9. Bertelsmann SE & Co. KGaA
Revenues 2014: € 16.675 billion
The Bertelsmann SE & Co. KGaA is based in Gütersloh, consists of 1.200 companies and shareholdings in more than 50 countries and over 106.000 employees worldwide, making the company Europe’s largest media house and of the world’s media giants. The product range spans from traditional book clubs, which marked the beginning of Bertelsmann’s success story, over print services, software development and TV channels to radio stations and newspapers. As of now, Bertelsmann is focussing on expanding its service provider division.
Branches: Newspapers, magazines, book publishing, book clubs, music labels, print services, television, radio, film-/TV-production, e-commerce, licensing
Legal form: Public company (1971-2012), Societas Europaea & partnership limited by shares (since August 2012)
Financial year: 01/01 - 12/31
Founding year: 1835
|Revenues (in $ Mio.)||17,141||16,675||16,179||16,065||15,253||15,786||15,364||16,118||18,758||19,297||17,890|
|Profit (loss) after taxes (in $ Mio.)||1,108||573||885||619||612||656||35||270||405||2,424||880|
Executives and Directors
- Thomas Rabe, Vorstandsvorsitzender
- Markus Dohle, CEO Penguin Random House
- Anke Schäferkordt, Co-CEO RTL Group
- Immanuel Hermreck, Personalvorstand
- Achim Berg, Vorstandsvorsitzender Arvato AG
Board of Directors:
- Christoph Mohn, Vorsitzender, Christoph Mohn Internet Holding GmbH
- Gigi Levy-Weiss, Angel Investor
- Werner J. Bauer, Nestle AG
- Dr. Wulf H. Bernotat, Deutsche Annington Immobilien SE
- Kai Brettmann, RTL Group
- Dr. Karl-Ludwig Kley, Merck KGaA
- Prof. Dr.-Ing. Joachim Milberg, AG
- Liz Mohn, Bertelsmann Foundation
- Dr. Brigitte Mohn, Bertelsmann Foundation,
- Hans Dieter Pötsch, Volkswagen AG
- Kasper Rorsted, Henkel AG & Co. KGaA
- Bodo Uebber, Daimler AG
- Ian Hudson, Random House UK
- Christiane Sussiek, Bertelsmann
- Murat Cetin, Arvato Direct Services
Major Holders: Mohn Family (19,1 %), Bertelsmann Stiftung (77,6 %), Reinhard Mohn Stiftung and BVG-Stiftung (3,3 %).
After the Second World War, Mohn’s politically unladen son Reinhard takes over the tarnished book- and church publisher and turns it into the world company of today. The recipe of success: So-called ‘reading rings’, which offer books as well as in-house encyclopaedias and atlases at low costs through a subscription system. The club business model also appeals to foreign markets. By mid 1950, Bertelsmann enters the record business with the acquisition of Ariola.
The step-by-step purchase of the Hamburg newspaper company Gruner+Jahr (completed in 1972) propels the company to the top of the German media industry. Under the direction of Bertelsmann, Gruner+Jahr becomes the first major German publisher to engage in business with foreign countries und buys the complete ‘New York Times’ newspaper group as well as further economy titles (‘Fast Company’, ‘Inc’) in 1994. By June 2005, the publisher makes an unexpected turn by announcing its withdrawal from the US industry.
Bertelsmann gained international recognition due to a double deal in New York 1986: The acquisition of traditional New York publishing house Doubleday and music giant MCA. Intermittently, that is, before merging with Time Warner in 1989, Bertelsmann was the largest media company in the world.
The company also took on a pioneering role in German commercial television: Founded in 1984, commercial TV station RTL becomes the market leader in Germany in 1993 and goes on to become Europe’s biggest advertising medium.
Following the company’s involvement in AOL by 1995, it started investing in the Internet at an increasing rate, for example the development of the US Internet bookshop Barnesandnoble.com and the respective European counterpart, BOL. In order to ensure the ability to offer the highest possible array of content for e-commerce, which was particularly promoted by CEO Middelhoff (1998-2002), Bertelsmann buys New York publisher Random House and the majority of the academic publisher Springer-Verlag in Heidelberg.
