Bertelsmann

Bertelsmann SE & Co. KGaA

The current Bertelsmann headquarters in Gütersloh, Germany
Type	SE & Co. KGaA
Industry	Mass media
Founded	1835 (1835)
Founder	Carl Bertelsmann
Headquarters	Gütersloh, Germany
Area served	Worldwide
Key people	Thomas Rabe (Chairman & CEO)
Products	Broadcasting, publishing, cable, book clubs, music labels, radio, film-/TV-production
Revenue	€16.7 billion (2014)
Net income	€573 million (2014)
Owner	Bertelsmann Foundation
Number of employees	112,037 (2014)
Website	www.bertelsmann.com

Bertelsmann SE & Co. KGaA is a German multinational mass media corporation founded in 1835, based in Gütersloh, Germany. The company operates in 50 countries and employs in excess of 112,000 people (as of December 31, 2014). In 2014 the company reported a €16.7 billion consolidated revenue and an operating EBIT of €1.77 billion. Its principal divisions are Penguin Random House, RTL Group, Gruner + Jahr, Arvato, Be Printers and BMG.

Bertelsmann is a privately held Kommanditgesellschaft auf Aktien (KGaA; partnership limited by shares). 80.9 percent of the capital shares in Bertelsmann SE & Co. KGaA are held indirectly by foundations (Bertelsmann Stiftung, Reinhard Mohn Stiftung, BVG-Stiftung), and 19.1 percent are held indirectly by the Mohn family.

History

1835 to 2000

The C. Bertelsmann Verlag was founded as a publishing house and print shop in July 1835 by Carl Bertelsmann. At first Bertelsmann concentrated on Christian songs and books. In 1851, led by Carl Bertelsmann's son Heinrich, the company began publishing novels. During the following years Bertelsmann expanded steadily. By 1939 the publishing house employed 401 people. During World War II, Bertelsmann was the biggest single producer of Nazi propaganda. Its owner, Reinhard Mohn, is said to have belonged to a group that donated money to the Nazi squadron SS. At the end of World War II, the publishing house was closed for some time because of illegal paper-trading. During the Nazi period, it published books by Nazi authors such as Will Vesper (who did the commemorative speech at the 1933 book burning) and Hans Grimm. It had also published pro-war books for Hitler Youth members and other key Nazis In 1947, the company was re-founded by Reinhard Mohn, fifth generation of the Bertelsmann family. In 2002 a commission appointed by the company itself found that it had co-operated closely with the Nazis during the war, and had also used Jewish prisoners in the form of slave labor.

A 1986 bust of Reinhard Mohn, on display in Stadtmuseum Gütersloh

In the 1950s, Bertelsmann expanded with the bookclub Bertelsmann Leserring (Book Club) and entered the music market with the founding of the LP label Ariola Records in 1958. In 1964 Bertelsmann entered the movie market with the purchase of the Ufa Filmproduktionsgesellschaft. It sold Ufa's cinema chain in the 1970s. In 1969, Bertelsmann bought into the Gruner und Jahr publishing house (newspapers, magazines) and took majority ownership in 1973.

Since the 1980s, Bertelsmann has expanded internationally: in 1979 it bought the American Arista label, in 1980 Bantam Books, in 1986 the label RCA Victor and the publishing house Doubleday. It has distributed Windham Hill Records since 1989. In 1992 it acquired 50% of Windham Hill Records and in 1996 it took full control. During this period the activities in the music market were bundled into the label BMG.

In 1993, Reinhard Mohn as owner of Bertelsmann moved 68.8% of his Bertelsmann AG stock over to the Bertelsmann Foundation. As of 2006, the Mohn family still owns 74.9 of Bertelsmann's capital, in addition of the Bertelsmann foundation.

From 1995 to 2000 Bertelsmann had a major Internet service provider (and associated content) joint venture with AOL that operated throughout Europe.

In 1995 the Ufa Film- und Fernseh-GmbH merged with CLT, Luxembourg. The result was known as RTL Group, the biggest private radio and TV broadcaster in Europe.

In 1998 Thomas Middelhoff became CEO of Bertelsmann. He bought the Random House publishing house and concentrated the group's worldwide book publishing operations under this label.

In 1999, Bertelsmann launched bol.com, the internet book retailer.

2000 to 2010

The Bertelsmann Building in New York City, Bertelsmann's North American headquarters

In 2000, Bookspan was created as a joint-venture between Time Warner and Bertelsmann until 2007 when Bertelsmann took over complete ownership.

