The Bertelsmann and RTL boss expects only a slow recovery of the advertising markets.
(Photo: Bloomberg)
Dusseldorf Three months after the announced job cuts at the publishing house Gruner + Jahr (G+J), talks are underway with affected employees and negotiations about the sale of magazine titles. “We are in constructive sales talks,” said RTL Germany on request. G+J was merged with the Cologne TV group in 2020.
At the beginning of February, RTL and the parent company Bertelsmann announced that they would cut 700 of the 1,900 jobs at the traditional Hamburg publisher. The news caused a great public outcry. 45 out of 58 brands and magazines are to be sold or discontinued. Only core titles such as “Stern”, “Geo” or “Capital” remain.
The mood at the publishing house is bad, according to company circles. Many employees could not understand the management’s decision and had already found new employers. The publisher’s headquarters on Hamburg’s Baumwall also reported that the titles for sale were rated as attractive during the negotiations.
Earlier G+J magazines such as “11 Freunde”, “Beef” and “Landlust” are to be sold. The talks should be completed by the summer. RTL did not want to comment on the expected proceeds.
Meanwhile, the Luxembourg TV group got off to a weak start in the new year. Sales fell in the first quarter by nine percent to 1.4 billion euros. The private broadcasting group, which is listed in the MDax, is suffering from a weak advertising market, particularly in Germany. In view of the weak economy and high inflation, many companies often first save on advertising.
Advertising sales at RTL are falling
RTL earned significantly less money from advertising in the first quarter. Advertising sales fell by 15.6 percent to 700 million euros. This quickly affects the balance sheet, RTL generates over 40 percent of its revenues from advertising.
“In line with our expectations, the TV advertising markets were very challenging in the first quarter,” said RTL boss Thomas Rabe. He does not expect a recovery in the current quarter either. RTL estimates that the net TV advertising markets in Germany were 17 to 18 percent below the previous year’s level in the first quarter.
>> Read more: Breaking up of Gruner + Jahr – Why are 134 million euros missing in profit?
Nevertheless, RTL sticks to its forecast. The TV group expects annual sales of 7.3 to 7.4 billion euros and an operating profit of a good one billion. The prerequisite for this, however, is that there is an upswing in the TV advertising markets in the second half of the year, as expected.
The broadcasting group, which, in addition to RTL Germany, also includes the French TV group M6 and RTL Nederland, does not comment on its profits on the basis of the quarterly figures.
Bertelsmann is growing despite the weakness of RTL
Despite the decline in sales at its most important subsidiary, the parent company Bertelsmann was able to increase its revenues by 5.6 percent. The company, owned by the Mohn family, had a turnover of 4.8 billion euros in the first quarter. Bertelsmann also announced this on Thursday.
The group structure also includes the world’s largest book group, Penguin Random House, the fourth-largest music company, BMG, and the service provider Arvato. Rabe, who has been head of Bertelsmann since 2012, is pursuing the strategy of diversifying the group’s portfolio in order to become more independent of the cyclical advertising business. The current figures underline the necessity of the project.
The family business started the year with an increase in sales.
(Photo: IMAGO/Cord)
Bertelsmann wants to invest five to seven billion euros from 2021 to 2025 as part of its “Boost” future strategy – for example in the area of digital health. Bertelsmann wants to help healthcare workers with digital offerings to complete their administrative tasks faster. Even in difficult economic times, this area is considered a growth market.
Rabe also expanded the music business BMG and reorganized the service provider Arvato. Both areas contributed to the increase in sales in the first quarter. “The results of the boost strategy are becoming increasingly noticeable,” says Rabe.
Last week, Bertelsmann sold its call center subsidiary Majorel to French competitor Teleperformance. Previous attempts to sell had failed. The group thus generates around 1.2 billion euros. Rabe announced that these funds should also be invested in further growth.
Last year, Bertelsmann exceeded the €20 billion revenue mark for the first time. By 2026, according to Rabe, sales should be 24 billion euros. For the current year, Bertelsmann expects a “moderate to significant increase in revenue and stable operating earnings”.
More: 1.2 billion proceeds: Bertelsmann sells call center division Majorel