RTL Group
The leading European entertainment network generated revenues of €2.7 billion in the first half of 2014 (H1 2013: €2.8 billion). This slight decline in revenues is primarily due to difficult market conditions in France and the decline in revenues at Fremantle Media. However, operations in the Netherlands in particular showed positive developments.
RTL Group’s operating EBITDA totaled €612 million (H1 2013: €631 million) and was particularly affected by the market-related drop in earnings at Groupe M6 and RTL Radio in France, and by Fremantle Media. However, Mediengruppe RTL Deutschland achieved record earnings and RTL Nederland was able to significantly increase operating profits. Due to the introduction of a new tax on advertising revenue by the Hungarian parliament, an impairment of €-88 million was made to the TV operations in Hungary. As a special item, this has no impact on RTL Group’s operating EBITDA.
RTL Group was largely able to maintain its leading audience positions in its core territories, even though the soccer World Cup in June was broadcast by competitors. Mediengruppe RTL Deutschland’s audience share in its main target group was slightly down year on year to 29.2 percent (H1 2013: 31.2 percent). However, RTL Television was still the clear number one among 14- to 59-year-old audiences. RTL Nitro, the channel launched in 2012, almost doubled its audience share in the first half of 2014 to 1.5 percent (H1 2013: 0.8 percent). In France, the Groupe M6 family of channels registered a slight decrease in audience share. The new channel 6ter, launched in December 2012, developed positively. The audience share of the Dutch family of channels around RTL 4 was also slightly below the level of the first half of 2013.
In the digital domain, RTL Group continued to show dynamic growth thanks to its online platforms, mobile applications and YouTube activities. 15.7 billion online video views were generated in the first six months of the year – a 226 percent increase compared to the first half of 2013. Online video advertising revenues also increased significantly during the reporting period.
Penguin Random House
The world’s largest trade publishing group’s results for the first half of 2014 were driven by strong bestseller performances, especially from its children’s divisions worldwide. Achievement of key milestones for the integration of the Penguin and Random House businesses continues on track in all territories. Bertelsmann owns 53 percent of shares in Penguin Random House, which was established by merger on July 1, 2013; Pearson owns 47 percent.
The group generated revenues of €1.5 billion in the reporting period, including the publishing businesses of Random House in Germany, which are fully owned by Bertelsmann, thus representing a 60 percent increase over Random House’s revenues in the first half of 2013 (€915 million). Operating EBITDA was €159 million (H1 2013: €131 million).
In the United States, Penguin Random House placed 430 titles on the “New York Times” bestseller lists in the first six months of 2014. The half-year top-selling title was John Green’s young adult novel “The Fault in Our Stars,” which sold more than four million copies in print and e-book formats in North America. Other children’s and young adult books in high demand include the multimillion-copy-selling tie-ins with the movie “Frozen,” “Wonder” by R. J. Palacio and “The Book Thief” by Markus Zusak. Among the largest-selling adult titles were “The Invention of Wings” by Sue Monk Kidd, “Duty” by Robert Gates and the paperback editions of Dan Brown’s “Inferno” and “Gone Girl” by Gillian Flynn.
In the UK, Penguin Random House commanded 45 percent of the “Sunday Times” bestseller list. “The Fault in Our Stars” was also this division’s biggest seller, with Jeff Kinney’s “Diary of a Wimpy Kid: Hard Luck” a major success as well.
At Penguin Random House Grupo Editorial, positive results in the Latin American territories offset the impact of the ongoing challenging market conditions in Spain. In March, Penguin Random House reached an agreement to acquire the Spanish- and Portuguese-language trade publishing companies of Santillana Ediciones Generales, including the Brazilian publisher Objetiva. The transaction involving the Spanish-language businesses was completed on July 1, 2014.
Verlagsgruppe Random House in Germany grew its sales of e-books and audiobooks, placing 231 titles on the “Der Spiegel” bestseller lists.
Penguin Random House invested across its divisions in extending the reach of its digital content and expanding its digital marketing, as well as introducing new web verticals and apps. Several of the group’s authors won major literary awards, including Dan Fagin, who won the US Pulitzer Prize for General Nonfiction for “Toms River.”
Gruner + Jahr
In the first half of 2014, Gruner + Jahr continued its strategic transformation from a traditional magazine publisher to a creative house of content. Driven by the decline of the magazine business and portfolio adjustments, G+J’s revenues fell to €908 million during the reporting period (H1 2013: €1.0 billion). At the same time, Gruner + Jahr’s revenues from digital activities increased across all countries. As a result of the overall decline in revenues, operating EBITDA fell to €77 million (H1 2013: €108 million).
