Chief Financial Operator

Dr. Thomas Rabe

CFO, Bertelsmann AG

 

Thomas Rabe, 44, unites all the advantages of a modern-day executive who grew up with several languages and enjoyed an international education. Bertelsmann AG’s Chief Financial Officer is European in outlook, has experience in managing business operations, has closed major corporate deals, and knows the ins and outs of the capital markets – all excellent qualifications for the position of Chief Financial Officer at an international media company.

Thomas Rabe has managed Bertelsmann’s finances since the beginning of 2006. He has repeatedly shown that he regards this as an operational rather than an administrative role: Working closely first with Gunter Thielen and then, from January 2008, with the Group’s new Chairman & CEO Hartmut Ostrowski, he successfully facilitated and orchestrated billions in portfolio adjustments such as the exit from the recorded-music business, the building of new businesses and the issuance of large bonds on the capital market. With circumspect, forward-looking financing transactions he and his finance team have ensured that Bertelsmann is in no danger of liquidity bottlenecks during the global economic downturn.

Today, the company is financed largely via the capital market and accordingly has a capital market focus – even without being listed on the stock exchange with equity tools implying voting rights. “Bertelsmann is Europe’s biggest issuer of bonds in the media sector. We cultivate an accordingly high degree of openness and transparency,” Rabe emphasizes. In doing so, he continues in the strategic tradition of his longstanding predecessor Siegfried Luther without losing sight of the rapid developments in the financial markets, with their ever-changing new opportunities, risks and requirements. Rabe has a good instinct for taking advantage of this rapid-changing environment to ensure progressive, solid financing for Bertelsmann. He is in constant contact with rating agencies, analysts and banks, as well as with M&A experts and fund managers from all over the world.

The CFO utilizes fund structures such as the Bertelsmann Digital Media Investments Fund (BDMI) or Bertelsmann Asia Investments (BAI) to ideally build new businesses in the digital sector and the emerging Asian market. He also uses Private Equity wherever it makes sense, as shown by the case of BMG Rights Management, the music rights joint venture set up with KKR in 2009.

Rabe faced his first major test as Bertelsmann’s CFO shortly after taking office in Gütersloh: in spring of 2006, together with Bertelsmann’s then CEO Gunter Thielen, he drew up a concept for buying back a 25.1-percent stake in Bertelsmann held by Groupe Bruxelles Lambert (GBL). €4.5 billion were eventually paid, and Bertelsmann has been without external owners ever since. Working closely with the CEO, Thomas Rabe managed the complex financing of the deal and the subsequent debt repayment: to quickly pay down the debt, BMG Music Publishing, at the time the world’s third-largest music publishing company, was sold to Vivendi at an excellent price before 2006 was out; Bertelsmann narrowed its focus in the music division – represented on the Executive Board by Rabe from 2006 to 2008 – to the recorded-music business(Sony BMG). In the years since the share buyback, some four billion euros in debt have already been repaid.

After the changeover at the top of Bertelsmann’s management in January 2008, the Group’s entire portfolio was subjected to a stringent review by the new Chairman & CEO Hartmut Ostrowski. The aim was and continues to be to pull out of shrinking businesses, and to direct funds to areas that promise growth. Thomas Rabe was put in charge of negotiating major disinvestments. With his team, he disposed of the club business in North America and other clubs outside the European core markets. Faced with dramatic structural change in the music industry, they also sold Bertelsmann’s 50-percent stake in the Sony BMG music joint venture to the JV partner Sony. Bertelsmann has since banked on a new business model, in the shape of BMG Rights Management: music rights management, focusing strictly on the artists’ wishes and requirements. In October 2009, to speed up the building of BMG’s business, the private equity firm KKR became Bertelsmann’s joint-venture partner in the music rights sector. Thomas Rabe is Chairman of the JV’s supervisory board.

The global economic crisis, which given collapsing ad bookings has thrown the media industry into choppy waters as well, has called for new priorities since the second half of 2008: cost discipline, safeguarding operations and liquidity, and restrained investment. Here, too, Bertelsmann’s CFO makes an important contribution.

