Observers: Bertelsmann’s family owners limiting company growth

Observers believe that the Mohn family, who control media conglomerate Bertelsmann SE, are limiting the company’s growth opportunities, a

Bloomberg profile of Bertelsmann CEO Thomas Rabe said.

Rabe told Bloomberg the family “wants us to invest as wisely as possible with a very long-term view.”

The Mohn family, descendants of the founder, controls 19.1 of the company; foundations led by the family control the rest. “They are less focused on building a global empire than on safeguarding their fortune,” the Bloomberg article said.

Bertelsmann’s revenue rose 1.8% last year, to €16.4 billion ($23 billion), less than what it was a decade ago, the Bloomberg article said. The company reported that in the first three months of 2014, revenue rose 8.5% because of the full takeover of music-rights unit BMG and the purchase of Netrada, an e-commerce service provider.

The Bloomberg report noted that Bertelsmann “remains heavily anchored in traditional media,” including books, magazines, and its RTL television broadcasting unit.

The Bloomberg report noted that Rabe, who became CEO in 2012, revamped the leadership team and closed a printing facility and the

Financial Times Deutschland

newspaper — “measures that had historically been off-limits for managers at the paternalistic company.”

Rabe described his role as building consensus between management and the Mohn family, the Bloomberg article said. He told Bloomberg that he has the resources to make acquisitions in education, digital and markets outside Europe. Rabe is focusing on acquisitions of about €500 rather than big deals like Vivendi’s purchase of Vodafone’s stake in SFR for €8 billion, the article said.

“The Mohn family’s lingering distrust of outsiders’ ambitions has spurred them to keep management on a tight rein, even if it meant slower growth,” the Bloomberg article said.

In 2012, Bertelsmann merged its Random House with Pearson Plc’s Penguin books unit in a deal that involved a share swap rather than cash. Bertelsmann now owns 53% of the combined publisher, which is an exception to the Mohns’ usual target of 70% ownership, the Bloomberg article said. The merged company is the world’s largest book publisher. (Source: Bloomberg, May 8, 2014.)