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Tuesday, April 29, 2003 |
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Oligopoly brief: Bertelsmann Bertelsmann AG is one of the world media giants, and a leader in a number of fields. The privately held company’s holdings range from publishing to broadcasting and from recording to on-line commerce. Although the German-based company was originally founded as a book publisher in 1835, it was almost obliterated by Allied bombing In World War II. It’s growth in the last 58 years has been remarkable, based both internal growth and on smart acquisitions. The company had $19 billion in sales in 2002, and, in time of turmoil in the book publishing and recording industries, seems to be doing better than others. Here are a few of its holdings:
But the company has seen recent turmoil. Last year’s departure of flashy CEO Thomas Middelhoff, due to conflicts with Bertelsmann board and owners, may change some of the most ambitious plans yet: An IPO to sell Bertelsmann shares publicly, which Middelhoff championed, is less likely now. (However, its RTL television division did go public in 2000). Also, the company has started withdrawing from its expensive fling with the Internet. Most notable of the Internet losses came from an attempt to subsidize digital music downloader Napster, hoping to make that service into a pay-for-download service. In the end, the idea had to be abandoned after millions were sunk into the project. Other e-business flings have at best a mixed record. Bertelsmann has recently teamed with EMI and Time-Warner to support another download service, getmusic.com, but the success of that venture is pretty unlikely. Currently there is talk about selling some of the company’s assets. (The company never bought Napster in the end.). Also the company last year acquired Zomba, the largest independent record label in the US. Zomba artists include Britney Spears, N' Sync and Backstreet Boys After rapid growth in the past few years under Middelhoff, the thought is that Bertelsmann plans to lie low for a bit while it digests its acquisitions, even spins a few off. Looking at rivals like AOL-Time-Warner and Vivendi stumble, Bertelsmann is taking steps to cut costs and get tough with divisions that don’t make the right level or profit. For example, they fired Random House publisher Ann Godoff earlier this year when her division did not make its numbers. The current thinking is that Bertelsmann will back off from further expansion, and perhaps drop some money-losing divisions, including the Internet ones. Lately, company owners have been talking about reinstilling small company values in the company, but it will be interesting to see where that leads. Bertelsmann faces tough competition, and the company can’t get back to the “good old days.” 9:15:33 PM 
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Last update: 9/4/2007; 8:51:52 PM .
