Bertelsmann Registers Record First-Half Operating Profit

German media giant Bertelsmann on Friday reported its highest profit from operations for a first half of the year in its long history, with operating profit jumping $50 million to $1.02 billion. The company also posted net profit of $557 million, the highest figure in more than a decade.

After exiting from the music-business five years ago the German media-group today considers itself back in the music-business. This was underlined by Thomas Rabe, Chairman & CEO of Bertelsmann on an earnings call this morning from the Bertelsmann headquarters in Guetersloh, Germany where Rabe pointed out that BMG Rights Management is currently the fourth largest music-publisher in the world.

It was Bertelsmann's "old media" enterprises, particularly the company's broadcast division RTL Group and its publishing arm Random House, that were responsible for the bulk of the growth.

The only shadow over the company's first-half report, released Friday, was revenue, which sank by almost 2% to $9.9 billion, a reflection, Bertelsmann says, of the weak economies in several of its key European territories and "several structurally declining businesses."

Bertelsmann CEO Thomas Rabe has kicked off a major strategic restructuring at the German group, investing heavily in digital operations and moving to expand in higher-growth territories in Asia and South America.

Bertelsmann's recent buyout of music rights group BMG as well as the merger of Random House with U.K. publisher Penguin - to create "the first truly global book publisher" in Rabe's words - have both been framed in terms of the new strategy. As has RTL Group's new joint venture with CBS Corp. to launch two branded entertainment channels in Asia.

Within a few years, Rabe predicts BMG will have a total turnover of 500 million euros. “The acquisition of full ownership in our music rights business BMG is a milestone that will make Bertelsmann a faster growing, more digital and more international company,“ he said.

Rabe told Billboard that, “For Bertelsmann this is the final and lasting return to the music-business. This made us within a short time the fourth largest music-rights company in the world with more than one million song-rights.” He also said Bertelsmann will continue to grow BMG organically. “BMG has decent margins and is a respected player in the market. The fact that Keith Richards and Mick Jagger came to us shows that BMG has arrived to the top league of the music-rights-business.”

The CEO did not want to comment planned acquisitions in the next months, but noted that their “war chest” for acquisitions is full. Earlier this year, Bertelsmann raised some $1.9 billion in new capital for its expansion plans by selling off a minority stake in RTL, which operates free and pay-TV channels across Europe and controls TV production juggernaut FremantleMedia, which produces “American Idol” and “X Factor.”

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