The leading European entertainment network recorded a positive first-half performance. RTL Group’s revenues increased by 3.8 percent to €2.8 billion (H1 2014: €2.7 billion), thanks to strongly increasing revenue at Mediengruppe RTL Deutschland, growing digital revenue and favorable exchange rate effects. Operating EBITDA increased by 2.3 percent to €626 million (H1 2014: €612 million), mainly driven by higher earnings contributions from Mediengruppe RTL Deutschland as well as from RTL Hungary. The earnings development at RTL Hungary includes a positive effect from the partial reclaim of taxes paid on advertising revenues in 2014.
Europe’s TV advertising markets presented a mixed picture during the reporting period. Most of RTL Group’s families of TV channels outperformed their respective markets. RTL Group defended its leading positions in viewer markets in the core countries. Mediengruppe RTL Deutschland’s audience share decreased slightly in the main commercial target group. However, RTL Television remained the clear number one in the 14-to-59 demographic. In France, the flagship channel M6 recorded a slightly lower audience share. Meanwhile, the digital channel 6ter continued its positive development. The Dutch family of channels around the main flagship RTL 4 was able to increase its audience share in prime time.
RTL Group’s content production arm, Fremantle Media, generated slightly higher revenues in the first half of the year, mainly due to positive exchange rate effects. Its operating result was down, mainly due to lower earnings contributions from Germany and the “American Idol” format.
In the digital domain, RTL Group continued its dynamic growth thanks to its online platforms, mobile applications and YouTube activities. The total number of online video views reached 42.5 billion – a 171 percent increase compared to the first half of 2014. The companies bundled in the RTL Digital Hub, founded in June – BroadbandTV, StyleHaul and SpotXchange – each reported high double-digit revenue growth rates.
Penguin Random House
For Penguin Random House, the first half of 2015 was characterized by a strong fiscal performance, bolstered by a diverse lineup of bestselling titles. The merging of structures, processes and functions of the Penguin and Random House businesses, which combined on July 1, 2013, also continued on course during this period. Bertelsmann holds a 53 percent stake in the world’s leading trade book publisher; Pearson owns 47 percent of the shares.
Including Verlagsgruppe Random House in Germany, which is wholly owned by Bertelsmann, the book group’s revenues during the reporting period totaled €1.7 billion (H1 2014: €1.5 billion), representing an increase of 16.2 percent, mainly due to exchange rate effects. Operating EBITDA was €207 million, an increase of 30.2 percent over the previous year (H1 2014: €159 million). With more than 4.5 million copies sold, Paula Hawkins’s debut novel “The Girl on the Train” was the half-year’s top-selling title. “Grey,” a new volume in E. L. James’s “Fifty Shades” series, was the fastest-debuting trade paperback ever in the US and UK, selling more than 3.5 million copies in the first two weeks after its release.
In the US, Penguin Random House placed 306 titles on the “New York Times” bestseller lists during the first half of the year, 38 of them at number one. In addition to “The Girl on the Train” and “Grey,” top-selling Young Readers titles for the company included “Paper Towns” and other works by John Green, “Wonder” by R. J. Palacio, as well as books from Dr. Seuss, B. J. Novak, and James Dashner.
In the UK, 38 percent of the titles on the “Sunday Times” bestseller lists were published by Penguin Random House’s UK imprints. The publishing group’s bestselling book was “Grey”; other leading bestsellers included “To Kill a Mockingbird” by Harper Lee and “Diary of a Wimpy Kid: The Long Haul” by Jeff Kinney.
At Penguin Random House Grupo Editorial, an excellent performance in Latin America and double-digit growth in e-book sales more than offset the ongoing challenges in the Spanish book market. Substantial progress was made on integrating the Spanish- and Portuguese-language publishing activities of Santillana Ediciones Generales, acquired last year.
Verlagsgruppe Random House in Germany recorded a near-stable first half in 2015, placing 212 titles on the “Spiegel” bestseller lists.
All of Penguin Random House’s divisions also invested in increasing the reach of their digital content through digital marketing and a variety of other outlets, platforms and partnerships.
Several of the group’s books won prestigious literary awards, including the Pulitzer Prize for Biography: “The Pope and Mussolini” by David I. Kertzer.
Gruner + Jahr
Gruner + Jahr continued its strategic transformation. Due to divestitures during the same period last year – including Brown Printing in the US and the Entertainment Media publishing company in Germany – as well as the general development of the advertising market, G+J’s first-half revenues decreased by -17.2 percent to €752 million in 2015 (H1 2014: €908 million). Meanwhile, Gruner + Jahr increased its revenues from digital activities in the core markets of Germany and France. As a result of overall declining revenues and continued high expenses for the digital transformation, operating EBITDA decreased by -28.6 percent to €55 million (H1 2014: €77 million).
Lower advertising revenues in the print sector, along with changes to its portfolio, caused a revenue decline at G+J Germany. However, circulation revenues and the digital business both developed positively. G+J invested in the expansion of its magazine portfolio (“Walden,” “Stern Crime,” “National Geographic Traveler”) as well as in digital activities. For instance, the company acquired the specialized gift-ideas e-commerce provider Danato, fully acquired the food platform Delinero, and provided €50 million of investment funds and media performance for future startups. G+J also signed an exclusive strategic partnership with the Dutch startup Blendle to develop new mobile products for innovative publishing opportunities. Motor Presse Stuttgart improved its results, thanks to cost-cutting measures and higher advertising revenues in Germany. Dresdner Druck- und Verlagshaus recorded higher revenues thanks to good ad sales and successful additional businesses, such as travel and trade fairs. However, the result was lower.
