Nothing More Basic Than Executives Changing Things

Michael Hedges February 10, 2021 Follow on Twitter

Business strategies generally follow one of two basic forms. There is the slow and plodding make-no-mistakes kind. On the other end of the spectrum we have go-fast-and-break-things. The later is heralded as the way of the future, digital everything, appealing to the attention-deficit times. The former is seen as just a relic of the last century, soon to fade away or be gobbled up. There are many examples of each within the media world. In the middle there is always rearranging lines on the spreadsheet.

Last year Bertelsmann SE chief executive Thomas Rabe said a few glowing words about consolidation. He suggested there is “a strong case and need for consolidation” within European TV broadcasting, to the Financial Times (August 16, 2020). “We should be allowed to create national TV champions,” pointing to the RTL Group subsidiary, where he is also chief executive. He expanded that theme last week, in an interview with news agency DPA (January 21), as including Germany, France and the Netherlands.

Last year he also mentioned consolidation in book publishing. Before the year was out Bertelsmann acquired big US publisher Simon & Schuster for €2.17 billion, merging it into the publisher Penguin Random House. The bidding was too heavy for News Corp owned Harper Collins and (maybe) Vivendi owned French publisher Editis.

Bertelsmann SE based in Germany and privately owned by foundations representing the Mohn family. It principally owns broadcaster RTL Group, based in Luxembourg, which has subsidiaries in Germany, France, Belgium and the Netherlands as well as production house Fremantle. RTL Group stock is publicly traded on the German SDAX exchange. Bertelsmann SE holds a 75% stake. RTL Group is the largest revenue and profit contributor to Bertelsmann SE.

Herr Rabe has made clear that the streaming business is a concern. Internally, the Bertelsmann Content Alliance was created in 2019 to facilitate sharing among the subsidiaries. For example, German magazine Stern, published by subsidiary Gruner+Jahr, began producing a crime drama TV series, fit for streaming. Podcasts began popping out all over. And of this fits with subsidiary BMG Rights Management, the music publisher formed when Bertelsmann sold BMG to Sony in 2008.

About two weeks ago, Reuters (January 29) reported that RTL Group is exploring the sale of its controlling 48% stake in French broadcaster M6 Group, seven TV and three radio channels. The rumored asking price is €3 billion. Various potential buyers have been “approached,” including Vivendi, principal owner of pay-TV group Canal+, telecom Altice Europe, broadcaster TF1, Italian broadcaster Mediaset and Czech investor Daniel Kretinsky, who owns a piece of newspaper Le Monde and German broadcaster ProSiebenSat1.Media. An RTL Group statement thereafter emphasized how all this is quite preliminary, no bank named to run a deal, and noted Herr Rabe’s earlier comment on consolidation.

Well, this sent media watchers agaggle. Bertelsmann subsidiary Gruner + Jahr “entered exclusive negotiations” with Vivendi in December to exit magazine publisher Prisma Media. Add to that, M6 Group merged newsrooms at TV and radio channels, causing the usual distress among journalist unions. Conservative business news portal Les Echos (February 6) lamented a “major desertion of foreign owners” from French media. German media news portal meedia.de (February 6) suggested Herr Rabe is fishing for a merger partner rather than an exit. All the better to compete with Netflix, Amazon Prime and Disney.

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• Hot Topics - Bertelsmann/RTL

• Hot Topics - Streaming Media