IPO a peek into Bertelsmann

GBL's conglom stake may go public

The world’s largest private media conglom could soon become a little more public.

Execs for Bertelsmann confirmed that Belgian holding company Groupe Bruxelles Lambert could sell all or part of its 25% stake in the company in what would be an unprecedented development for the German giant.

Even if the stake became publicly held, Bertelsmann execs say the company would not relinquish any of its own shares. Bertelsmann is privately owned by the Mohn family, which controls 75% of a corporation that owns European broadcaster RTL, book publisher Random House, half of Sony BMG and magazine publisher Gruner+Jahr.

The family also oversees the Bertelsmann Foundation.

Move would be heavily symbolic nevertheless. In its more than 170 years of existence — and especially in recent years as the world’s fourth-largest media company — Bertelsmann has never had any shares available on the public markets, allowing it to function in an unusually closely held manner for a company its size.

Change will likely mean Bertelsmann would have to disclose earnings several times a year, and with more specificity than its reports tend to reveal.

Bertelsmann went through a round of IPO speculation under former CEO Thomas Middelhoff, who is reported to have drawn the resentment of the Mohn family for his plans to take the company public. Since his ouster in favor of current CEO Gunther Thielen, the plan has been permanently shelved.

But the GBL stake, for which an IPO is reportedly being planning for next year, is not under the Mohn family’s control.

“We are prepared, and we have absolutely no problem with that,” Thielen said of the stake’s flotation. He did not expect to know any more until after GBL’s shareholder meeting in May.

Bertelsmann has not ruled out buying the GBL stake itself but did say that it is maintaining very strict debt controls. Company has about $1.2 billion earmarked for acquisitions after it spent more than $3 billion this past year to expand its TV holdings throughout Europe. Analysts have valued the GBL stake at about $6 billion.

In earnings news, Bertelsmann reported Wednesday an 11% drop in net profit in 2005 to E1.04 billion ($1.25 billion) as overall revenue grew by $1 billion to $21.64 billion.

Company attributed the dip in full-year profit to the lack of significant one-time gains, which buoyed the previous year’s results.

Thielen provided an upbeat assessment. “In 2005, we resolutely seized opportunities for acquisitions and fundamentally strengthened core businesses such as our TV division,” he said. “In a difficult market environment, we have more than doubled our operating profit since 2002 and achieved record results in 2005.”

RTL, Arvato (Bertelsmann’s printing, business and IT services division) and Gruner+Jahr were the group’s major moneymakers.

At RTL, the conglom’s largest division, plans are already under way to launch a digital broadcaster in Germany this year, RTL topper Gerhard Zeiler announced Wednesday.

RTL’s main rival in Germany, ProSiebenSat 1, is set to launch two digital webs in May.

RTL posted a 13% profit gain to $915 million on revenue of $6.1 billion, up nearly 5% from 2004.