Berlin – German media group Bertelsmann AG said Thursday its profit rose sharply in 2004 thanks to strong performances by its television, music and media services businesses and lower writeoffs due to changed accounting rules.
Earnings rose to 1.03 billion euros ($1.28 billion) from 154 million euros in 2003, while revenue rose 1.2 percent to 17.02 billion euros ($21.17). A company statement did not include fourth-quarter figures.
The Guetersloh-based company credited a good showing by subsidiary RTL, Europe’s largest television broadcaster, which boosted earnings to 668 million euros ($831 million) from 503 million euros, helped by the company’s acquisition of French broadcaster M6.
The privately held company also got improved results from the BMG music division, which joined with Sony Music Entertainment during the year to form Sony BMG Music Entertainment; Random House, the world’s largest trade publisher; and its Arvato media services division.
The music and book businesses got help from hits such as R&B star Usher’s album “Confessions,” which sold 12 million copies, former U.S. President Bill Clinton ‘s memoirs, and the continuing success of Dan Brown’s novel “The Da Vinci Code.”
Chief executive Gunter Thielen said he was pleased with the year and expected better revenues and earnings in 2005.
“Bertelsmann delivered a gratifying overall business performance and markedly improved its profitability,” he said.
A big boost to profit came from new accounting rules that no longer require regular writeoffs for goodwill amortization, for which the company took charges of 632 million euros ($786 million) last year.
With a weak dollar that shrinks euro earnings, and industrywide worries about pirating and downloading of music illegally, revenues at Sony BMG fell from 2.7 billion euros in 2003 to 2.55 billion euros ($3.42 billion). Earnings, however, rose to 162 million euros ($217.45) from 54 million euros the year before due to cost-cutting measures.
The Sony BMG joint venture created a combined home for artists such as Beyonce, Justin Timberlake and OutKast and classic catalogs from Elvis Presley, Miles Davis and Johnny Cash.
Figures for 2004 include the results of BMG’s business from January to July 2004, and half of the results of the Sony BMG joint venture from August to December 2004.
New York-based Random House had flat sales at 1.8 billion euros ($2.2 billion) for 2004 in what the company described as a difficult year for book sales. It boosted earnings to 140 million euros ($174 million) from 115 million euros, however, on the strength of Clinton’s “My Life” and “The Da Vinci Code,” which the company says is the best-selling non-children’s novel of all time.
Arvato’s revenues rose to 3.8 billion euros ($5.1 billion) from 3.6 billion euros, with the operating earning up significantly to 310 million euros ($416 million), from 261 million euros. International growth including the purchase of a majority share in Phone Assistance, a Moroccan call center, and service operations in India, Poland, Ireland and Turkey.
Magazine publisher Gruner
Jahr saw earnings slip to 210 million euros (US$282 million) from the previous year’s 233 million euros, primarily because of acquisitions of new magazine titles. Revenues fell to 2.4 billion euros ($3.22 billion) from 2.5 billion euros in 2003, due to the weak dollar and portfolio changes, the company said.
Bertelsmann revised its accounting guidelines in 2004, and now uses an expanded definition of debt, recognizing pensions and profit participation as economic debt as well.
Bertelsmann isn’t listed on the stock market. A majority stake is controlled by the Mohn family, directly and through a foundation. Group Bruxelles Lamber holds a 25 percent stake.