Dusseldorf Despite the geopolitical uncertainties and the looming recession, Europe’s second-largest media group achieved record results. The RTL parent company Bertelsmann increased its sales by 3.8 percent to 9.3 billion euros in the first half of the year.
Earnings before interest, taxes, depreciation and amortization (Ebitda) amounted to 1.43 billion euros – and was thus higher than ever. This was announced by the media, service and education group on Wednesday morning.
“Despite higher streaming investments, we again posted a record operating result,” said Bertelsmann boss Thomas Rabe according to the company press release.
Bertelsmann has even raised its forecast for the year as a whole: The group wants to exceed the EUR 20 billion threshold in sales for the first time this year, Rabe told the Handelsblatt. Last year, the company already achieved record sales of 18.7 billion euros.
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In terms of profit, the group expects 3.3 to 3.4 billion euros for the year as a whole. This would be slightly above the previous year’s level of 3.2 billion euros.
RTL had recently cut the outlook
Bertelsmann’s largest business unit, the RTL Group, recently cut its outlook and expects less profit and sales. The reason for this is the advertising slump as a result of the economic slowdown, high inflation and the Ukraine war. The private broadcasting group, which is listed in the MDax, depends on advertising, but companies are reluctant to advertise because of the uncertain situation.
The RTL Group is in a time of upheaval. Since the beginning of the year, the Cologne TV broadcaster and the Hamburg publishing house Gruner+ Jahr have been combined under the RTL brand. Bertelsmann is pursuing the strategy of “creating national media champions”, as Rabe likes to say, in order to be able to compete against the global tech platforms.
The expansion of the streaming platform RTL+ (formerly TV Now) therefore plays a central role in Bertelsmann’s strategy. The company wants to compete with international streaming giants like Disney or Netflix at the local level. RTL+ has seen significant user growth over the past twelve months – by 69 percent to 3.4 million paying subscribers.
However, the streaming platform for Bertelsmann is still a subsidy business, and the platform should not be profitable until 2026. This year alone, Bertelsmann expects start-up losses of 250 million euros in this area.
In addition to films and series, RTL also wants to offer content such as podcasts, audio books, music, digital books as well as online magazines and digital newspaper articles, for example from Stern or Geo from Gruner + Jahr, in its app. But the delivery is delayed. The entire product should be available as early as summer 2022, but so far there is only a music portfolio in the app.
Bertelsmann boss Rabe holds three positions
The recent changes in RTL management could be related to these problems. In mid-August, co-boss Stephan Schäfer had to leave after just one year at the helm. He was also responsible for the content of RTL+. Before the merger, Schäfer was head of Gruner+ Jahr and, together with Matthias Dang, who comes from RTL, formed an equal dual leadership.
>> Read more: RTL boss Schäfer has to go – Bertelsmann CEO Rabe now has a triple role
Bertelsmann boss Rabe justified Schäfer’s release with “some major challenges” that RTL is facing. He himself has taken over Schäfer’s tasks on an interim basis and thus has a triple role: Rabe is currently head of RTL Germany, the RTL Group and the mother Bertelsmann.
The fact that a single manager is both operationally responsible and his own controller twice is a special case worldwide. Raabe points out that in the eleven years at the helm of Bertelsmann he has repeatedly “focused on individual businesses”. “It’s part of my way of working.”
Up to seven billion euros in investments by 2025
Bertelsmann also includes the IT service provider Arvato, the book publishing group Penguin Random House, the music company BMG, the Printing Group, the Education Group and the Bertelsmann Investments fund network. The second-largest division, Arvato, increased its revenue to EUR 2.64 billion (up 8.3 percent), while the third-largest division, Penguin Random House, generated revenue of EUR 1.9 billion (up 6.2 percent).
Bertelsmann intends to invest five to seven billion euros by 2025 as part of its “Boost” future strategy. In the first half of the year alone, the group spent around 750 million euros on this and, among other things, increased its stake in the Brazilian education company Afya by 161 million euros in order to strengthen the international education business.
More: Why Bertelsmann is investing 161 million in an education company in Brazil