His hallmark mixture of openness, efficiency and precision was shaped early on. Thomas Rabe was born in Luxembourg in 1965, where his father worked for the European Coal and Steel Community, the “Montanunion” that was established in 1951. When his father was transferred to Brussels in 1968, the family moved there with him. Young Thomas, who has two older brothers and a younger sister, went to the European School. A cheerful mix of languages prevailed in its classrooms. As a result, today, in addition to German, English and French, Rabe also speaks passable Dutch and Spanish.

As a youngster, Rabe played bass guitar in a band in Brussels, and liked to listen to “The Police” and “The Cure.” To make sure he could keep on rockin’, he spent his university years up to his preliminary diploma in Aachen, an easy train ride from Brussels. When he moved to Cologne to finish up his economics degree, he left the band and retired from being an active musician.

His entry into professional life led Thomas Rabe back to Brussels, where he worked for the European Commission from March 1989 to September 1990. At the time, the focus was on liberalizing the European markets and setting up the European internal market. The young business graduate was involved in developing several EU-Directives and presented the drafts to Europe’s political committees.

Looking back, he says it was a tremendously instructive and interesting time, and it was exciting to gain insights into how public institutions work. At the same time, he quickly realized that it wasn’t where he wanted to be. Everything moved too slowly for him, and involved endless meetings and tedious debates: “In Brussels, I got to know the limits of harmonization.” A subject that he would go on to discuss in detail – in 1995, he earned his doctoral degree from the University of Cologne with a dissertation entitled “Liberalization and Deregulation in the European Internal Market for Insurance.”

Thomas Rabe’s supervisor at the European Commission was Alastair Sutton, an Englishman who in 1989 became a partner at the Forrester, Norall & Sutton law firm, which later merged with White & Case. Sutton, a noted expert in European law, recruited 24-year-old Rabe in 1990. On behalf of the law firm, Rabe traveled the world, got to know Harvard Law School, built a network of contacts at the World Bank, and did work for clients from all of the European Union member states, the U.S. and Japan.

The fall of the Berlin wall brought some changes for Thomas Rabe as well. Though he remained an Associate with the law firm in Brussels, he transferred to Berlin, where starting in 1991 he worked for the Treuhand, at the time the world’s largest industrial holding. The complexity of his tasks was fascinating: As Director Controlling, Thomas Rabe was in charge of the Treuhand’s budget, a staggering 48 billion DM – all of it for debt financing: “Representing this budget and the individual budget plans that arose from it was a real challenge, both in the theoretical sense and in the actual implementation.”

In 1995 he took some time off to work on his dissertation. A call from a headhunter in 1996 put him in touch with the Centrale de Livraison de Valeurs Mobilières S. A. (CEDEL), an institute that was set up in Luxembourg by leading banks and financial institutions in 1970. Its job involved the safekeeping, administration and processing of (mostly) internationally traded stocks and bonds.

Several years in the world of international banking followed, with transactions worth 100 billion dollars per day being the order of the day. The team consisted of employees from 15 countries. In 1998, Thomas Rabe was appointed to the board of management, followed shortly thereafter by his appointment as CFO. During this time, he negotiated the merger between CEDEL and Deutsche Börse Clearing AG, which resulted in Clearstream, now part of the German Stock Exchange. Clearstream is a leading organization for processing securities transactions and trusts.

In June 2000, Europe’s largest TV and radio group was looking for a Chief Financial Officer. Some intense research on the newly founded RTL Group’s TV, radio and content business quickly convinced Thomas Rabe that the media realm was one of the most exciting fields he could get into. He set up a new reporting system in Luxembourg, adapted systems and processes to reflect the group’s new status as a listed company in London, Brussels and Luxembourg, and secured the group’s ratings and financing. Rabe was also directly responsible for the TV, Radio and broadcasting business in Luxembourg with its more than 500 employees, and sat on the supervisory board of numerous RTL Group holdings.

On January 1, 2006, he left Luxembourg for Gütersloh, a seat on the Bertelsmann Executive Board, and to head the Group’s Corporate Finance department.


(Last update: October 2009)