The international businesses saw an overall dip year-on-year. In Austria, Spain and China, revenues and earnings were down – partly due to changes in the consolidation scope. In France, G+J managed to keep its revenues stable. Prisma Media’s digital business in France grew significantly, fueled by – among other factors – the successful performance of the video marketer Advideum. G+J further expanded its digital activities by acquiring the software provider Recatch. On July 1, 2015, G+J withdrew from the Italian market due to lack of strategic prospects, selling back its 50 percent stake in the joint venture Gruner + Jahr / Mondadori.
Arvato improved its revenues as well as its operating result. The international service provider’s revenues increased by 3.7 percent year on year to €2.3 billion (H1 2014: €2.2 billion), and operating EBITDA was €171 million, up by 5.6 percent compared to the first half of 2014 (H1 2014: €162 million).
The financial services operations bundled at Arvato Financial Solutions achieved profitable growth during the reporting period. This was supported mainly by a positive business development in Scandinavia and German-speaking countries. As a result of the 40 percent stake in the Brazilian financial services provider Intervalor completed on June 1, 2015, Arvato entered the Latin American financial services market.
The services businesses in the area of Arvato CRM also contributed to the increase in sales and earnings due to higher volumes with existing customers and an improved cost structure. Apart from traditional telephone advisory services, the focus was primarily on the expansion of digital communication channels and self-service solutions, where customers are able to independently seek advice and support.
The logistics services businesses at Arvato SCM were able to expand existing national and international customer relations, and projects with new customers were implemented. Sales and earnings were stable.
The IT services business provider Arvato Systems recorded a constantly high demand for solutions in relation to application development and system integration. Revenues improved, while earnings development was impacted by start-up losses for a large project. Arvato’s print businesses were almost stable in the first half. Especially Mohn Media, Europe’s leading offset print business, continued to expand its operations as the company was awarded two large magazine contracts. The production capacities and the range of services offered were expanded. Meanwhile, revenues from storage media replication continue to decline as expected.
The Be Printers division, in which Bertelsmann has pooled its European gravure printing activities and international offset and digital printers, recorded a -24.9 percent decline in revenues to €362 million (H1 2014: €482 million). Besides the sale of the Italian printing business on September 30, 2014, and the Spanish printing activities on April 30, 2015, the decrease also resulted from declining print runs and continuing price pressure. First-half operating EBITDA halved to €12 million, after €25 million the previous year.
The European gravure printing company Prinovis expanded its range of services to accommodate lower print runs, additional formats and short-notice deadlines by putting two offset printing presses into operation in Dresden. In addition, the company was able to renew several print contracts with key customers. However, due to lower order volumes overall, Prinovis recorded significant year-on-year declines in revenues and earnings.
Be Printers’ US printing plants benefited from a stable order situation in book printing and were also able to increase their revenues by expanding the business with innovative print products for other sectors.
During the reporting period, Be Printers also pressed ahead with focusing the business on the company’s core markets. At the end of April 2015, the company sold the two Spanish printers, Rotocobrhi in Madrid and Eurohueco in Barcelona, to the British print investor Walstead Capital.
Corporate Investments/Corporate Center
Corporate Investments saw a distinctly positive development in the first half of 2015. Revenues increased by 17.3 percent to €298 million (H1 2014: €254 million) and operating EBITDA by 31.6 percent to €25 million (H1 2014: €19 million). The continued expansion of the music company BMG contributed to this, as well as the expansion of the education business on the revenues side.
BMG expanded its publishing and recording business and enhanced the management of audiovisual rights as its third mainstay. The company acquired Rise Records, a label specializing in rock and metal, the Verse Music Group and the Buddy Holly catalog in the US, as well as the publishers Minder Music in the UK and Tipping Music in France. BMG signed new contracts with renowned artists, including Dave Stewart, Janet Jackson and Marco Mengoni. In China, BMG signed an extensive distribution agreement with the digital division of the Alibaba e-commerce group.
In education, at the beginning of the year, Bertelsmann invested in Alliant International University – with campuses in the US, Mexico and Asia – with a view to gradually building a network of universities in the fields of medicine and human sciences. In Brazil, the company invested in Affero Lab, the country’s market leader in corporate training; in the United States it increased its shareholding in the university-services provider Synergis Education.
The investment fund BDMI, which invests in digital companies mainly in the US, and the BAI fund, which specializes in promising companies in China, bought several new holdings. In Brazil, Bertelsmann and Bozano Investimentos jointly set up a new fund focused on high-growth education companies. In India, the group expanded its shareholding in Pepperfry, the leading online marketplace for furniture.
The last branches of Der Club Bertelsmann closed their doors in March 2015. The club business in the German-speaking territories will be entirely discontinued by the end of the year.
The Corporate Center supported the implementation of the corporate strategy in Bertelsmann’s growth markets and growth platforms. In addition, it worked with the divisions to advance the multiyear Operational Excellence program to optimize business support processes in the areas of HR, finance/accounting, IT and sourcing. Among other things, the creation of a global network of Accounting Shared Services Centers was agreed.