In early 1999, Bertelsmann drops out off German Pay TV (Premiere) and focuses on Free TV: Over the course of subsequent years, the company acquires the production businesses of Pearson and Fremantle, Cologne TV station Vox as well as a 47 percent share of news channel n-tv.
Furthermore, Bertelsmann purchases music company Zomba Records in 2002. The sales of AOL Europe shares (50 percent) and technology company Mediaways (100 percent) result in high one-off gains.
Middelhoff’s successor, Gunter Thielen in turn got rid of several Internet activities, consolidated the business (Fusion of BMG and Sony) and bought the US DVD sales club Columbia House. A new gravure printing company unites the activities of Bertelsmann, subsidiary Gruner+Jahr and junior partner Axel Springer AG.
The company from Gütersloh aspires to reach at least a 10 percent yield of sales. This secures Bertelsmann’s top spot within the worldwide media industry and enables the company to offer investors a 15 percent interest rate on their participation certificates. This tight calculation permits ongoing additional purchases and mergers – occasionally bordering very close on the antitrust law.
The centre of power: Bertelsmann Verwaltungsgesellschaft
Bertelsmann is operated via the Bertelsmann Verwaltungsgesellscaft (BVG) (Bertelsmann Management company), in which 100 percent of the votes are bundled. A steering committee is installed at the top, made up of three members of the Mohn Family and three elected members from outside the family.
Hartmut Ostrowski was made the CEO in 2008. It became apparent three years ago, that Bertelsmann was still very much in the hands of the family. Five days after Ostrowski’s vocation, Bertelsmann announced the reduction and reshuffle of the BVG. The company’s CEO was eliminated from the BVG; the number of BVG associates was reduced from eight to six. The principle idea that members of the board and supervisory board would be represented in the BVG by virtue of their respective office was abandoned. Neither Hartmut Ostrowski’s person nor office had been the particular reason for the change, yet the new regulation still signified a loss in power. Through the reduction, the family was reinforced and the CEO weakened. This might have been the result of the Mohn family’s prior conflict with Middelhoff: Not the manager, but the family runs the company.
The Owners: Mohn Family
Reinhard Mohn: Farewell to the Bertelsmann patron
Reinhard Mohn, who established Bertelsmann amongst the world elite after the Second World War gave up the managing directorship in 1980. He died in October 2009 at the age of 88 years. He did not make an appearance as head of the company in the years prior to his death, but no substantial decision would be made without his agreement. Suffering from poor health, Mohn was primarily counselled by his wife Liz.
Christoph und Brigitte Mohn: The children, who inherit the company
In 2003, during a book launch, Liz Mohn was announced to become the family’s spokesperson at Bertelsmann. She put her children, Christoph and Brigitte into more decisive positions, resulting in Johannes Mohn being forced out of the company.
During an extraordinary general meeting in December 2007, Brigitte Mohn was elected to the board of the Bertelsmann AG. She had already taken over her mother’s managing directorship at the Stiftung Deutsche Schlaganfallhilfe (SDSH) in 2001. In 2005, she became a board member of the Bertelsmann foundation and has also been an associate of the BVG since 2002. Mohn studied politics, history of the arts and German, graduating at the private University of Witten/Herdecke. She completed a MBA course at the management college WHU Koblenz and at the Kellogg Institute USA. She worked at the Institute of Global Economics in Kiel, at US publishers Bantam, Doubleday and Dell in New York as well as McKinsey and the multimedia agency PixelPark.
Christoph Mohn: The ‘European Google’ gives up – The end of Lycos
Christoph Mohn, CEO of Lycos and Bertelsmann heir, supports the notion that one shoulders a great responsibility as an entrepreneur. He was adopted together with his siblings Brigitte an Andreas by Reinhard Mohn, being almost of an adult age. He internalized the decentralist leadership philosophy of his father Reinhard. Christoph Mohn studied marketing in Münster, worked for the Bertelsmann Music Group (BMG) in New York and Hong Kong and at McKinsey. When he was looking to make Bertelsmann’s Internet activities fit for the stock market, he himself invested millions in Lycos. The owners made him CEO. Back in the day, Lycos was considered the second AOL, able to generate revenues in the range of billions for Bertelsmann – it would also be the deed that would pave his way to the board of directors.
Spurred by the initial public offering in 2000, which earned Lycos about 700 million Euros, Mohn began to purchase other companies and envisioned gigantic company headquarters. Back then, the stock was oversubscribed 33 times – and that is when the Internet bubble burst. Lycos is history by now and profitable parts of the company, such as the domain business, were sold off to Denmark; at least, the investors obtained 50 of the remaining 130 million Euros. Since going public, Lycos has wasted half a billion Euros. ‘”Lycos had no chance against Google”, such was the statement by Christoph Mohn.
The Bertelsmann Foundation
Founded in 1977, the organisation looks to secure company continuity on the one hand and future projects in the fields of media, social policies, international communication culture, education and health on the other.
In its heyday, Bertelsmann was shaped and influenced by the Evangelic revivalist movement and of a deliberately conservative alignment. The remainder of this spirit rests in the Bertelsmann Foundation through which the company engages on the socio-political sector. It is both used to cultivate the climate of opinion and establish contacts with high-ranking politicians. The result of the efforts is a positive and liberal image, which has been associated with Bertelsmann for years.
In early 2008, it was announced that former Bertelsmann CEO Gunter Thielen would take over the chairmanship of the German Bertelsmann Foundation, after five and a half years at the top of the company. “It is my primary goal to ensure the high credibility of the company. We are also looking to become more international and address the consequences of globalisation more than it has been done before.”, thus Thielen informed the world. He was also voted the new chairman of the board of directors in 2008.
Bertelsmann is involved in the RTL Group with 89,8 percent (RTL, RTL2, Super RTL, VOX, NTV, amongst others) through the RTL Group Verwaltung- und Holding GmbH. The group expanded its portfolio to 42 TV and 32 radio stations in ten countries, as well as approx. 30 production companies in 40 countries. With more than a 29 percent share of the total revenue, RTL is the most important ‘cash cow’ within the company’s media division (2007).
Furthermore, new stations in the Netherlands and Russia were established in 2007. By the end of the same year, production company Fremantle Media announced the launch of a cinema production subsidiary in Germany (Ufa Cinema). Also in the same year, the RTL Group cast off their shares of the Portuguese Media Capital and took over the Talpa Media Holding from John de Mol in the Netherlands and the country’s leading radio station, TV sports licensees, shows and series. In Return, Talpa Media was awarded a minority interest in RTL Nederland. In Russia, the RTL group entered the cable and satellite television market through a joint venture.
Since 2006, TV shows are being distributed through the video-on-demand platform ‘RTL NOW’. RTL has been offering free music video downloads from Universal and Sony BMG on the in-house website Clipfish since April 2007.
Direct Group’s core businesses are the book and music club as well as online shops by Bertelsmann: 35 million members in 24 countries. In 2007, Bertelsmann announced to look into a possible sale of the Direct Group due to a decline in sales. The sale of the American book club business on the other has already been decided on.
The club in Germany and the equivalents in France and Spain are working profitably. Following the purchase of book trader chain Betrant in Portugal and its integration into the company, the Direct Group disposed of the complete value chain from publishing to the distribution via clubs, Internet and stationary retail. Under the same name, the development of a book trader chain was started in Spain in 2007.
Bertelsmann had sold its music publisher BMG Music Publishing to the Universal Music Group in 2006. In August 2008, Bertelsmann sold its 50 percent share of Sony BMG (and the joint venture partner Sony),. It seemed as if Bertelsmann was retreating from the music business. One year later, Bertelsmann contracted a joint venture with the financial investor KKR in the field of music rights markting (BMG Rights Management). In September 2011, BMG Rights Management bought the music publisher Bug Music. Bertelsmann plans to own the whole company BMG Rights Management.
