‘Journalism Is More Relevant Than Ever’
Thomas Rabe spoke to the Hamburg Business Journalists Club about the consolidation of European media markets, Bertelsmann’s current situation, and the “Boost 25” strategy. The club is deemed to be Germany’s largest business journalism association and has around 190 members.
“We are in competition with the global platforms across all dimensions: for formats, talent, reach, advertising, and subscribers. Size is crucial to survival in this competition,” said Thomas Rabe, addressing the members of the Hamburg Business Journalists Club on Friday morning. At the invitation of Germany’s largest business journalism association, the Bertelsmann CEO spoke about consolidation in the European media markets – and specifically about the creation of national media champions, Bertelsmann’s response to this challenge.
Business journalists from major daily newspapers, Norddeutscher Rundfunk, and other print and online media had accepted the invitation of the 190-member club, founded in 1991, to discuss with Thomas Rabe. Before getting to the actual topic in his opening statement, however, Rabe addressed the all-dominating topic of the war in Ukraine. He called it a “convulsion in the heart of Europe that can hardly be captured in words.” But at the same time, he said, the war has “sharpened our awareness of how fortunate we are to live in freedom, in a democracy in which opinions can be freely expressed, and in a society in which we are able to develop.” Rabe commended the work done by media companies and journalists in the war, praising them for their comprehensive reporting and for putting events into context.
Turning the focus to Bertelsmann, Rabe explained to the journalists the priorities of the Group’s “Boost 25” strategy, which will “better exploit the potential of our businesses to grow more strongly, both organically and through acquisitions – and in a second phase by expanding new businesses.” The CEO also looked back on the 2021 financial year, “the strongest year in Bertelsmann’s history to date,” before turning in more detail to the strategic priority of establishing national media champions
“For years, I’ve been talking about the need to consolidate Europe’s TV markets and create national media champions,” Rabe reminded his audience, before adding, “The good news is that use of the media is increasing, especially video usage.” At the same time, he cautioned, “TV usage is at a high level, but has been declining in all major markets for years, especially among younger audiences.” The winner in video usage, he noted, is online video or streaming, which is dominated by U.S. platforms – with billions of users and hundreds of millions of subscribers worldwide.
Rabe illustrated this dominant position with concrete figures: “According to the ‘Financial Times,’ in 2022 alone, the eight major U.S. platforms and media companies will invest more than $140 billion in video content and sports rights for their self-proclaimed ‘streaming war’.” In the digital advertising market, Google, Meta and Amazon accounted for 70 percent of the volume and virtually all of the growth.
What this means for the competition is clear to Rabe: “European media companies and TV groups must follow their viewers into online video or streaming to avoid losing reach and substance,” said the Bertelsmann CEO. And because size is crucial, it is important to pool resources and create synergies that can be reinvested primarily in local content, independent journalism, streaming, and technology.
This is why, said Rabe, RTL has concluded several agreements in the past twelve months: “In Germany, the merger of RTL and Gruner + Jahr; in France, the merger of TF1 and M6; in the Netherlands, that of RTL and Talpa; also in Belgium, the sale of RTL Belgium to two Belgian media companies; and in Croatia, the sale to a leading Eastern European TV group.” Rabe went on to discuss the respective status quo of these transactions, as well as the regulatory conditions required for them to succeed.
The CEO objected to “concerns occasionally expressed that consolidation would create an excessive concentration of media – and that journalism could suffer.” Rabe believes the opposite is true: “There are more media offerings and diversity today than ever before. Journalism is more relevant than ever.” But it needs to be financed, too, he noted, which is where synergies are helpful. Rabe said, “We keep expanding our journalistic offering because it is relevant, because we can do it – and because it also makes good business sense.” Bertelsmann is also investing heavily in streaming, significantly expanding its video offering in Germany and adding audio and text to create a true multimedia offering, true to the motto “one app all media.”
Before going on to a lively discussion with the business journalists, the Chairman & CEO concluded that Bertelsmann was “very confident that this strategy of consolidation, transformation and massive investment will enable it to play an enduringly important role as a national media champion in its core markets. He said that the Group is on the right track – and still has a lot of plans.
