German Media Giant Bertelsmann Boosts Profit Despite COVID-19

Thomas Rabe
JOHN MACDOUGALL/AFP via Getty Images

Thomas Rabe

The coronavirus pandemic hit Bertelsmann's ad-supported TV divisions Fremantle and RTL Group, but digital operations saw strong growth. 

German media giant Bertlesmann had a surprisingly good year. 

Despite the coronavirus pandemic, Bertelsmann, which controls leading European commercial TV broadcaster RTL Group, production giant Fremantle, music label BMG, and book publisher Penguin Random House, boosted its annual profit by 34 percent to $1.77 billion (€1.5 billion) last year, the highest level since 2006, with operating (EBITDA) profit hitting a new high of $3.65 billion (€3.1 billion). 

Overall revenue slipped to $20.37 billion (€17.29 billion) from $21.2 billion (€18 billion) a year earlier, with the company's advertising-financed businesses particularly hard hit. RTL Group, which has interests in 67 television channels, 10 streaming platforms, and 38 radio stations and owns Fremantle, producers of American Idol and The X Factor, saw a 9.5 percent fall in revenues and a 14.2 percent drop in adjusted earnings before interest, taxes and amortization. But the company's less-sexy divisions, particularly its digital services group Arvato, saw strong growth. Arvato booked $5.16 billion (€4.382 billion) in revenue in 2020, up from $4.9 billion (€4.175 billion) a year earlier. 

Digital music sales helped boost revenue at BMG, which recorded $707 million (€602 million) in earnings, a slight increase on 2019. Even books proved a good business.

The company's book publishing business earned $4.5 billion (€3.8 billion) last year compared to $4.3 billion (€3.64 billion) in 2019, helped by the former first family: Barack Obama's A Promised Land and Michelle Obama's Becoming were both global bestsellers the group. Bertelsmann completed its full acquisition of Penguin Random House last April and announced the takeover of U.S. publisher Simon & Schuster in November. 

Bertelsmann CEO Thomas Rabe said the group successfully reduced costs early on in the corona pandemic, which helped secure the company’s liquidity. "Priority was given at all times to protecting our employees, many of whom have been working from home since the beginning of the pandemic. Fortunately, there were very few infections in our workplace."

Rabe said the company's success in 2020 was built on Bertelsmann's long-term strategy of focusing on digital services, global content, and what it calls "national media champions" —meaning commercial broadcasters such as RTL Television in Germany and France's M6.