Bertelsmann fails with mergers worth five billion euros

Thomas Rabe

The boss of Bertelsmann and the RTL Group wants to promote large mergers of media companies – but has now failed four times in a row.

(Photo: Bertelsmann)

Dusseldorf Europe’s second largest media group, Bertelsmann, is suffering another setback in its merger plans. The plan to merge the TV subsidiary RTL Nederland with the media company Talpa of TV producer Jon de Mol has failed. The Dutch antitrust authority ACM will not approve the merger, RTL Group announced on Monday in Luxembourg.

In the event of a merger, the two companies would have accounted for around three quarters of the Dutch TV advertising market. The antitrust watchdogs had raised concerns, and two weeks ago the companies proposed outsourcing Talpa’s advertising sales to another company.

However, they could not dispel the concerns of the competition authority and could not save the deal announced in June 2021. The merger, which was supposed to take place in 2022, has now been canceled by Bertelsmann. The RTL Group share lost a good one percent in the meantime.

RTL: Another merger in the Netherlands failed

For Thomas Rabe, who is not only head of the parent company Bertelsmann, but also leads the RTL Group and RTL Germany, the decision is a serious defeat. Four transactions have failed since September – with a total value of five billion euros.

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Rabe wants to set up “national media champions” at the local level in order to counter global competitors such as Netflix or Disney. As with the failed merger in the Netherlands, Bertelsmann had previously wanted to create such a “champion” in France.

RTL boss Rabe calls canceled merger in France “serious setback”

But the plan to merge the Bertelsmann holding M6 with the TV station TF1 of the French conglomerate Bouygues failed in September due to the competition authorities. Here, too, the merged company would have controlled more than 70 percent of advertising television.

Plan B to sell the M6 ​​elsewhere also failed. The schedule for a new deal was too tight. At an internal manager meeting in the fall, Rabe described the unapproved plan as a “serious setback”.

Analyst: Competition authorities need to adapt

François Godard, analyst at the British consulting firm Enders Analysis, assesses Bertelsmann’s strategic visions as fundamentally correct compared to the Handelsblatt. However, the implementation is challenging because the competition authorities would have to make major changes. According to Godard, the decision of the French antitrust authorities also influenced the competition authorities in the Netherlands.

Rabe’s takeover plans for the family company in Gütersloh have also failed in two other areas of the group. The Bertelsmann subsidiary Penguin Random House was not allowed to take over the New York publisher Simon & Schuster after a court decision, as it became known in November. The $2.2 billion US deal also fell through over competition concerns, in this case with bestselling books.

Rabe also fails in the publishing and call center industry with takeovers

In the call center industry, the Bertelsmann subsidiary Majorel did not meet its competitor Sitel, which is twice as large and belongs to the French billionaire family Mulliez. It wasn’t because of concerns from the authorities. The parties fell out in September because of rising interest rates. The companies had already agreed on the basics of a takeover in the summer.

We think long-term: If plans are delayed by two or three years, that’s not a problem. Bertelsmann Supervisory Board Chairman Christoph Mohn in autumn 2022

The pressure on Bertelsmann boss Rabe should now increase. He pushed ahead with the merger projects in the TV sector with great personal commitment and described them as “great steps towards strengthening our broadcasting business in Europe”. However, the head of the supervisory board, Christoph Mohn, backed the manager in the fall: “We think long-term: if plans are delayed by two or three years, that’s not a problem,” Mohn told the Handelsblatt.

Analyst Godard says that after the setbacks, Bertelsmann will “take a deep breath and come back with an action plan.” One cannot criticize Thomas Rabe for remaining stuck in the past. “RTL has been more forward-thinking than most other private broadcasters in Europe when it comes to digital challenges.” Such an approach is necessary in a disruptive market.

And so Rabe remains combative: “We are still convinced that market consolidation is necessary in order to be able to compete with the global technology platforms.” This will come sooner or later.

More: After the failed takeover in the USA: Penguin boss leaves Bertelsmann

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