Dusseldorf For his strategy, Thomas Rabe was inspired by his running shoes. The Bertelsmann boss called the future plan of the Gütersloh-based family company “Boost 2025” – based on the “Adidas Ultra Boost” that he wears on his early-morning jogs. Rabe is a passionate marathon runner.
In the past year, the media, services and education group that he leads has had a successful sprint. The company, founded in 1835, turned over 18.7 billion euros – organic growth of eleven percent. The bottom line is that profits rose by 58 percent to 2.3 billion euros, as the group announced on Thursday. “It was the best annual operating result in the history of Bertelsmann, it’s going in the right direction,” said Rabe in an interview with the Handelsblatt.
The doctor of economics has been leading the group for ten years and has made it more international, more digital and faster-growing. Under his aegis, sales rose from 15.4 to 18.7 billion euros. The most important sources of income include the TV group RTL, the book business Penguin Random House and the services division Arvato.
In terms of organic growth, all areas – apart from the structurally declining printing business – increased significantly, they are again above the pre-corona level. Bertelsmann benefited from a recovery in the advertising markets and growth in the service business. There were also high profits from company sales.
Top jobs of the day
Find the best jobs now and
be notified by email.
Gradual withdrawal from Russia
For the current year, the group is aiming for four to five percent more sales. This does not yet price in the effects of the Ukraine war. They cannot yet be assessed, according to Rabe. Last year, the Gütersloh-based company turned over 70 million euros in Russia – 0.4 percent of group sales. “We are gradually reducing business in Russia with our customers.”
Arvato employs 2,000 people in Russia and has been active there for 25 years. Arvato is primarily active in the supply chain for companies in the consumer goods sector. “We cannot close our camps overnight in Russia,” says Rabe. “We want to act responsibly towards our employees and customers.” Rabe did not want to rule out whether Bertelsmann would do business in Russia in the future. “We have to see how the horrible war develops and whether there is still a perspective in Russia.”
Because of the small proportion of sales, Rabe fears no direct impact on his business. However, the indirect consequences could be “considerable” if customers booked less advertising because of higher costs. In March, the “advertisements were a little weaker”, for April things are looking better again.
A lack of advertising is likely to slow down RTL’s business. The TV group was one of Bertelsmann’s growth drivers in 2021. The RTL Group, which Rabe also heads, increased its sales by ten percent to 6.6 billion euros – also because the advertising business had recovered after the pandemic. RTL left the Russian market in 2012, “we had already seen at the time that the influence of the Russian state on the media was increasing”.
The Bertelsmann boss is currently reorganizing his journalistic offerings. At the beginning of the year, RTL merged with the publishing house Gruner + Jahr (G + J). The first management levels have been determined, “these colleagues are now defining the further structures”. Rabe sees synergies of 100 million euros. The first cross-platform projects have started. The editors have now also turned the G+J platform Chefkoch.de into a TV cooking show.
Some observers are skeptical as to whether the traditional Hamburg publisher and the former Cologne trash TV station can be merged. “There may be differences, but both companies previously belonged to Bertelsmann and are culturally connected,” says Rabe. He was satisfied with how the teams would find each other.
RTL plus could be delayed
The most visible result of the merger is the RTL plus platform, formerly known as “TV Now”. Previously a pure streaming service, users should soon be able to listen to music and podcasts or read e-magazines. Such an offer is so far unique in Europe. According to Rabe, the platform should be launched “in the course of the year”. When the announcement was made in autumn, RTL was still talking about summer.
>>> Read more: Fight against Netflix: RTL plans platform for videos, podcasts, books and magazines
The project is technically very demanding, Rabe admits. Users should receive suitable recommendations across media using algorithms. “We want to build a product that meets customer expectations. It doesn’t matter whether we start the platform a little earlier or later,” he says.
At the end of February, RTL plus had over three million paying subscribers in Germany. The distance to Netflix, which is estimated to have around eleven million users in Germany, is large. Rabe says: “There is no local streaming service that has made such a development in competition with Netflix and Amazon Prime.” One is very satisfied. However, the service is not yet profitable, it should only be in the black in 2026 – and have eight to ten million users. Rabe is planning to invest 250 million euros in the streaming business this year alone – which should weigh on operating profit.
In Europe, the manager is pursuing the strategy of creating strong moving image offerings in the countries through cooperation or mergers. In this way, Bertelsmann is trying to fight against global competition. The industry is dominated in the advertising market by the US corporations Google, Meta and Amazon. At the same time, services like Netflix or Disney are stealing viewers away from linear television.
In France and the Netherlands, Bertelsmann is aiming for a merger of broadcasting groups, which could be approved by the antitrust authorities in the second half of the year. In Germany, Rabe has been flirting with a merger between RTL and competitor Pro Sieben Sat 1. Rabe confirmed this position, but also said: “Pro Sieben is currently not on the agenda.”
Entry into the digital health business
Rabe intends to continue growing in the existing portfolio until 2023. From 2024, the CEO plans to enter new growth areas. He sees great potential in the area of digital health, but without being specific: “Many facets are conceivable, from digital treatment methods to practice management to further training.” They will start with smaller investments in the area and then set priorities.
Overall, Bertelsmann is planning global investments of five to seven billion euros by 2025. The planned takeover of the book publishing group Simon & Schuster by Penguin Random House plays an important role. The world number one in the book business would then take over number four. The US Department of Justice wants to block the takeover, but Rabe is confident of winning the court case. It would be the next stage on his endurance run with Bertelsmann.
His contract ends in 2026, when he will be 61 years old. If he resigns, he will have more time for the Dolomites, the Bertelsmann boss rejoices. He also likes to run a marathon.
More: Bertelsmann shakes off corona crisis with record profit – consequences of war are unclear