Bruised Bertelsmann Plans US Selloff

20 March 2008

GÜTERSLOH, Germany: Privately-held German media mammoth Bertelsmann is reeling after massive impairment charges transformed its 2007 bottom line into a down-bound rollercoaster.

Net income at Europe's largest media business last year plunged to €216 million ($340.93m; £168.65m) from €2.14 billion thanks to €854m million in net charges. These included €414m of impairment and restructuring costs related to its US assets which include book, music and DVD clubs.

Nor did the enfeebled US dollar help matters; while revenues were further depleted by the sale of its stateside music-publishing business.

Revenue at Bertelsmann's US book and music clubs fell more than 10% last year, according to a Gütersloh mole, while membership numbers fell to around 13m in 2007, down from approximately 16m in 2005.

The US disposals will be the first major strategic move by new ceo Hartmut Ostrowski since taking Bertelsmann's tiller in January. He has hired investment bank Morgan Stanley to try to find a buyer for the units.

Among Bertelesman's heathier holdings are US book publisher Random House, Europe's largest TV broadcaster RTL Group, and a 50% stake in recorded-music company Sony BMG Music Entertainment.

Data sourced from Wall Street Journal Online; additional content by WARC staff