Bertelsmann at a Glance

Bertelsmann at a Glance

Description of the Business

Bertelsmann operates in the core business fields of media, services and education in around 50 countries worldwide. The geographic core markets are Western Europe – in particular, Germany, France and the United Kingdom – and the United States. In addition, Bertelsmann is strengthening its involvement in growth markets such as Brazil, India and China. The Bertelsmann divisions are RTL Group (entertainment), Penguin Random House (books), BMG (music), Arvato Group (services), Bertelsmann Marketing Services (direct marketing and print activities), Bertelsmann Education Group (education) and Bertelsmann Investments (international network of funds).

Organizational Structure

Bertelsmann SE & Co. KGaA is a capital market-oriented but unlisted partnership limited by shares. As a Group holding company, it exercises central corporate functions. Its internal corporate management and reporting follow the Group’s organizational structure, which consists of the operating divisions and Corporate.

Strategy

Bertelsmann’s strategic focus is on a fast-growing, digital, international and diversified Group portfolio. Businesses in which Bertelsmann invests should have long-term stable growth, global reach, sustainable business models, high market-entry barriers and scalability. A significant increase in investment is planned over the next few years as part of the Group-wide growth initiative. Existing and new lines of business will be established and expanded through organic initiatives and acquisitions. The strategy pursues five growth priorities: national media champions, global content, global services, education and investment portfolio. The following topics form the basis for the successful implementation of the strategy: tech & data, people, communication and ESG. Further progress was made in the implementation of the strategic priorities in the 2022 financial year.

National Media Champions

Further portfolio changes were made in the creation of national media champions. RTL Group completed the combination of RTL Deutschland and Gruner + Jahr at the beginning of the year 2022. The disposals of RTL Belgium and RTL Croatia were also completed in 2022. However, the announced mergers of Groupe M6 and Groupe TF1 in France, and of RTL Nederland and Talpa Network in the Netherlands will no longer be pursued after the competent antitrust authorities in the relevant countries have objected to or prohibited, respectively, the said transactions. The growth ambitions and the strategic goal of forming national media champions remain unchanged. In order to respond to the ongoing need for consolidation, alternative scaling paths will be pursued in future to complement the strategy employed to date. These scaling paths include new cooperations in the area of domestic and international advertising marketing, the development of advertising and streaming technology, the expansionof sales partnerships and the creation of shared content. As of year-end 2022, RTL Group had around 5.5 million paying subscribers to its streaming services RTL+ in Germany and Hungary, and Videoland in the Netherlands, representing an increase of 45 percent year on year. With the launch of RTL+ Musik and the integration of a podcast service in Germany, RTL+ became a multimedia provider. RTL Hungary launched its streaming service RTL+ in 2022.

Global Content

Bertelsmann continued to invest in the expansion of the global content businesses. Fremantle grew organically and through acquisitions, and was thereby able to continue with its international growth strategy. The production company Fremantle completed a number of acquisitions and shareholding increases in 2022. Among other transactions, Fremantle acquired 70 percent of Lux Vide, Italy’s leading independent TV production company, and a 51 percent stake in the Irish production company Element Pictures. The best-selling books at Penguin Random House in 2022 were “Atomic Habits” by James Clear and “Where the Crawdads Sing” by Delia Owens. U2 singer Bono’s memoir “Surrender” and “The Light We Carry” by Michelle Obama were published by Penguin Random House in November. In addition, preparatory work was carried out at the end of the year for Prince Harry’s autobiography “Spare,” which went on sale in January 2023. BMG, the world’s fourth-largest music business, strengthened its rights portfolio by acquiring further music rights, including those of Scottish rock band Simple Minds and French electronic music pioneer Jean-Michel Jarre, and concluded new contracts with artists such as Rita Ora, Elvis Costello and Julian Lennon. BMG also acquired the German Schlager music label Telamo.

Global Services

Global services were also further expanded. The growth drivers at Arvato Group were primarily the logistics and customer experience businesses (CX). In relation to this, Arvato Supply Chain Solutions saw growth primarily in the customer segments of consumer products, healthcare and technology, and continued to expand its distribution centers, including in Germany and Poland. Majorel made several acquisitions in the reporting period, including IST Networks, a CX technology specialist in the Middle East, and the Spanish CX service provider Findasense. Majorel also strengthened its customer relationship with Booking.com. Majorel and Sitel ended talks about a possible merger as they were unable to reach a final agreement. The financial services business implemented its strategic realignment under the name Riverty (previously Arvato Financial Solutions). Arvato Systems expanded its technology range and customer relationships in the energy sector and in cloud services. In light of rapidly rising paper and energy prices, the Bertelsmann Marketing Services focused on increasing the competitiveness of the printers.

Education

Bertelsmann strengthened its global education business by increasing its stake in Afya. The NASDAQ-listed education company is a leading provider of medical education and training and digital solutions for medical practitioners in Brazil and, since this increase, is for the first time fully consolidated under the Bertelsmann Education Group division. In 2022, Afya also announced the acquisition of two additional medical universities in Brazil. The Bertelsmann Education Group benefited from high demand for the digital education and training services offered by Relias and Alliant and continued to invest in developing the range of digital learning solutions of its e-learning provider Relias, while Alliant International University continued to expand its range of online courses.

Investment Portfolio

Bertelsmann expanded its investment portfolio by investing in 2022 in around 54 new and 31 follow-on investments . As of the end of 2022, Bertelsmann Investments held a total of 333 investments through its three international funds. Bertelsmann Next increased its engagement in the digital health sector through various direct and follow-on investments. Former Gruner + Jahr companies including the AppLike Group, Territory and the DDV Mediengruppe have also been assigned to the Bertelsmann Investments division since the beginning of 2022. Since June 1, 2022, CEO Carsten Coesfeld has headed up the Bertelsmann Investments division and is thereby responsible for the network of funds and the newly established unit Bertelsmann Next.