At G+J Germany, the decline in the magazine business had a significant impact on revenues and earnings. G+J countered this decline with a product campaign based on the publisher’s leading brands such as “Brigitte” and “Gala” and with the launch of new titles (e.g., “Flow”) as well as numerous special issues. The company continued the expansion of its digital business. G+J strengthened its position in the advertising market through acquisitions such as Veeseo and Trnd.
Overall, the international business showed a downturn. Activities in Austria and China generated revenues and earnings below the levels of the previous year. Meanwhile, despite weaker revenues, G+J Spain increased its earnings, thanks to structural measures taken in 2013. G+J France strengthened its position in digital marketing by acquiring France’s leading video marketer Advideum shortly before the end of 2013 and kept its revenues largely stable.
Dresdner Druck- und Verlagshaus was able to slightly increase its revenues and earnings year on year and on a like-for-like basis.
Arvato
The international services provider Arvato grew in the first half of 2014, both organically and through acquisitions, and increased its revenues in the reporting period by 5.5 percent to €2.2 billion (H1 2013: €2.1 billion). As a result of the revenue growth, operating EBITDA increased slightly to €162 million from €160 million in the same period last year; the earnings contributions of the acquisitions compensated for declines in earnings in individual businesses.
During the reporting period, Arvato grew its revenues and earnings in areas including services for international customers in the Internet, high-tech, healthcare and automotive sectors. With the acquisition of Netrada, completed on February 1, 2014, Arvato became a leading European provider of e-commerce services, strengthening its position in the field of supply-chain management.
The financial services business, which benefited from the takeover of Gothia Financial Group in the previous year, also contributed to Arvato’s growth. In contrast, revenues from storage media replication continued to decline, as expected.
Arvato improved its position in key growth markets and industries in the first half of the year, expanding the services businesses in India, Turkey and Poland and acquiring new customers. Arvato also consolidated its leading position in the European market for customer relationship management by taking over five service centers.
Be Printers
The gravure printers and international offset printing plants, grouped into the Be Printers division, generated first-half revenues of €482 million in a market environment characterized by declining print runs and surplus capacity (H1 2013: €512 million). The division’s operating EBITDA decreased to €25 million (H1 2013: €29 million).
In Germany and the UK, the gravure division Prinovis was able to secure printing contracts for several major magazine packages for several years. However, lower overall print volumes caused a slight decline in revenues and earnings at Prinovis. Production at the Itzehoe plant was terminated on April 30, 2014, as planned. In Ahrensburg, the workforce adopted a “Future Package.”
Be Printers Americas agreed on a multiyear contract extension with Penguin Random House, which will increase capacity utilization at the company. Continued cost discipline served to enhance results.
Due to macroeconomic developments in Italy and Spain, Be Printers Southern Europe recorded lower order volumes and further price declines.
Corporate Investments/Corporate Center
In the first half of 2014, Corporate Investments reported an increase in revenues to €254 million (H1 2013: €235 million) and operating EBITDA of €16 million (H1 2013: €-10 million). In particular, the growing business and full consolidation of the music rights company BMG for the entire half-year – BMG has been wholly owned by Bertelsmann since March 30, 2013 – had a positive effect. By contrast, the club and direct-marketing businesses declined as planned.
BMG continued its growth course during the reporting period, acquiring the music rights companies or catalogs of Talpa Music, Montana and Hal David, with numerous classics in their portfolios. At the same time, BMG signed new contracts with several well-known artists, including the Smashing Pumpkins, The Strokes, George Ezra and the Beatsteaks. The company was Germany’s most successful music publisher in the first half of 2014 – almost 21 percent of all singles in the German charts were from BMG. In addition, BMG entered the Chinese market.
In the field of education, Bertelsmann continued to drive forward the preparations for the expansion of this business, and committed to investing a sum in the triple-digit millions in a second University Ventures fund. In Brazil, Bertelsmann teamed up with a partner to establish a fund for investments in the education sector at the beginning of the year.
The BDMI digital investment fund with a focus on the United States, and BAI for investments in promising companies in China, acquired new shareholdings during the reporting period, including one in the IT recruiting platform Lagou.com. In India, investments were made in growth businesses including online marketplaces for furniture and real estate.
Revenues and earnings from the club and direct-marketing businesses continued to diminish as planned. The sale of the businesses in Czech Republic and Slovakia was completed on March 31, 2014. In June, the decision was made to discontinue the German club business at the end of 2015. The sale of the 50 percent stake in Círculo de Lectores to the co-owner of Grupo Planeta went ahead and was completed on July 29, 2014.
During the reporting period, the Corporate Center and the divisions together advanced the multiyear Operational Excellence program to optimize business support processes in the areas of HR, finance, IT and sourcing across the Group.
