Napster expenses slow Bertelsmann's Q3
EmptyGerman media giant Bertelsmann slightly boosted its third-quarter revenue but reported an 11.7% operating profit improvement Wednesday.
However, Bertelsmann's results for the first nine months of the year were weighed down by legal problems — including claims resulting from Bertelsmann's 2002 bailout of illegal file-sharer Napster and a €96 million fine against German on-air advertising agency IP Deutschland.
CFO Thomas Rabe, however, lauded his company's performance, saying, "Bertelsmann further improved its operating profitability in the first nine months."
Bertelsmann on Wednesday reported €4.3 billion ($6.3 billion) in revenue for the third quarter, up 1.2% on an adjusted basis, and improved operating profit before interest and taxes of €314 million ($458 million) year-over-year.
Profit for the first three quarters of the year was €132 million ($193 million), a fraction of the €384 million Bertelsmann earned during the same period a year ago. But operating profit was up 4.7% to €1.03 billion ($1.5 billion).
Revenue for the nine-month period was up slightly at €13.3 billion ($19.4 billion).
When stripping out one-off portfolio effects — specifically Bertelsmann's sale of its BMG Music Publishing arm to Vivendi Universal and its stake in French pay TV group TPS — operating profit jumped 13.6% in the first nine months.
Bertelsmann this year settled what it said will be the last Napster lawsuit. By year's end, the German company expects to have paid out a total of €393 million ($574 million) in Napster-related claims.
IP Deutschland was fined €96 million, while SevenOne Media was fined €120 million.
For the full year, Bertelsmann projected its revenue and operating profit, adjusted for asset changes and exchange rates, will exceed those for 2006.