digital push, Bertelsmann buys rest of G+J
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[October 06, 2014]
By Harro Ten Wolde
FRANKFURT (Reuters) - Bertelsmann is taking
full ownership of Gruner + Jahr, publisher of magazines including Stern
and Brigitte, as Europe's largest media group looks to make up ground
after being slow to expand online.
The German media group, which also controls broadcaster RTL and
co-owns book publisher Penguin Random House, said on Monday it would
buy the 25.1 percent stake from the Jahr family for an undisclosed
price in cash.
Privately owned Bertelsmann has held a 74.9 percent stake in the
Hamburg-based publisher since 1976, with the Jahr family retaining
the remaining shares and a veto right.
"Taking full ownership of Gruner + Jahr gives us the opportunity to
act fast and respond to rapid developments in the publishing market.
It will also be easier to decide on investments," Chief Executive
Thomas Rabe said on a press call.
Bertelsmann's German rival Axel Springer, which is focusing on its
digital business, sold a cluster of regional newspapers and
magazines this year to peer Funke Mediengruppe for 920 million euros
($1.15 billion), almost 10 times EBITDA.
A similar EBITDA multiple for Gruner + Jahr, which has been
overtaken as Europe's biggest magazine publisher by the family-run
Bauer Media Group, would mean a purchase price of about 450 million
euros for the 25 percent stake.
Analysts however cautioned that such a figure would be high for
Bertelsmann, which has a reputation for its conservative policy in
Rabe declined to give any details about the purchase price, beyond
saying that it was "appropriate and fair".
Publishers are shifting to digital publishing as their readers
increasingly use smartphones and tablet computers to consume news
and information, but Gruner + Jahr gets only about 10 percent of its
sales from digital publishing.
Springer <SPRGn.DE> now makes more than half its sales and
two-thirds of its core profit from digital operations.
Asked how much of Bertelmann's revenues come from digital, Rabe
declined to give details. Analysts have said Bertelsmann, whose
roots go back to the 19th century, was late in adapting to digital
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Gruner + Jahr, which made revenues of 2.1 billion euros ($2.6
billion) and operating EBITDA of 193 million euros in 2013, has
committed to invest several hundred millions in the expansion of its
It said in August it planned to cut up to 400
jobs as it seeks to reduce annual costs by 75 million euros to
combat a downturn in the print media market.
Gruner + Jahr, which currently has 8,562 employees, closed its
Financial Times Deutschland (FTD) newspaper title in 2012 after it
piled up millions of euros in losses over 12 years.
Its flagship publications are weekly news magazine Stern and women's
magazine Brigitte. Rabe told employees Gruner + Jahr would remain a
"core business of Bertelsmann".
"Bertelsmann fully supports the strategy of the G+J Executive Board
under Julia Jaekel, and will make available the resources necessary
for its implementation," Rabe wrote in an internal memo seen by
(Reporting by Harro ten Wolde; Editing by Georgina Prodhan/Keith
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