Tue. Oct 26th, 2021

Updates from Bertelsmann SE & Co KGaA

Bertelsmann’s chief executive said he was “confident” regulators would approve an agreement that would allow the German media group to create a national television champion in France, adding that he was also looking at further acquisitions in education and TV production.

With results showing that revenue rose nearly 11 percent year-on-year to € 8.7 billion year-on-year, Thomas Rabe also said the company was considering a possible listing of its customer service business, Majorel.

In a busy period of transactions, Bertelsmann tries to convince regulators to give it the green light combine its M6 station in France with TF1, the broadcaster’s main commercial competitor.

“We are confident that we will get clearance, but it will take some time,” Rabe said.

The combination would normally violate the competition rules, as the expanded business would control a large part of the French television advertising market.

However, Rabe said officials should consider the broader context and especially the expansion of ‘very important’ online competitors such as Facebook and Google.

Regulators’ traditional definitions of competition, he added, “no longer reflect the reality of the market”. He expects the agreement to be completed by the end of next year.

The French competition authority declined to comment Monday.

But its president, Isabelle de Silva, has already indicated in testimony to the French parliament and media interviews that regulators are planning an in-depth investigation of the deal with a decision expected next summer.

In July she told the BFM TV channel that they will consider its impact on competition in the television advertising market and the distribution of channels, as well as the acquisition of content rights.

But she did not want to answer questions about whether the ‘relevant market’ should be expanded to include online advertising as well as TV advertising.

If the deal were successful, the deal would create the leader in the French TV market, which accounts for about a third of viewers who watch in good time and almost three-quarters of the TV commercials sold.

As a result of his performance in the first half, Bertelsmann said he would now generate an annual net income of almost € 2 billion, a sharp increase from his previous estimate of just over € 1 billion.

Bertelsmann’s media assets already include the book business Penguin Random House, magazine publisher Gruner + Jahr and the music group BMG, as well as the broadcasting division RTL, which manages 67 TV channels, 10 streaming platforms and 38 radio stations. The other interests of the private enterprise also include call centers, training and education.

In his attempt to consolidate in the broadcasting industry, Bertelsmann also entered into an agreement to combine RTL with the Dutch media group Talpa in the Netherlands. In books, it awaits U.S. regulatory approval to buy publisher in New York Simon & Schuster for $ 2.2 billion.

Rabe, who is also the chairman of the company, said Bertelsmann has the power to spend between € 2 billion and € 3 billion on acquisitions. The figure includes money spent on Simon & Schuster, although Rabe said Bertelsmann is also considering transactions in the education and TV production sector.

A revival in the advertising market boosted the group’s sales in the six months to end-June, raising net revenue from € 488 million to € 1.37 billion.

The largest increase in revenue was recorded at RTL, where it increased by 22% on an organic basis. In most countries where RTL operates advertising, it has recovered to pre-pandemic, Rabe said.

The recovery was in customer sectors, he added. “It’s really across the board – including tourism, which of course was hit hard last year.”

Rabe also said that an initial public offering from Majorel, which operates call centers and employs about 60,000 people, is ‘one option’ for the business.

The German newspaper Handelsblatt reported earlier in August that JPMorgan, Citigroup and BNP Paribas had been set up to list Majorel in Amsterdam in a deal that could be valued at € 3 billion. “No decision has been made,” Rabe said.

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