New Media: Bertelsmann Ventures Out of the Bunker Waving €6bn

23 March 2007

GÜTERSLOH, Germany: Europe's largest consumer media conglomerate Bertelsmann celebrated a 132% surge in annual profits with news that it has set aside up to €6 billion ($7.98bn; £4.07bn) to acquire or invest in new media businesses.

Announcing full year net profits for 2006 at €2.4bn - a figure boosted by asset sales - group operating profits also rose by 16% to €1.87bn, fuelled by a 10.4% rise in income to €835 million at its largest division, the broadcaster RTL Group.

According to cfo Thomas Rabe, group debt will reduce sufficiently by the end of this year to fund between €1.2 and €1.5bn a year on deals.

Bertelsmann will also plough €500m into a €1bn venture fund, supported by the private equity units of Citigroup and Morgan Stanley, with a view to investing in opportunities in Asia and the USA.

Alone among global media mammoths, Bertelsmann has had little strategic involvement with the internet as yet, even though all its units have limited new-media spin-offs.

Soon-to-retire ceo Gunther Thielen (pictured above) justifies his apparent reticence to conquer the cyber-world, opining that there are few obvious gaps in Bertelsmann's existing portfolio, which ranges from television to music to book publishing.

Pressed to pinpoint possible acquisition targets, Thielen said it was difficult to identify sustainable new-media businesses: "Those who are too early will be punished and so will those who are too late."

However, the company will target fresh assets that it could ultimately integrate into its existing structure.

Data sourced from The Times (UK); additional content by WARC staff