Bertelsmann

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For the foundation, see Bertelsmann Foundation.

Bertelsmann AG

Type	Private
Founded	1835
Headquarters	Gütersloh, Germany
Key people	Carl Bertelsmann, Founder Dr. Reinhard Mohn, Owner Hartmut Ostrowski, Chairman and CEO
Industry	Media
Products	Broadcasting Publishing Music Media editing
Revenue	▲ €18.578 billion (2007)
Net income	▲ €0.405 billion (2007)
Website	www.bertelsmann.com

U.S. headquarters at 1540 Broadway in Times Square in New York City

Bertelsmann AG is a transnational media corporation founded in 1835, based in Gütersloh, Germany. The company operates in 63 countries and employs 102,397 workers (as of December 31, 2007). In 2007 the company reported a € 18.578 billion revenue, an operating EBIT of € 1.81 billion, and a net income of € 0.405 billion. ^[1]

1 Businesses
- 1.1 Subsidiaries
- 1.2 Ownership
2 History
3 References
4 See also
5 External links

[edit] Businesses

[edit] Subsidiaries

Bertelsmann consists of six corporate divisions:^[2]

RTL Group, Europe's biggest broadcaster
Gruner + Jahr (a magazine publisher, the biggest in Europe)^[3]
Bertelsmann Music Group (BMG), which mainly consists of 50 percent interest in Sony BMG^{[citation needed]}
Random House, the world's largest trade book publisher (popular literature)
Direct Group, the world's largest book and music club group
Arvato AG, an international media and communications service provider

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 in fall 2000, when it announced it would extend an $80 million loan to Napster, also forming an alliance with the music file-sharing company to develop a secure file-sharing service. With the alliance Bertelsmann separated itself from the other major labels who saw Napster's closure as the only option.^[4]

[edit] Ownership

Bertelsmann itself 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.^[5] The remaining 23.1% is owned by the Mohn Family. Albert Frère, a Belgian industrial, owned 25% of the Bertelsmann until 2006.

[edit] 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 publishing programme was extended into the area of novels. During the following years Bertelsmann expanded steadily. By 1939 the publishing house employed 401 people.

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 like 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 (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's cinema chain was sold again 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 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 February 2001, Groupe Bruxelles Lambert, headed by Albert Frére 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 loat 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.^[6]

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. BMG Music Publishing remained wholly owned by Bertelsmann, 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.

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.^[7]

On January 1, 2008, Hartmut Ostrowski became the new Chairman and CEO of Bertelsmann, replacing Gunter Thielen.^[8]

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 planned to include abbreviated entries for the 50,000 most commonly used search terms of the prior two years.^[9]