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Bertelsmann Sales Ahead of CBS : Publisher Leads Pack After U.S. Acquisitions

October 03, 1986|From Reuters

BONN — The Bertelsmann publishing company, little known outside its native West Germany, has jumped into the forefront of the world's media industry by its determined takeover campaign in the United States.

The company, already Europe's leading media group, has overtaken CBS and Capital Cities/ABC in global sales after two weighty acquisitions in the United States last month.

Last week, it bought the prestigious Doubleday publishing house, among the largest in the United States, for $475 million. Only two weeks earlier, Bertelsmann had spent $300 million to take full control of the RCA/Ariola International recording company.

The acquisitions cap a two-year effort by Bertelsmann to become a major player in the largest media market in the West.

But for all its international success and savvy, family-owned Bertelsmann is still run from the provincial northern town of Guetersloh, where it began as a printer of hymnals and religious tracts 151 years ago.

Postwar Growth

Unlike press barons and media moguls in such culture capitals as New York and London, Bertelsmann's top officials shun publicity and are little-known outside publishing circles.

Bertelsmann's period of spectacular growth began with the establishment of book clubs during West Germany's "economic miracle" after World War II.

Today, Bertelsmann owns book and record clubs with some 16 million members in 19 countries.

Its international empire also includes U.S.-based Bantam, the world's largest paperback publisher, and a variety of encyclopedia, map and atlas publishers.

Its 30 magazine titles include Stern in West Germany, with a circulation of about 1.4 million, and Parents magazine in the United States, with 1.7 million readers.

Through an affiliate company, Bertelsmann also has a minority stake in Der Spiegel, the leading West German weekly news magazine.

World Sales Swell

Bertelsmann is active in music publishing in America and direct satellite television in Europe and says it is keen to seize any suitable opportunity to gain a leading position in the new electronic media while continuing to expand in book and journal publishing.

Its latest acquisitions in the United States will help swell Bertelsmann's annual world sales in the 1986-87 financial year to $5 billion, up nearly 32 percent from just last year.

The sales boost gives Bertelsmann a lead over CBS, with sales last year of nearly $4.8 billion, and ABC/Capital Cities with $4.3 billion in turnover.

Bertelsmann spokesman Helmuth Runde confirmed industry calculations that Bertelsmann now leads CBS and ABC, but added: "The comparative rankings between us and U.S. firms are heavily influenced by movements in foreign exchange rates."

"We have always said we are one of the leading media groups in the world and are content to leave it at that," he said in a telephone interview from Guetersloh, a town of 80,000 near the Dutch border.

Time to Digest

Runde said the recent sharp fall of the dollar against the mark--making it less expensive for West German firms to make purchases in the United States--had not played a decisive role in Bertelsmann's two latest U.S. acquisitions.

"They are part of a strategic plan announced two years ago to look to the U.S. market for expansion," he said.

Asked if the firm had plans for further U.S. takeovers, he said, "In the last weeks we have landed two 'big fish'. . . . We need to digest them a bit first."

Part of the reason for Bertelsmann's steady growth overseas is the fact that it is already so large in West Germany that it cannot make any big purchases because of possible opposition from West German antitrust authorities.

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