European Media Giant Bertelsmann’s Revenues Soar to $21 Billion, But Profits Halve
Revenues at European media giant Bertelsmann, the parent company of Fremantle, RTL Group, BMG and Penguin Random House, leapt 8.3% from €18.7 billion ($20.2 billion) in 2021 to €20.2 billion ($21.8 billion) in 2022. These are the highest revenues in the company’s history.
While the company’s operating EBITDA (earnings before interest, taxes, depreciation, and amortization) was maintained at €3.2 billion, the same as the previous year, despite higher start-up losses from streaming, profits halved from €2.3 billion to €1.1 billion. In the previous year, revaluations at Bertelsmann Investments (€423 million after taxes), as well as gains on the disposal of video advertising platform SpotX and the revaluation of the Magnite [the advertising company that bought SpotX] shares (totalling €355 million after taxes), had led to the highest figure since 2006.
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Bertelsmann’s overall performances echo that of its RTL Group, which saw revenues soar but profits slide, with its subsidiary Fremantle the jewel in its crown. The company has launched an investment initiative called Boost via which the company will “invest a total of 5 to 7 billion euros in new growth,” Bertelsmann chairman and CEO Thomas Rabe said. “Since launching Boost, we have already invested €2.2 billion, €1.6 billion of that in 2022 alone.”
Some of Bertelsmann’s media consolidation plans were not successful with the merger between RTL’s M6 and French broadcaster TF1 and between RTL Nederland and Talpa were both scuppered by regulators as was the acquisition of Simon & Schuster by Penguin Random House.
“It’s true that after many major successes in the past decade, we have recently been unable to complete several strategic projects. Unfortunately. However, this was not so much because of us or because the plans were wrong. It was due to the opposition of the antitrust authorities,” Rabe said. “For example, the proposed acquisition of Simon & Schuster by Penguin Random House was opposed in a lawsuit by the U.S. Department of Justice, which was upheld by the U.S. District Court. In the case of the TV mergers in France and the Netherlands, the authorities were not willing to take into account the massive changes in the advertising markets – instead, they stuck to their historical market definitions. Perhaps we were simply too early with our plans.”
“In view of the competition with tech platforms, the pressure to consolidate is increasing in the European media markets. Consolidation will happen, sooner or later. Our strategic ventures would have created a lot of value and given us a decisive competitive advance. Through more investment in content, our streaming services and technology. Now and for the time being, we will have to take other paths, with alliances and partnerships in areas like ad sales, technology, data and content,” Rabe added.
By 2026, via Boost, Bertelsmann hopes to achieve sales of €24 billion, EBITDA of €4 billion and net profit of €2 billion.
“These are ambitious targets. But we can achieve them,” Rabe said.
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