Bertelsmann focuses on growth

Media giant to develop digital activities

BERLIN — German media giant Bertelsmann is looking to beef up business this year after posting a net loss of Euros82 million ($111.1 million) in 2009.

Bertelsmann chief exec Hartmut Ostrowski said the conglom was now shifting the focus from cost and cash management to growth.

“The emphasis here will be on continuing to develop the wide range of digital activities in all divisions and to gain market share.”

Ostrowski stressed that digitization and the convergence of digital devices offered enormous potential for a company like Bertelsmann, which counts pan-European broadcasting group RTL, leading book publisher Random House and magazine publisher Gruner + Jahr among its assets.

Bertelsmann’s annual revenue fell 5.4% to $20.7 billion. The figure includes restructuring and impairment charges of some $986 million, up from $913 million a year earlier, resulting in an operating profit of $1.9 billion. Interest and taxes cut the group’s net profit to $47 million, which was whittled down to a $111.1 million loss following pay-outs to minority shareholders. In 2008, the group posted a net profit of some $192 million.

Nevertheless, Bertelsmann execs maintained cost-cutting measures implemented last year cushioned the group against the effects of the economic downturn.

An improvement in the ad market boosted revenue and operating profit in the second half of the year, resulting in comparatively moderate declines in its full-year results.

Ostrowski said the group had reduced costs as never before while maintaining, and in some cases even strengthening its market positions.

“Bertelsmann has proven itself to be robust and flexible,” Ostrowski added. “Like other media companies we felt the global effects of the economic crisis, particularly in the areas dependent on advertising. But Bertelsmann responded quickly and in a decentralized way, aligned to their markets and to its customers.”

Although company execs expect conditions to begin stabilizing in 2010, they said planning for the current year was characterized by lingering uncertainties in the markets, with no sustainable recovery foreseeable as yet.

Bertelsmann expects revenue and operating profit to remain stable, with the group result expected to “increase significantly.”

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