Profit Plunges at Bertelsmann

GUTERSLOH, March 19:
Bertelsmann has released its financial report for 2007, with net income
plunging from 2.5 billion euros in 2006 to 405 million euros, while revenues
were down slightly from 19.3 billion euros to 18.8 billion euros.

Operating EBIT, meanwhile,
remained stable at 1.8 billion euros. The company attributed the fall in
revenues to the disposal of the group’s music-publishing operations and the
weakness of the U.S. dollar. On the fall in net profit, Bertelsmann cited
non-recurring items of 854 million euros and the substantial gains from the
disposal of the music publishing operations in the previous year. The charges
resulted from settlements as part of a legal dispute relating to the former
music file-sharing platform Napster; from impairments in the North American
club activities; in printing; at Five in the U.K.; as well as a fine for the
RTL advertising time-marketing company, IP Deutschland.

Bertelsmann’s TV business
was a driver, with RTL Group’s revenues up to 5.7 billion euros and operating
EBIT up from 835 million euros to 978 million euros.

Hartmut Ostrowski, the
chairman and CEO of Bertelsmann, stated: “Bertelsmann was successful in 2007.
After the record results of the previous year, we retained a stable position.
We are strong in operating terms and are profitable at a high level. In 2007 we
made extensive value corrections and removed risks such as the Napster legal
dispute with the relevant expenses in order to prepare the ground for the new
strategic alignment on organic growth. It is only on the basis of growth that
the value of a company can be increased further on a long term-basis.”

—By Mansha Daswani