Bertelsmann Revenues Up 25%

Herbert R. Lottman |

Sep 18, 2000

News
Bertelsmann Revenues Up 25% Herbert R. Lottman -- 9/18/00 *Looks to More U.S. Buys* The figures were given at a press conference at the Hanover, Germany, world's fair by chief executive Thomas Middelhoff, who noted that the Bertelsmann acquisition of scientific publisher Springer Verlag, whose figures were included in full for the whole year, also boosted the results, while BookSpan, the joint venture between Doubleday Direct and Book-of-the-Month Club, doubled revenues from U.S.-U.K. club operations. In any event, Middelhoff pointed out that the aggregate $6.6 billion rise in revenues was equivalent to total group turnover in the 1989-90 business year. He referred to the group's "war chest," and described a ventures portfolio targeting the U.S. (where 97% of its investments have gone--the first $50 million now worth $150 million). Henceforth, all venture capital activity will be bundled, with $1 billion earmarked for strategically important investments. Middelhoff took note of a prediction that the Internet will prove his downfall. But his figures show that Bertelsmann draws more visitors to its sites--notably bol.com, bn.com, Fireball and Lycos--than leading media rivals Disney, Time Warner, Viacom and News Corp. It's also true that its Internet investments exceed those of all the other groups except Disney, and are expected to rise to $3.5 billion by the 2002-03 business year. "We want to be number one in content," he declared (the content coming from the Random House book group, BMG, the Gruner+Jahr magazines, RTL television and Bertelsmann Springer professional publishing). Middelhoff indicated that Random House will soon become an exportable brand, publishing in other areas and languages (he mentioned French, Italian and Spanish, in that order). And, as previously announced, the entire Munich-based book group, called Buch AG, will be rechristened Random House beginning next spring. Meanwhile, Bertelsmann itself is adopting English as its vehicle for in-house corporate communication. Middelhoff described a recent world meeting of Bertelsmann executives at which the new lingua franca was used; Bertelsmann's chief family owner Reinhard Mohn delivered his address "in perfect English." Addressing assembled representatives, Middelhoff had high praise for Random House chairman and CEO Peter Olson, who had, he said, successfully integrated his companies into the global media group a year ahead of plan. In a talk with PW's envoy at the informal press dinner on the eve of the conference, Olson made it clear that Random House will not meddle in the publishing policies of its trade houses, which include some high-profile German imprints; each company will keep its personality as well as its logo. "Bennett Cerf wanted to publish books 'at random,' and we intend to leave it that way. It's just that headquarters will be in New York instead of Munich." Olson takes over global book operations formally next April, at which time he joins the Bertelsmann executive board, though in fact he has been running the book group unofficially since July. Bertelsmann began its postwar resurrection with books, and for long years, books and magazines were the fabled "two pillars" of the firm. Now music (with BMG) has overtaken both pillars, and the book group has the lowest growth rate of all. Starting next year, the clubs will be hived off from the book group, to be run as part of the direct-to-customer group with e-commerce ventures. One thing Bertelsmann will not do is to offer Internet access (and it has sold off its AOL shares). "Our core business is content," Middelhoff told a questioner.

News

Bertelsmann Revenues Up 25%
Herbert R. Lottman -- 9/18/00
Looks to More U.S. Buys

The figures were given at a press conference at the Hanover, Germany, world's fair by chief executive Thomas Middelhoff, who noted that the Bertelsmann acquisition of scientific publisher Springer Verlag, whose figures were included in full for the whole year, also boosted the results, while BookSpan, the joint venture between Doubleday Direct and Book-of-the-Month Club, doubled revenues from U.S.-U.K. club operations. In any event, Middelhoff pointed out that the aggregate $6.6 billion rise in revenues was equivalent to total group turnover in the 1989-90 business year.

He referred to the group's "war chest," and described a ventures portfolio targeting the U.S. (where 97% of its investments have gone--the first $50 million now worth $150 million). Henceforth, all venture capital activity will be bundled, with $1 billion earmarked for strategically important investments. Middelhoff took note of a prediction that the Internet will prove his downfall. But his figures show that Bertelsmann draws more visitors to its sites--notably bol.com, bn.com, Fireball and Lycos--than leading media rivals Disney, Time Warner, Viacom and News Corp. It's also true that its Internet investments exceed those of all the other groups except Disney, and are expected to rise to $3.5 billion by the 2002-03 business year. "We want to be number one in content," he declared (the content coming from the Random House book group, BMG, the Gruner+Jahr magazines, RTL television and Bertelsmann Springer professional publishing).

Middelhoff indicated that Random House will soon become an exportable brand, publishing in other areas and languages (he mentioned French, Italian and Spanish, in that order). And, as previously announced, the entire Munich-based book group, called Buch AG, will be rechristened Random House beginning next spring.

Meanwhile, Bertelsmann itself is adopting English as its vehicle for in-house corporate communication. Middelhoff described a recent world meeting of Bertelsmann executives at which the new lingua franca was used; Bertelsmann's chief family owner Reinhard Mohn delivered his address "in perfect English."

Addressing assembled representatives, Middelhoff had high praise for Random House chairman and CEO Peter Olson, who had, he said, successfully integrated his companies into the global media group a year ahead of plan. In a talk with PW's envoy at the informal press dinner on the eve of the conference, Olson made it clear that Random House will not meddle in the publishing policies of its trade houses, which include some high-profile German imprints; each company will keep its personality as well as its logo. "Bennett Cerf wanted to publish books 'at random,' and we intend to leave it that way. It's just that headquarters will be in New York instead of Munich." Olson takes over global book operations formally next April, at which time he joins the Bertelsmann executive board, though in fact he has been running the book group unofficially since July.

Bertelsmann began its postwar resurrection with books, and for long years, books and magazines were the fabled "two pillars" of the firm. Now music (with BMG) has overtaken both pillars, and the book group has the lowest growth rate of all. Starting next year, the clubs will be hived off from the book group, to be run as part of the direct-to-customer group with e-commerce ventures. One thing Bertelsmann will not do is to offer Internet access (and it has sold off its AOL shares). "Our core business is content," Middelhoff told a questioner.

A version of this article appeared in the 09/18/2000 issue of Publishers Weekly under the headline: