20 percent
Growth businesses
contribution to Group revenues 2011
30 percent
Growth businesses
contribution to Group revenues 2016
The New Bertelsmann Is Growing Faster

Bertelsmann is Growing Faster

One of Bertelsmann’s strategic priorities is to sustainably improve its growth profile. The company is pursuing this in two ways – building and developing high-growth businesses while downscaling businesses that are structurally declining.

As part of defining its corporate strategy, Bertelsmann specified growth areas into which the Group has increasingly invested in recent years. They include the digital businesses of RTL Group and Gruner + Jahr, Bertelsmann Investments and the company’s strategic growth platforms – Fremantle Media; Arvato’s services businesses in the e-commerce, financial services and IT sectors; the BMG music company; and the Education division. All of these areas benefit from positive longterm market forces, including major trends like digitization or demographic changes.

By systematically investing more than €4 billion in digital and growth businesses since 2011 and by growing organically, Bertelsmann has significantly improved the profile of its portfolio over the past few years. RTL Group has become one of the world’s leading players in online video services. The e-commerce services business has been strengthened. The music business has expanded. And with the entry into the education sector, a third pillar is being created in the long term alongside media and services. Investments in growth businesses are subject to clear investment criteria, including global potential and scalability.

The result: While the share contributed by high-growth businesses to total Group revenue was around 20 percent in 2011, it increased to 30 percent by the end of 2016 – an average increase of two percentage points per year. In the medium term, thanks to the Group’s further organic expansion and acquisition, fast-growing businesses are expected to contribute at least 40 percent to total revenue.

In conjunction with this digital and growth expansion, Bertelsmann is withdrawing from structurally declining businesses. In the past few years, for example, printing activities outside Germany have fallen off, and the Club businesses have been discontinued or sold in many countries. In 2016, structurally declining businesses contributed only 4 percent to Group revenues as a result of these measures, while in 2011 they accounted for 16 percent.

As a direct result of these efforts, in 2016 Bertelsmann achieved its highest organic growth in four years.

Highlights 2016: Higher Growth

Creative Powerhouse

It would take about 12,000 hours to watch all the video content broadcast that was produced by the RTL Group subsidiary Fremantle Media in 2016. Highlights of the past year included “The Young Pope” featuring Hollywood stars Jude Law and Diane Keaton. The critically acclaimed series was Sky Italia’s strongest series premiere when it launched in Italy and the most popular international drama series on Canal+ in France and can be watched in nearly 200 countries. The UFA Fiction series “Deutschland 83” continued its string of international successes, causing the RTL Group subsidiary to announce a second season.

Meanwhile, Fremantle Media continued to expand its business through investments as well. For example, the company invested in several innovative production companies and acquired a majority stake in Abot Hameiri, a company from Israel that specializes in entertainment, scripted reality and drama.

rtl-programme-on-ipad

Coordinated, Cross-Media Cooperation between Sister Companies

RTL Group and Gruner + Jahr created scale in the advertising market: the Ad Alliance, an umbrella under which the two companies’ sales houses – IP Deutschland and G+J EMS – offer advertisers communication solutions across all of the Bertelsmann subsidiaries’ brands and genres. The offer covers everything from traditional commercials and ads to display and programmatic advertising. The Ad Alliance portfolio reaches about 99 percent of the German population each month. It includes the TV channels RTL Television and Vox; the magazines “Stern,” “Brigitte” and “Gala”; and both Bertelsmann subsidiaries’ digital offerings.

ad-alliance-on-iphone
logo Territory

Concentrated Competence

In May 2016, Gruner + Jahr caused a sensation in the agency business by merging its Corporate Content units G+J Corporate Editors and Medienfabrik, the personal marketing specialists Employour, the media agency CrossMarketing and the collaborative marketing specialists at trnd into a single new unit: Territory. With about 850 employees, the company became the largest provider overnight of content-driven communication in the German market.

Gruner + Jahr also pooled its expertise with Landwirtschaftsverlag last year and founded Deutsche Medien-Manufaktur. The new company created the new magazine “Essen & Trinken mit Thermomix®.” The title was a success from the start, selling out less than a week after its launch in mid-October and having to be reprinted. In all, the first edition sold 140,000 copies, and the title generated 26,500 subscriptions within just three months.

thermomix-journal

New Stars at BMG

Blink-182, Nickelback, Robin Schulz, Rick Astley and Max Giesinger are just a few of the stars who entrusted their work to BMG last year and now rely on the Bertelsmann division’s support in recordings or music publishing. One of BMG’s greatest successes in 2016 was signing Pink Floyd legend Roger Waters in June. The company also expanded its business through acquisitions last year. For example, BMG acquired a majority interest in the ARC Music publishing catalog, which comprises rights to songs by Chuck Berry, the Beach Boys and John Lee Hooker. In all, at the end of 2016 BMG administered more than 2.5 million music rights.

bmg stars
Nickelback
bmg stars
Rick Astley
bmg stars
Robin Schulz

Arvato on an Expansionist Course

Arvato substantially expanded its fast-growing service operations in 2016 – quite literally in some places. New logistics centers have been under construction since last year in the United States (Louisville, Kentucky), the Netherlands (Gennep) and in Germany (Dorsten and Gütersloh). The cornerstone ceremony for the warehouse in Dorsten on November 15 was the symbolic starting signal for Arvato’s largest ongoing construction project worldwide. In the first construction phase, three halls and a central office building with a total area of 28,200 square meters will be built; the final construction phase will result in more than 100,000 square meters of usable space.

Arvato Financial Solutions broadened its activities, among other things, by further expanding its innovative fraud solutions, making the AfterPay service available in other European countries, and acquiring 49 percent of the shares in MF Group, a leader in e-commerce B2C factoring in Switzerland.

In the CRM sector, the Bertelsmann subsidiary grew mainly by adding international clients in the IT, Internet and tourism industries and through investments in the emerging healthcare business. Among other things, Arvato has cooperated more closely with Gesundheitsforen Leipzig since 2016 and, in this context, acquired the analytics and care management division from the company along with the corresponding research database.

arvato setting foundation stone
Arvato CEO Fernando Carro (2nd from left) with partners at the cornerstone laying