In February 2001, Groupe Bruxelles Lambert, headed by Albert Frère, purchased 25% of Bertelsmann AG. André Desmarais, President and Chief Executive Officer, Power Corporation of Canada, was named to the board. In July 2002, the CEO Thomas Middelhoff left the company because of disagreements concerning the company's strategy, in particular relating to his plans to float the company's share on the stockmarkets.

In 2002 Bertelsmann admitted that they lied about their involvement with Adolf Hitler and the Nazi party, which included making profits from slave labour and publishing propaganda. The revelations came to light during their takeover of US book publisher Random House in 1998; Bertelsmann used a revised account of their Nazi past to smooth the deal.

In 2003, the new CEO Gunter Thielen expanded the music branch BMG with the buying of Zomba Records.

In 2004, BMG set up a joint-venture with Sony Music to create Sony BMG, reducing the Big Five of music companies to the Big Four. BMG Music Publishing, the world's third largest music publisher, remained wholly owned by Bertelsmann at the time, but was sold to Universal Music Publishing in 2006.

Also in 2004, the London Borough of Camden, England, brought anti-social behaviour orders (ASBOs) against Sony Music UK and BMG Entertainment for alleged fly posting. Illegal fly posting by the two companies is thought to save them £8 million a year in advertising costs in Camden and cost the Borough £250,000 to clean up. Failing to comply with an ASBO can result in a jail sentence of up to 5 years.

In July 2006 Bertelsmann AG purchased back 25% of own company from Groupe Bruxelles Lambert.

As of September 1, 2007, Bertelsmann agreed to pay music publishers $130 million to settle a copyright infringement lawsuit brought on by its deal with Napster.

On January 1, 2008, Hartmut Ostrowski became the new Chairman and CEO of Bertelsmann, replacing Gunter Thielen.

On April 23, 2008, the company announced that it planned to publish a one-volume encyclopedia in September using content from the German-language Wikipedia. The volume is sold since September 15, 2008 and includes abbreviated entries for the 50,000 most commonly used search terms of the prior two years.

On October 1, 2008 Bertelsmann completed the sale of its 50% stake in Sony BMG to Sony Corporation of America. Sony has since renamed its now wholly owned music business to Sony Music Entertainment. These two divestitures marked the end of the Bertelsmann Music Group division and the selected assets that Bertelsmann decided to retain from these sell-offs will be the basis of a forthcoming BMG branded division, BMG Rights Management, which will focus on building, managing and marketing artist rights.

On October 3, 2009, Reinhard Mohn died at age 88.

2010 to present

On October 10, 2011, it was announced that Thomas Rabe would be elevated from CFO to CEO, succeeding Hartmut Ostrowski from January 1, 2012.

On August 20, 2012, Bertelsmann changed its legal form from "Bertelsmann AG" to "Bertelsmann SE & Co. KGaA", a partnership limited by shares (KGaA). KGaA is a proven legal form for businesses owned by families or foundations that is widely used in Germany.

In October 2012, Bertelsmann entered into talks with rival conglomerate Pearson plc, over the possibility of combining their respective publishing companies, Random House and Penguin Group. The houses are considered two of the "Big Six" publishing companies.

In October 2014, Gruner + Jahr was fully taken over by its owner Bertelsmann.

Operations

See also: List of assets owned by Bertelsmann

Bertelsmann is currently organized into the following six divisions:

• Corporate: Comprising the companies corporate center functions and corporate investments, such as the VC arm BDMI, the BMG music business and the Direct Group business area surrounding bookstores and e-commerce activities
• RTL Group, Europe's biggest broadcaster of radio and television, which is also the parent to the FremantleMedia movie and TV production enterprise, the largest of its kind outside Hollywood
• Gruner + Jahr, one of the biggest magazine publishing houses in Europe, owning approximately 500 media activities, magazines and digital offerings in over 30 countries.
• Penguin Random House, the world's largest general interest trade book publishing company
• Arvato, an international media and communications service provider
• Be Printers, an international group of companies offering printing solutions and communications services

BMG Rights Management replaced the music publishing and recorded music business, concentrating on music rights management. Together with its five major divisions Bertelsmann holds assets in more than 200 companies and enterprises worldwide. Direct Group was disbanded as a separate corporate entity in June 2011, its businesses subsequently being transferred to the Corporate Investments division in Bertelsmann's Gütersloh corporate headquarters.

Ownership

Bertelsmann is not publicly listed and is majority owned (77.4%) by the Bertelsmann Foundation, a non-profit organisation and political think tank set up by the Mohn family, which in turn privately owns the remaining 22.6%. Albert Frère, a Belgian industrialist, owned 25% of Bertelsmann until 2006.

See also

• Media concentration

External links

• Bertelsmann Official Website