Bertelsmann profits dip
One-off expenses take their toll
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Outlining Bertelsmann's future strategy at a press conference Tuesday in Berlin, CEO Hartmut Ostrowski said the company would invest in strongly growing businesses. He added that it was "examining all strategic options" for the struggling Direct Group, "including a possible sale."
Contributing to the big dent in its bottom line was the out-of-court settlement between the TV and publishing conglom and record labels in connection with peer-to-peer music-swapping platform Napster plus one-time costs of $145 million related to antitrust proceedings against IP Deutschland, the German ad sales firm owned by its RTL Deutschland division.
Additionally, Bertelsmann's 2006 record result was buoyed by substantial one-time gains from the sale of its music publishing business.
RTL Group remained Bertelsmann's main money-making engine, contributing 30.5% to the conglom's overall revenue. The pan-European broadcasting group saw increases in both revenue and operating profit.
Ostrowski rejected recent media reports that Bertelsmann was "milking" RTL, saying the broadcasting group would continue to receive the necessary funds for its successful operation.
Bertelsmann sustained further lower sales at publishing arms Random House, where sales were hit by the falling greenback, and Gruner + Jahr as well as at BMG, which largely consists of the 50% stake in Sony BMG Music Entertainment.
With uncertainty increasing about the global economy, particularly in the U.S., company execs expect a moderate upturn in revenues in 2008. Bertelsmann is expecting its operating result this year to be at, or slightly above, the 2007 level and predicts net income will rise considerably, with non-recurring effects no longer applying.
