Dusseldorf After the job cut at the traditional publishing house Gruner + Jahr (G+J), the owner Bertelsmann announces the highest turnover in its history. Last year, the media group generated revenues of 20.2 billion euros – an increase of a good four percent from its own resources. For the first time, Bertelsmann broke the 20 billion euro mark in sales, as the company announced on Thursday.
However, earnings before interest, taxes, depreciation and amortization (Ebitda) fell slightly to 3.2 billion euros. The margin fell accordingly from 17.3 to 15.8 percent.
The figures do not hide the fact that times are difficult for Bertelsmann and CEO Thomas Rabe. The company, owned by the Mohn family, has come under criticism because it announced at the beginning of February that it would cut 700 of the 1,900 jobs at G+J. 45 out of 58 brands and magazines are to be sold or discontinued. Only core titles such as “Stern”, “Geo” or “Capital” remain.
Bertelsmann boss Rabe had merged the two subsidiaries RTL and G+J in early 2022. Former and current executives at G+J had accused the manager of deliberately miscalculating the publisher. Rabe rejected this in an interview with the Handelsblatt.
>> Read more: Breakup of Gruner + Jahr – Why are 134 million euros missing in profit?
Before the merger, the manager had outsourced profitable business from G+J to other areas of the Bertelsmann group – such as the rapidly growing app platform Applike or the stake in the news magazine “Spiegel”.
Insiders also complained that many advertisers had recently dropped out because Rabe had been checking G+J’s portfolio for more than five months. In addition, the manager is said to have calculated particularly high costs for the publishing house and booked its proceeds in the Gütersloh headquarters.
RTL suffers from a weak advertising market
A look at the Bertelsmann balance sheet also shows that the most important source of profit is weakening. The income of the Luxembourg RTL Group, in which the family company holds a good 75 percent of the shares, fell by 6.5 percent to 1.3 billion euros. However, sales increased slightly to 7.2 billion euros.
The private broadcasting group, which is listed in the MDax, is suffering from a weakening advertising market in Germany. RTL Group generates a good 43 percent of its revenues from advertising. But many companies are saving on their advertising expenses in view of the uncertain and crisis-ridden situation.
The decline in Bertelsmann profits can also be explained by start-up losses of 233 million euros from the RTL streaming business. The group invests in the RTL+ app (formerly: TV Now). According to their own statements, the market share in Germany is eight percent. The project should be profitable in 2026.
In addition to RTL and G+J, Bertelsmann also owns the world’s largest book group, Penguin Random House, the fourth-largest music company, BMG, and Arvato. With sales of €6.6 billion, the IT service provider is Bertelsmann’s second-largest division and increased its revenues and earnings. For example, Arvato manages Amazon invoices or transports medicines.
The third-largest area, Penguin Random House’s books business, achieved a profit of almost twelve percent lower than in the previous year at EUR 666 million, which is mainly due to the decline in US business. In the structurally declining printing business, earnings fell by 57 percent to EUR 26 million.
Music and education business are profit makers
Bertelsmann’s profit makers are the smaller divisions BMG (866 million euros in sales) and the education business (622 million euros). The music company increased its profits by 35 percent to 195 million euros, also due to increased investments in new businesses.
The Education Group managed to more than double its earnings to 192 million euros. The increase in Afya’s Brazilian education business had a positive effect here. In 2024, Rabe announced that both areas should generate one billion euros each.
Most recently, the Bertelsmann boss had promised big growth plans. By 2026, sales should be 24 billion euros and profits should be four billion. At the end of 2026, the contract of the 57-year-old will also expire.
Bertelsmann reiterated its goal of investing five to seven billion euros from 2021 to 2025 as part of its “Boost” future strategy. In the past year alone, Bertelsmann took 1.6 billion euros of this into its own hands.
Much of this money is to flow into the field of digital health – a global growth market. Bertelsmann wants to help employees in the healthcare sector with digital offers to complete their administrative tasks more quickly. The future activities are bundled in the Bertelsmann Investments segment.
In 2022, Bertelsmann had invested 60 million euros in funds and smaller companies in this area. “It’s a good way to get to know the business,” Rabe said on Thursday. In order to expand the presence in the market, he thinks a larger investment is conceivable in the current year. “If we find a suitable opportunity, we are ready to invest several hundred million euros,” said the manager. Rabe sees potential above all in the USA.
Year of failed mergers
Rabe has been the head of Bertelsmann since 2012. He made the company more international, digital, faster-growing and regionally broader and reduced its dependency on the cyclical advertising business. “The restructuring of the group and the strategy of the past decade are showing their effects,” said Rabe. Under his aegis, adjusted sales increased from 12.2 to 20.2 billion euros and profits from 2.2 to 3.2 billion.
Bertelsmann only wants to concentrate on a few brands in the magazine business.
(Photo: dpa)
Despite the successes, the manager has to look back on a year of failed mergers. Overall, Bertelsmann was unable to complete four deals with a total volume of five billion euros. The US judiciary prevented the plan to make Penguin Random House even bigger with an acquisition in the USA.
>> Read more: Fourth defeat in a row: Bertelsmann fails with mergers worth five billion euros
The plans to create strong media companies through mergers in France and the Netherlands failed because of the cartel authorities. And in the call center branch, the subsidiary Majorel did not come together with the competitor Sitel.
Because of the setbacks, Rabe now wants to “pursue alternative ways of scaling” with RTL and aim for smaller alliances and partnerships. For the current year, Bertelsmann CFO Rolf Hellermann expects “a moderate to significant increase in sales and a stable operating result”. The group employs almost 165,000 people worldwide. Despite the layoffs at G+J, that’s 20,000 more than the year before.
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