RTL expects less sales

Bertelsmann

A sign with the Bertelsmann logo is in front of the headquarters in Gütersloh.

(Photo: dpa)

Dusseldorf Europe’s second largest media group, Bertelsmann, is suffering from a flagging advertising market. The most important subsidiary RTL, which accounts for almost half of the total profit, has now lowered its forecast. At 7.2 billion euros, sales will be below the previously targeted figure of 7.3 to 7.5 billion euros, as the group announced on Friday morning.

RTL had to reduce its profit prospects in the summer due to the advertising market slump. The station group has now made it clear that adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) will even be at the lower end of the lowered forecast at 1.05 billion.

CEO Thomas Rabe, who also runs the parent company Bertelsmann, spoke of “solid” results in view of the advertising problems. “Looking at the fourth quarter, we assume that the difficult environment on the advertising markets, especially in Germany, will continue.”

Overall, the media, services and education group Bertelsmann was able to significantly increase its sales in the first nine months. This was 14.4 billion euros – an increase of five percent from our own resources. The Gütersloh parent company also announced this on Friday morning. Bertelsmann does not name key earnings figures on the basis of its nine-month figures.

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CEO Rabe told the Handelsblatt in the summer that he wanted to exceed the 20 billion mark in sales for the first time this year. “The highest group turnover so far after nine months of a year makes us confident that we will exceed the 20 billion euro mark for the first time in terms of sales for the year as a whole,” Rabe said in a company statement on Friday. The 20 billion would be record revenue, and in 2021 the company achieved an all-time high in sales of 18.7 billion euros.

Advertising business accounts for 21.6 percent of Bertelsmann’s revenues

Rabe, who has headed the family business and its shareholder family Mohn since 2012, has made the media group more international, digital and growing. He has also reduced dependence on the cyclical advertising and advertising business. But this still stands for 21.6 percent of the proceeds. Because of the economic uncertainty and consumer restraint, companies are currently placing fewer advertisements.

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Rabe, whose contract runs until the end of 2026, had recently announced major growth plans: by 2026, sales should be 24 billion euros and profits should be four billion. In 2021, Bertelsmann still achieved an Ebitda of 3.2 billion.

>> Read here: Next defeat for the Bertelsmann boss: court stops purchase of US publisher

However, the growth fantasies have recently been stopped. Three merger plans failed within a few weeks. Just this week, the planned takeover of the New York publisher Simon & Schuster by the Bertelsmann subsidiary Penguin Random House was stopped by the US judiciary. The world’s number one in the book business wanted to take over number four. Bertelsmann intends to appeal the verdict.

There was also a setback in the call center industry: Contrary to what was planned, the subsidiary Majorel did not come together with 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.

Merger in the Netherlands: RTL expects a decision in the fourth quarter

And 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. Plan B to sell the M6 ​​elsewhere also failed.

CEO Rabe is pursuing the strategy of creating “national media champions” at the local level in order to counter global competition such as Netflix or Disney. This is also the case in the Netherlands: RTL Nederland wants to take over the competitor Talpa Network from media entrepreneur John de Mol.

Here, too, the group is threatened with a setback, the first requirements by the authorities are already emerging. RTL expects a decision “for the fourth quarter of 2022”. If this takeover also fails, transactions with a total value of five billion euros would have been resolved for Bertelsmann.

IT service provider Arvato is one of the growth drivers

The IT service provider Arvato was once again one of Bertelsmann’s growth drivers. The second-largest Bertelsmann division is “continuing to grow,” said Bertelsmann, without giving specific figures.

Thomas Rabe

The Bertelsmann CEO recently failed with his merger plans.

(Photo: imago images / Reiner Zensen)

For example, Arvato manages Amazon invoices or transports medicines. Consumers should come into contact with the Arvato services half a dozen times a day. The music company BMG “grew in double digits”.

Bertelsmann reiterated its goal of investing 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: How the merger plans of media group boss Thomas Rabe fail

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