Bertelsmann 2008 profits down on write-offs

CEO predicts: '2009 is going to be a hard year'

COLOGNE, Germany -- Bertelsmann CEO Hartmut Ostrowski said Tuesday that "2009 is going to be a hard year," as the company announced 2008 results that already show the impact of the global recession.

Revenue at Bertelsmann held steady at €16.1 billion ($22 billion), but write-offs, in particular the $456 million goodwill impairment on U.K. network Five, slashed already weaker profits. Net earnings came in at €270 million ($366 million), compared with €405 million a year earlier.

Television division RTL Group, Bertelsmann's growth motor, is sputtering. Channel Five has been hit hardest, but even RTL's core German channels are facing a major drop in advertising revenue this year. While RTL's figures were largely stable last year, 2009 will be a challenge to RTL boss Gerhard Zeiler.

But all of Bertelsmann's operations have been hit by the downturn, with only media services group Arvato posting both an increase in sales and operating profits.

Ostrowski has put the German giant on a diet, trimming the flab from Bertelsmann's books. The sale of Bertelsmann's 50% stake in Sony BMG, the U.S. operations of its Direct Group business and software unit Empolis are all aimed at bringing down debt.

Bertelsmann cut $1.5 billion from its debit column last year but, at $8.9 billion, net debt is still too high for Ostrowski's liking.

While the group's liquidity remains strong -- CFO Thomas Rabe says it is secure beyond 2010 -- there seems to be little appetite at Bertelsmann for the kind of anti-cyclical acquisitions that built its business in the past. Last year, RTL spent $170 million for a majority stake in Greek broadcaster Alpha Media Group, but big bets appear off the table for the time being.
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