Broadcast Group Props Bertelsmann

CD Sales Down

Pan-European broadcaster RTL GROUP rescued first-half results at German parent BERTELSMANN AG, with strong growth in the German and French TV markets compensating for stagnant or negative developments in most of BERTELSMANN's other businesses (NET NEWS 9/4).

BERTELSMANN top brass in a conference call TUESDAY also reaffirmed their commitment to the music business and said that music arm BMG and partner SONY MUSIC are considering an expansion back into the music-publishing business.

Troubling for BERTELSMANN's music division BMG is the drop-off in its traditional CD business. BERTELSMANN CEO GUNTER THIELEN said TUESDAY that the company, "like all of our competitors," was taken by surprise by the 20% drop in traditional music sales worldwide in the first half.

We see good developments with the digital side of the music business... And while it will take a while for digital sales to compensate for the decline in CD sales, we believe in music.

The division booked revenue of EU600 million ($815 million) in the first half, down from EU900 million, and swung to an operating loss of EU3 million ($4.1 million) from a EU2 million profit compared with the same period last year.

"We see good developments with the digital side of the music business," THIELEN said. "While it will take a while for digital sales to compensate for the decline in CD sales, we believe in music. It remains a core part of BERTELSMANN's business."

Bertelsmann has resubmitted its planned merger between BMG and SONY MUSIC to the EUROPEAN COMMISSION and expects a decision in OCTOBER. THIELEN said he was confident the merger would go through.

Thielen also confirmed that BMG is looking to get back into the music-publishing business. The sale of the profitable BMG MUSIC PUBLISHING was driven by BERTELSMANN's need for cash to finance a buyback of its own shares from Belgian investment firm GROUPE BRUXELLES LAMBERT. THIELEN said BMG and SONY MUSIC were working on a strategy to return to the music-publishing business.

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