahr.

An IPO of 20% of Bertelsmann’s multimedia agency Pixelpark is planned for the first week in October. The issue will price Friday morning and the group’s estimated market capitalization is north of $400 million.

Middelhoff predicted several other Internet-related European IPOs in the first quarter and a possible U.S. spinoff “of a small stake in our professional information business.” A public offering for GetMusic, BMG’s online music venture with Universal, is possible as well.

Siegfried Luther, the company’s chief financial officer, said privately owned Bertelsmann has developed a system of “virtual stock options” to keep its Internet execs from defecting to promising startups and to attract new talent.

U.S. the No. 1 market

The execs were gathered to discuss Bertelsmann’s 1999 financial results, announced Wednesday, which revealed the U.S. to be the company’s biggest single source of revenue for the first time at $5.1 billion. That’s due largely to acquisitions such as the purchase of Random House, which turned Bertelsmann into the biggest book publisher in the U.S. and the world.

While Bertelsmann is focusing primarily on the Internet and internal growth, execs noted the company’s strong financial position and said it wants to be No. 1 in all its business areas where it’s not currently the leader, including magazine publishing, worldwide music and professional information.

That’s ambitious, since BMG’s market share lags well behind Universal, which became the world’s biggest music group when it bought Polygram late last year. Speculation has linked BMG and U.K. independent EMI; the companies have talked in the past about a combination. But BMG insiders said they aren’t in any hurry, and EMI is still too expensive.

In magazines, where prices are also high, Gruhner+Jahr is working on several launch projects and could make selective acquisitions if “something falls from the sky.”

A movie studio is still not in the cards. “The price of a studio is so high, the business is so vulnerable. It would be nice to have one, but it’s not our focus or our priority,” Middelhoff said. Execs noted that Bertelsmann has more than enough product to fill its large European television operations. It produces a lot of its own product and has output deals with Disney, Universal and, on a more limited basis, Twentieth Century Fox.