The Sony BMG joint venture “continues to face challenges” in light of a “sharp decrease” in the volume of the recorded music market, parent company Bertelsmann reported today (Nov. 8).
In unveiling its financial figures for the first nine months, however, an upbeat Bertelsmann chief financial officer Thomas Rabe said the company still expected pre-tax profits to register near double-digit improvements for the year.
“We are pleased with the group’s operating result,” he said in a statement. “For the current full fiscal year 2006 we expect a nearly 10% increase in operating result and a significantly improved net income year on year.”
Rabe added that the group’s coffers would look healthier by year-end thanks to the sale of its BMG Music Publishing asset. Universal Music Group successfully bid on BMG in an invitation-only auction, offering €1.63 billion ($2.05 billion).
“By the end of the year, our economic debt will be much lower due to funds generated from operating activities and the sale of BMG Music Publishing,” Rabe added.
The European Commission is set to rule on the BMG Publishing sale by Dec. 8.
Guetersloh-based Bertelsmann generated revenues in the third quarter of €4.4 billion ($5.6 billion), up 2.4% from the same period last year. Operating EBIT rose by 6.8% in the third quarter to €281 million ($359 million).
For the first nine months, Bertelsmann’s sales reached €13.5 billion ($17.2 billion), up 10.3% from the previous year. Operating EBIT from the Jan. 1-Sept. 30 period was up by 8.3% to €982 million ($1.25 billion).