The manager relies heavily on mergers for his growth plans – but recently had to put up with several setbacks.
(Photo: dpa)
Dusseldorf The media group Bertelsmann has to accept another setback in its merger plans: The takeover of the New York publisher Simon & Schuster by the subsidiary Penguin Random House initially failed because of the US judiciary. The world’s number one in the book business wanted to take over number four.
Washington District Judge Florence Pan blocked the €2.2 billion deal on Monday (local time). In doing so, she followed the US Department of Justice’s objection that a merger of two of the world’s largest publishing groups would reduce competition for bestsellers.
Bertelsmann announced on Tuesday morning that it intends to appeal the verdict in an urgent procedure. “A merger would be in the interests of competition,” said CEO Thomas Rabe. You share the assessment of the court just as little as the attitude of the US Department of Justice. We remain convinced that Bertelsmann and Penguin Random House would be the best creative home for Simon & Schuster.
Bertelsmann: Merger plans fail in rows
For the 57-year-old top manager, it is the third defeat in his merger plans in a short time. At Europe’s largest media group, Rabe is pursuing the strategy of founding “national media champions” at the local level in order to counter global competition such as Netflix or Disney.
Top jobs of the day
Find the best jobs now and
be notified by email.
In France, the Bertelsmann holding M6 wanted to merge with the TV station TF1 of the French conglomerate Bouygues. After the antitrust authorities expressed strong concerns that the duo controlled more than 70 percent of commercial television, Bertelsmann withdrew its plans.
>> Read also: Big plans, even bigger problems: How the big merger projects of Bertelsmann boss Rabe fail
Rabe’s takeover fantasies also failed in the call center industry. Contrary to what was planned, the subsidiary Majorel did not meet its competitor, Sitel, which is twice as large and belongs to the French billionaire family Mulliez. They fell out over rising interest rates. The companies had already agreed on the basics of the takeover in the summer.
At an internal Bertelsmann conference at the end of September, Rabe spoke of “two serious setbacks” in this regard, participants reported to the Handelsblatt. After “years of hard work, this is incredibly frustrating” and “very, very bitter”.
In the Netherlands there is even a risk of a fourth defeat. In mid-November, the cartel watchdogs want to decide on the planned merger of RTL Nederland with John de Mol’s Talpa Network. Conditions are already emerging. Officially, RTL no longer speaks of a “merger” with regard to the two market leaders, but only of the “planned merger”.
If this fourth deal also fails, planned transactions with a total value of five billion euros at the Gütersloh-based family company could disappear into thin air. The pressure on CEO Rabe would then increase. Supervisory Board Chairman Christoph Mohn has recently strengthened the manager’s back: “We think long-term: If plans are delayed by two or three years, that’s not a problem,” he told the Handelsblatt.
Media group to grow through acquisitions
Since taking office at the beginning of 2012, Rabe has made Bertelsmann more international, more digital and faster-growing. The group is now benefiting from these measures. Sales recently rose to almost 19 billion euros, this year Rabe wants to reach the 20 billion mark. Bertelsmann also wants to achieve further growth through acquisitions.
The merger with the US publisher Simon & Schuster has failed for the time being.
(Photo: dpa)
In the book market, Bertelsmann announced plans to take over Penguin Random House and Simon & Schuster in November 2020. A year later, the US Department of Justice filed a lawsuit against the deal, which the court has now upheld.
Unlike most competition disputes, which involve costs to consumers, this case involved authors’ revenues. The US government argued in its lawsuit that the purchase must be prevented because it would lead to less competition for bestsellers and fewer advances for authors. Bertelsmann criticizes that the verdict is based on false basic assumptions, such as an incorrect market definition.
One of the opponents of the merger was star author Stephen King, one of Simon & Schuster’s driving forces. The planned merger was never about the readers and writers, but about maintaining and growing Penguin Random House’s market share. “In other words, $$$,” King wrote on Twitter.
More: 2.1 million more subscribers, share up 14 percent – Why Netflix is growing again