German Media Giant Bertelsmann Says It Is "Well Prepared" to Weather Virus Crisis

Bertelsmann Chairman and CEO Thomas Rabe

"We are profitable, have high liquidity, a comfortable equity ratio [and] the setup of our businesses makes us less susceptible to economic fluctuations," says the owner of Fremantle and RTL Group as it unveils 2019 figures that show record operating profits and group revenues of $19.5 billion.

German media group Bertelsmann, which reported its full-year figures Tuesday, said it was "well prepared" to weather the current coronavirus crisis.

The company, which controls X Factor producer Fremantle, pan-European television conglomerate RTL Group, music label BMG and publishing giant Penguin Random House, said it has taken measures to protect its employees' health and well-being and is well prepared financially to ride out the economic disruption caused by the pandemic.

"We are profitable, have high liquidity, a comfortable equity ratio, and ratings continue unchanged in the investment-grade category," said Bertelsmann chairman and CEO Thomas Rabe. "The broad setup of our businesses makes us less susceptible to economic fluctuations and allows us to continue investing in our future without compromising the substance of our business."

Rabe unveiled strong figures for 2019, which showed group revenue at Bertelsmann topping $19.5 billion (€18 billion), compared with €17.7 billion a year earlier, and operating profit (EBITDA) hitting an all-time high of $3.14 billion (€2.9 billion). Group profit, at $1.19 billion (€1.1 billion), topped the €1 billion mark for the fifth year running. Bertelsmann also reduced its net debt last year by $618 million (€570 million) to $3.7 billion (€3.4 billion). 

Rabe highlighted corporate moves to shift Bertelsmann's traditional media businesses toward the digital market, noting that, for the first time, digital operations accounted for more than half of the group's total revenue.

At RTL Group, Bertelsmann's flagship division, the focus has been on expanding the company's streaming services, which Rabe says are targeting a paid subscriber base of between five and seven million across Europe by 2025.

Acquisitions have also helped Bertelsmann expand. RTL Group bought French free-to-air kids channel Gulli and five pay-TV channels from Lagardère last year and completed its buyout of Penguin Random House, making it the sole shareholder of the book giant.

On the TV production side, subsidiary Fremantle has pushed into drama production, with series such as American Gods on Amazon Prime and German hit drama Charité. For music division BMG, Rabe pointed to new releases by the likes of Kylie Minogue and Lewis Capaldi, as well as contract renewals with the Rolling Stones.

While Europe, a territory hard hit by the coronavirus outbreak, remains Bertelsmann's main focus, the company generated 30 percent of its revenue last year outside the continent, with expansion in the U.S. as well as in China, India and Brazil.

Rabe also noted that Bertelsmann's strong position in "the international media, services, and education" companies positioned it well to "emerge safely from the current crisis due to the global spread of the novel coronavirus."