Bertelsmann AG is a transnational
media corporation founded in 1835, based in
Gütersloh,
Germany. The company operates in 63 countries and employs 106,083 workers (as of December 31, 2008). In 2008 the company reported a
€16.118 billion revenue, an operating
EBIT of €1.57 billion, and a net income of €270 Million.
Ownership
Bertelsmann is not publicly listed, and is majority owned (76.9%) by the
Bertelsmann Foundation, a non-profit organisation and political think tank set up by the founding family
Mohn. The remaining 23.1% is owned by the Mohn Family.
Albert Frère, a Belgian industrialist, owned 25% of Bertelsmann until 2006.
Businesses
Bertelsmann currently consists of five corporate divisions and a forthcoming music division:
- Random House, the world's largest trade book publisher (popular literature)
- Arvato AG, an international media and communications service provider
History
The
C. Bertelsmann Verlag was founded as a publishing house and print shop in July 1835 by Carl Bertelsmann. At first Bertelsmann concentrated on Christian songs and books. In 1851, led by Carl Bertelsmann's son Heinrich, the company began publishing novels. During the following years Bertelsmann expanded steadily. By 1939 the publishing house employed 401 people. During
World War II, Bertelsmann was the biggest single producer of Nazi propaganda. Owner
Heinrich Mohn and his son
Reinhard Mohn were both members of the
SS.
At the end of
World War II, the publishing house was closed for some time because of illegal paper-trading. During the
Nazi period, it published books by Nazi authors such as
Will Vesper (who did the commemorative speech at the 1933
book burning) and
Hans Grimm. In 1947, the company was re-founded by Reinhard Mohn, fifth generation of the Bertelsmann family.
In the 1950s, Bertelsmann expanded with the bookclub
Bertelsmann Leserring (Book Club) and entered the music market with the founding of the LP label
Ariola Records in 1958. In 1964 Bertelsmann entered the movie market with the purchase of the
Ufa Filmproduktionsgesellschaft. It sold Ufa's cinema chain in the 1970s. In 1969, Bertelsmann bought into the
Gruner und Jahr publishing house (newspapers, magazines) and took majority ownership in 1973.
Since the 1980s, Bertelsmann has expanded internationally: in 1979 it bought the American
Arista label, in 1980
Bantam Books, in 1986 the label
RCA Victor and the publishing house
Doubleday. It has distributed
Windham Hill Records since 1989. In 1992 it acquired 50% of Windham Hill Records and in 1996 it took full control. During this period the activities in the music market were bundled into the label
BMG.
In 1993,
Reinhard Mohn as owner of Bertelsmann moved 68.8% of his Bertelsmann AG stock over to the
Bertelsmann Foundation. As of 2006, the Mohn family still owns 74.9 of Bertelsman's capital, in addition of the Bertelsmann foundation.
From 1995 to 2000 Bertelsmann had a major
Internet service provider (and associated content) joint venture with
AOL that operated throughout Europe.
In 1995 the
Ufa Film- und Fernseh-GmbH merged with
CLT, Luxembourg. The result was known as
RTL Group, the biggest private radio and TV broadcaster in Europe.
In 1998
Thomas Middelhoff become CEO of Bertelsmann. He bought the
Random House publishing house and concentrated the group's worldwide book publishing operations under this label.
In 1999, Bertelsmann launched bol.com, the internet book retailer.
In 2000, Bookspan was created as a joint-venture between Time Warner and Bertelsmann until 2007 when Bertelsmann took over complete ownership.
In February 2001,
Groupe Bruxelles Lambert, headed by
Albert Frère, purchased 25% of Bertelsmann AG.
André Desmarais, President and Chief Executive Officer, Power Corporation of Canada, was named to the board. In July 2002, the CEO Thomas Middelhoff left the company because of disagreements concerning the company's strategy, in particular relating to his plans to float the company's share on the stockmarkets.
In 2002 Bertelsmann admitted that they lied about their involvement with
Adolf Hitler and the Nazi party, which included making profits from slave labour and publishing propaganda. The revelations came to light during their takeover of US book publisher
Random House in 1998; Bertelsmann used a revised account of their Nazi past to smooth the deal.
In 2003, the new CEO
Gunter Thielen expanded the music branch
BMG with the buying of
Zomba Records.
In 2004, BMG set up a joint-venture with
Sony Music to create
Sony BMG, reducing the Big Five of music companies to the
Big Four.
BMG Music Publishing, the world's third largest music publisher, remained wholly owned by Bertelsmann at the time, but was sold to
Universal Music Publishing in 2006.
Also in 2004, the
London Borough of Camden,
England, brought
anti-social behaviour orders (ASBOs) against
Sony Music UK and BMG for alleged
fly posting. Illegal fly posting by the two companies is thought to save them £8 million a year in advertising costs in Camden and cost the Borough £250,000 to clean up. Falling to comply with an ASBO can result in a jail sentence of up to 5 years.
In July 2006 Bertelsmann AG purchased 25% of own company from
Groupe Bruxelles Lambert back.
As of September 1, 2007, Bertelsmann agreed to pay music publishers $130 million to settle a copyright infringement lawsuit brought on by its deal with Napster.
On January 1, 2008,
Hartmut Ostrowski became the new Chairman and CEO of Bertelsmann, replacing Gunter Thielen.
On April 23, 2008, the company announced that it planned to publish a one-volume encyclopedia in September using content from the
German-language Wikipedia. The volume is sold since September 15th 2008 and includes abbreviated entries for the 50,000 most commonly used search terms of the prior two years.
On October 1, 2008 Bertelsmann completed the sale of its 50 % stake in Sony BMG to
Sony Corporation of America. Sony has since renamed its now wholly-owned music business to Sony Music Entertainment. These two divestitures marked the end of the Bertelsmann Music Group division and the selected assets that Bertelsmann decided to retain from these sell-offs will be the basis of a forthcoming BMG branded division,
BMG Rights Management, which will focus on building, managing and marketing artist rights.
See also
