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To: Alomex who wrote (108433)	9/14/2000 12:13:00 AM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 164684

Let's think about this: "September 14, 2000 ------------------------------------------------------------------------ Bertelsmann Plans Acquisition Spree, Reports 45% Increase in Net Income By WILLIAM BOSTON Staff Reporter of THE WALL STREET JOURNAL HANNOVER, Germany -- Bertelsmann AG, reporting a sharp rise in earnings, said it plans to go on the acquisition trail to beef up its stable of books, magazines and music, and it plans a complete overhaul of its struggling book-club business to adapt the clubs to the Internet. Thomas Middelhoff, chairman and chief executive of the German media giant, said by selling stakes in Internet-access businesses and by taking some units public, the company has amassed a war chest of some 30 billion marks ($13.23 billion or 15.34 billion euros). The company's focus, he said, is to become the world leader in media-related e-commerce. Bertelsmann plans acquisitions to fill out its content offerings and to retool its direct-to-customer business for the Internet age. "We are sitting on a lot of cash," said Mr. Middelhoff. "We want to be the No. 1 in the content business and in direct sales to customers." RTL to Increase Its Available Shares in a Bid to Join London FTSE Index (Sept. 13) Bertelsmann Completes Purchase of Online Music Retailer CDnow (Sept. 1) Bertelsmann's businesses include U.S. book publisher Random House, Europe's biggest magazine publisher Gruner + Jahr AG, BMG Entertainment, whose recording artists include Santana and Britney Spears; online retailers Barnes & Noble.com and CDnow, European television powerhouse RTL Group and printing presses and book clubs. Under Mr. Middelhoff, the company has launched a drive to adapt all of its businesses to the Internet. Net income for the year ended June 30 was 1.3 billion marks, up 45%, on a 25% rise in sales to 32.4 billion marks. A large part of the increase in sales and earnings was attributed to the first-time inclusion of television and radio group CLT Ufa in the company's balance sheet. Excluding CLT Ufa, sales were up 12%. Mr. Middelhoff said he expects a significant rise in earnings this year and a boost in revenue to around 40 billion marks. According to people familiar with the situation, Bertelsmann is currently in the early stages of bidding for educational publisher Harcourt General, which is on the block for around $5 billion, and Times Mirror Magazine group, which is being sold by new owner Tribune Co. and could fetch more than $400 million. A spokeswoman for Bertelsmann declined to comment. This past year was marked by consolidation, following the prior year's acquisition of Random House. Now the company is looking at making fresh acquisitions to expand content offerings or to get major e-commerce brands, such as the recently acquired CDnow. Mr. Middelhoff wouldn't discuss potential takeover targets, but he reiterated his goal of becoming the leading music company this year. He said Bertelsmann is studying potential acquisitions in the area of downloading music off of the Web. Bertelsmann has earmarked 7 billion marks for investment in the Internet over the next three years -- that includes both acquisitions and expanding existing businesses. The company also is establishing a $1 billion venture-capital fund called eBertelsmann to invest in start-ups developing technology or services that fit with Bertelsmann's own strategy. The book clubs were at the root of the company's postwar success, which helped to transform Bertelsmann from a small publisher into a global media powerhouse. Today they count 40 million members world-wide, but aren't profitable and drag on overall book-division earnings. Mr. Middelhoff has restructured the book-club business, taking it out of the book division and placing it in the e-commerce group under the direction of management board member Klaus Eierhoff. Bertelsmann will spend 4.5 billion marks over the next three years to transform the book clubs into online "communities." Much of the investment in the book clubs will go toward modernizing the underlying technology, creating a single global database that allows the company to sell all of its products across any online platform, and toward acquisitions of new members. Mr. Middelhoff said that based on the number of visitors to its Web sites, which include barnesandnoble.com, CDnow and Web portal Lycos Europe, Bertelsmann has already become the leading media company on the Internet. It registered 32 million visitors to its Web sites in July, Mr. Middelhoff said. "In the U.S., only Disney is bigger than us," he said. "We are certainly bigger than Time Warner." Write to Willam Boston at william.boston@wsj.com"