This company is so big, it takes up space on the bookshelf, the magazine stand, and on television. Bertelsmann is one of the world's leading media conglomerates with operations in publishing and TV. It owns about 90% of RTL Group, Europe's #1 TV broadcaster with more than 40 channels operating in a dozen countries. Bertelsmann also owns Random House, the world's top trade book publisher, as well as 75% of magazine publisher Gruner + Jahr. In addition, its arvato unit is a leading provider of distribution, manufacturing, and other business services to media companies. Carl Bertelsmann founded the company in 1835. His descendants, the Mohn family, control the business through the Bertelsmann Stiftung foundation.
One unique quality of Bertelsmann is that its divisions operate more like stand-alone businesses rather than being integrated with one another in a fashion similar to Time Warner or News Corporation. Within its home market of Germany, Bertelsmann competes most directly with publisher Axel Springer and broadcaster ProSiebenSat.
Bertelsmann is certainly one of the largest, but also one of the very few, media conglomerates to dominate the European continent: While its TV and publishing businesses range across dozens of countries, most of the company's nearest competitors restrict their activities to one or two countries.
But being a global powerhouse in publishing and broadcasting has made Bertelsmann vulnerable during the global recession. Advertising revenue has suffered steep declines in many markets, while many of Gruner + Jahr's magazine titles struggle to hold on to readers in the age of digital distribution and expanding competition. Bertelsmann is also focused on managing its high level of debt in the face of declining revenue.
Bertelsmann is currently focused on exploiting new opportunities to turn its various businesses around. RTL Group is working to diversify away from commercial advertising by expanding its pay-TV and digital media operations. The broadcasting group is also buoyed by its FremantleMedia production unit, responsible for spawning Pop Idol, American Idol, and all the other Idol competition programs around the world. Random House, meanwhile, is eyeing growth of electronic publishing thanks to popular reading devices such as the Kindle from Amazon.com and Apple's iPad tablet device.
Another growth area for the company is music publishing royalties. In 2008 Bertelsmann launched BMG Rights Management, a joint venture with US-based private equity firm KKR, which controls the rights to more than 75,000 songs. BMG acquired US-based publisher Cherry Lane Music Publishing the following year. Bertelsmann had abandoned the music business earlier in 2008 when the company sold its 50% stake in Sony BMG Music Entertainment (now Sony Music Entertainment) to former joint venture partner Sony for $1.2 billion in cash. (The deal included $300 million from Sony Music's balance sheet.) In 2006 it sold BMG Music Publishing to Universal Music Group for $2.1 billion.
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