German media group Bertelsmann on Tuesday reported a 4.7 percent rise in full-year core profit and reiterated it wanted to raise its stake in Penguin Random House, the book publisher which helped to drive the earnings increase. Bertelsmann controls media group RTL and owns about half of Penguin Random House, publisher of best-selling authors such as John Grisham, Stephen King and Paula Hawkins, in a joint venture with Pearson.
Pearson and Bertelsmann committed to holding their shares for at least three years when the Penguin Random House venture was unveiled in October 2012 and each partner has the right of first refusal thereafter. Bertelsmann CEO Thomas Rabe said he did not expect anything to happen this year, but also said that he would feel comfortable owning between 70 percent and 75 percent of the book publisher. Bertelsmann's current stake is 53 percent.
Rabe said Bertelsmann had been approached by a number of investors who would be interested in participating in a deal to buy Pearson's stake should Pearson decide to sell it. Pearson said on Tuesday there was no change in its position regarding its stake in the joint venture following Bertelsmann's comments. The British company said its position had not changed since its Chief Executive John Fallon said in November that a sale or reduction in Pearson's stake would be considered at some point, "but it's more likely to be a 2017 than a 2016 issue."
Bertelsmann's full-year earnings before interest, tax, depreciation and amortisation from continuing operations rose to 2.49 billion euros ($2.79 billion), the highest level since 2006. Revenues were up 2.8 percent. Earlier this month, RTL Group reported a rise in 2015 earnings helped by its German operations and favourable exchange rates. Bertelsmann said it continued to see growth in sales and core profit in 2016 and that it expected to reach 20 billion euros in sales by around 2020, up from 17.1 billion euros from its continuing operations in 2015.
Rabe said the timing of reaching that target depended on investments, acquisitions and market dynamics. "We don't really care when it happens. It could be 2020, it could be a year later. Our growth perspective is clear, but it depends on more factors," he told reporters. He said the main growth drivers in the years to come would be media group RTL, service provider Arvato and music rights company BMG.