Despacito drives Bertelsmann to record €500m profits


The global success of 2017’s song of the summer, Despacito, together with sales of the TV series American Gods and the popularity of controversial book-turned-Netflix series 13 Reasons Why has helped drive record first-half profits at German media group Bertelsmann.

The privately owned Bertelsmann said profits exceeded €500m (£460m) for the first time, from revenues up slightly to €8.1bn. Profits at Penguin Random House – the world’s largest book publisher, owned in conjunction with Pearson – surged from €185m to €206m from revenues of just over €1.5bn in the first half.

The biggest seller in the first half was 13 Reasons Why. Other hits included Into the Water, the second thriller from The Girl on the Train author, Paula Hawkins, which sold 600,000 copies in just two months.

Bertelsmann is increasing its stake in Penguin from 47% to 75% in a $1bn (£780m) deal with Pearson announced in July. Bertlesmann’s music business, BMG, also enjoyed a strong first half, with profits rising from €32m to €40m year-on-year and revenues surging 28% to €233m.

Ricky Whittle and Ian McShane in American Gods
 Ricky Whittle and Ian McShane in American Gods Photograph: Jan Thijs/2017 Starz Entertainment, LLC

BMG said there had been strong performances in the UK, where it signed Kylie Minogue, and the US, which included deals with Avril Lavigne and Black Eyed Peas singer Fergie. The business benefited from the chart success of clients including Nickelback, DJ Khaled and the runaway global hit Despacito.

Revenues at Bertelsmann’s TV arm, RTL, Europe’s biggest ad-funded broadcaster and owner of X Factor co-producer Fremantle Media, grew from €2.87bn to €2.97bn. The company credited the rise in part to the success of American Gods, the TV adaptation of Neil Gaiman’s novel, which aired on Starz in the US and Amazon’s Prime Video service internationally.

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However, RTL profits fell from €676m to €624m in what it said was a challenging environment for the TV industry. The company said it would benefit from the revival of American Idol. The talent show is to return to US screens after being cancelled two years ago after a 15-season run.

Thomas Rabe, chairman and chief executive of Bertelsmann, said the increased stake in Penguin Random House was especially worth noting because Bertelsmann would now own “a strategic three-quarters majority in the world’s largest trade publishing group – the best possible conditions for successfully further developing this core business”.