Publishing house Gruner+Jahr (G+J) from Hamburg, founded in 1965, employs 14,941 people (2008), publishes magazines, newspapers and operates websites in more than 30 countries. Magazines Stern, Geo, Capital, Neon and Brigitte being the most successful titles in Germany. The publisher is active in other European countries too as well as in Russia and China. The publishing house generates about 54 percent of its turnover outside of Germany (2008). The Bertelsmann SE & Co. KGaA hold 74.9 percent of Gruner+Jahr and 25.1 percent belong to publishing family Jahr from Hamburg.
Since the departure of British media company Pearson in 2008, G+J has been the sole shareholder of Financial Times Germany. Furthermore, the publisher holds shares of the Dresdner Druck- und Verlagshaus (incl. Sächsische Zeitung, Dresdner Morgenpost – 60 percent), the Spiegel publisher (25.25 percent), the Motor Presse Stuttgart (59.9 percent) and the Gravure Print-Joint-Venture Prinovis. Gruner+Jahr’s chairman of the board is Dr. Bernd Buchholz, who is also a member of the Bertelsmann board. The ‘Expand your Brand’ strategy that was conceived in 2006 is still relevant and circumscribes the aspired multimedia extension of existing brands and offers. Internet platforms, events and merchandise are supposed to turn the magazines into even more profitable products.
G+J is also investing in emerging markets: In August 2011, the publisher bought 78.75 percent of the Indian Magazine Publisher MaXposure Media Group. At the end of January 2012, media reported that G+J are interested in the main share of the biggest Online and Mobile Maketer in India NetworkPlay.
Media and communication services
The Arvato AG, itself a part of Bertelsmann, is one of the world’s leading media and communication service providers and offers everything ‘from the traditional print to modern services such as service centres, financial clearing or mobile services’. By now, about half of all Bertelsmann employees work in the service provider division.
In 2007 in Würzburg, a collaboration between Arvato and public administrations in Germany manifested itself. The ultimate goal is to outsource communal services – a huge market. In 2005, Arvato, together with G+J and the Axel Springer AG, founded the gravure printing joint venture Prinovis. Five call centres were added to the contingent by the end of 2006. Thanks to the ongoing outsourcing trend, the service business is quite profitable in Germany and France, yet turns out to be rather challenging in Italy and the USA. Furthermore, a joint venture between Arvato and German Vodafone subsidiary Vodafone D2 was granted in December 2006. Together, they seek to offer content for mobile networks and download services. For that purpose, the companies also acquired shares of Moconta, which manages and markets customer loyalty programs for mobile customers.
Arvato subsidiary Scoyo GmbH was founded in 2007 and develops online formats, which procure educational content through multimedia: Comics, info graphics and games. The project will launch in Germany and be internationalised at a later stage. By entering the e-learning industry, Arvato CEO Ralf Schrempner substantiated the company’s prior announcement to shift the strategic focus towards service providing and education.
Thanks to the takeover of major American publisher Random House, Bertelsmann became the largest book publisher group in the world, sporting 11.000 new releases per year and 100 offshoot publishers in 16 countries. Numerous best selling authors, such as J.K. Rowling, ensure the division’s strong market position with more than 6.000 employees (2008). 231 books by Random House made the bestseller list of the ‘New York Times’. In 2007, Random House expended even more and took over the majority of Virgin Books in Great Britain. A fusion of Random House and Penguin Books is planned.
The Bertelsmann Digital Media Investments Fonds (BDMI), which is equipped with 50 million Euros, is looking to secure the company’s direct access to innovative technologies and developments. Due to the current economical situation, Bertelsmann cannot afford to buy promising start ups and as such, the management decided to invest in small companies instead - for the time being. The aim is to identify new business models. First successes of the fond: The Clipfish.de platform, the communities of magazines by G+J and the download platform GNAB by Arvato are making small profits.
the Open Society Foundations' Media Program,
Germany's Federal Agency for Civic Education,
the Rudolf Augstein Foundation,
the city of Cologne, Germany,
and the State of Thuringia, Department of Commerce.