Bertelsmann Prepares Way for IPO

5:30 AM PST 03/28/2012 by Scott Roxborough

European media giant controls broadcaster RTL Group, Random House and FremantleMedia, producer of “American Idol” and “The X Factor.”

COLOGNE, Germany – Bertelsmann, Europe’s largest media company, is preparing the ground to go public as it looks to markets outside its core European operations to provide future growth.

Bertelsmann new CEO Thomas Rabe said Wednesday the company would change its legal form from a joint stock company to a so-called KGaA, a structure that would allow Bertelsmann to issue shares and take on new investors without diluting the power of the Mohn family, which controls the media giant.

German-based Bertelsmann controls RTL Group, Europe's largest broadcaster, as well as FremantleMedia, producers of American Idol and The X Factor. Its other assets include Random House, the world's leading English-language book publisher.

The move will take effect June 30 and is being widely interpreted as the first step towards taking Bertelsmann public. It is a bold step by Rabe, who took over as Bertelsmann boss in January. An earlier attempt to take Bertelsmann public by former CEO Thomas Middelhoff fell foul of the Mohn family and cost Middelhoff his job.

But with growth slowing in its core European markets – profits for the group were down slightly last year - Bertelsmann needs to expand internationally. And for that, the company needs capital.

The new corporate structure will give Bertelsmann access to international capital markets and investors without giving it much say over how the company runs its business. Rabe made it clear that Bertelsmann’s focus would be on high-growth territories including China, India and South America as well as digital businesses including E-book sales and online video platforms.

"We will channel a large part of our future investments into new businesses based on clear prerequisites,” said Rabe. “They need to have an attractive long-term growth potential, a global footing and to be benefiting from the development of digital media.”

Spearheading this new strategy at RTL Group will be Anke Schäferkordt and Guillaume Posch, who have taken over as co-CEOs of RTL from Gerhard Zeiler, who left the company to join Turner Broadcasting. Schäferkordt will also become the first woman to earn a seat on Bertelsmann’s management board.

 

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