Bertelsmann
AG - (en)
Bertelsmann AG is a transnational media corporation founded in 1835, based
in Gütersloh, Germany. The company operates in 63 countries and employs
over 75,000 workers. In 2004 the company reported € 17 billion revenue.
Businesses
Subsidiaries
Bertelsmann consists of 6 corporate divisions:
RTL Group, a European broadcaster
Gruner + Jahr (a magazine publisher, the biggest in Europe and second
biggest world wide)
de:Prisma
BMG (Bertelsmann Music Group)
BMG Music Publishing
Random House, the world's largest trade book publisher (popular literature)
Direct Group, the world's largest book and music club group
arvato, an international media service provider and editing house
Doubleday Canada
In August 2004, BMG and Sony entered a 50-50 joint venture, reducing the
Big Five of music companies to the Big Four. BMG Music Publishing, the
world's third largest music publisher, stayed wholly owned by Bertelsmann
and became the world's largest independent music publisher. As of 2005,
Sony BMG's share of the music market stands at 21.5%.
Bertelsmann made headlines on May 17, 2002, when it announced it would
acquire the assets of Napster for $8 million. Bertelsmann first
established a relationship with Napster in the fall of 2000 when it formed
an alliance with them to develop a secure file-sharing music service. With
the alliance Bertelsmann separated itself from the other major labels who
saw Napsters closure as the only option. They also have close links with
Springer Science+Business Media, which was created from its majority
purchase of Springer-Verlag in 1999 and then a merger with Kluwer Academic
Publishers in 2003.
Ownership
Bertelsmann itself is not publically listed, and is majority owned (76.9%)
by the Bertelsmann Foundation, a non-profit organisation and political
think tank set up by the founding families Bertelsmann and Mohn.
History
The C. Bertelsmann Verlag was founded as a print shop cum publishing house
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 publishing programme was extended into the area of novels.
During the following years Bertelsmann expanded steadily. By 1939 the
publishing house employed 401 people.
In 2002 Bertelsmann admitted that they lied about their involvement with
Adolf Hitler and the Nazi party which included making huge profits from
Jewish slave labour and publishing propaganda aimed at harming European
Jews. 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.
After World War II, in which the publishing house was closed for some
time, but nevertheless published books by Nazi authors like Will Vesper (who
did the commemorative speech at the 1933 book burning) or Hans Grimm, the
company was re-founded by Reinhard Mohn, fifth generation of the
Bertelsmann family. In the 1950s, Bertelsmann expanded with the
Bertelsmann Leserring (readers ring) and the founding of the LP label
Ariola Records in 1958, which marks the entry in the music market. In 1964
Bertelsmann bought the Ufa Filmproduktionsgesellschaft as entry in the
movie market. Ufa was sold in the 1970s. In 1969, Bertelsmann bought into
the Gruner und Jahr publishing house (newspapers, magazines), in 1973
becoming majority owner.
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 Bertelsmann'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 book publishing in the USA under
this label.
In February 2001, Groupe Bruxelles Lambert 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 president
Thomas Middelhoff goes away, because of disagreements concerning the
company's strategy, in particular relating to its introduction in the
Deutsche Börse.
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.
BMG Music Publishing remained wholly owned by Bertelsmann.
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.
