Copyright Claims Hit Bertelsmann Results; Sales Slip
German media group Bertelsmann, the purveyor of books, CDs and other entertainment, lost 51 million euros ($69.52 million) in the first half of 2006 after costs related to settling copyright claims that arose from its backing of file-sharing service Napster eroded its overall results, it said Tuesday.
Bertelsmann lost the amount in the January-June period, compared with euro258 million in the same period last year. Sales also slipped, dropping 2 percent to 8.96 billion euros ($12.21 billion) from 9.14 billion euros in 2006. The sales decline came after the company sold its BMG Music publishing unit last year.
Though Napster's hey day as the music-sharing download service has long past, Bertelsmann said in April that it would pay $110 million (80.69 million euros) to settle claims brought by Warner Music Group over the German company's financing of Napster. Bertelsmann agreed to settle similar claims with EMI Group earlier this year and paid $60 million (44.01 million euros) to Universal Music Group in 2006.
Bertelsmann's businesses include book publisher Random House; music business BMG -- comprised of its 50% holding in the Sony BMG Music Entertainment joint venture; and radio and television -- including broadcaster RTL, magazines and media services.
Bertelsmann is based in Guetersloh, Germany, but most of its 97,000 employees are scattered over its divisions. The company is controlled by the Mohn family, directly and through a foundation.
The company has announced that Hartmut Ostrowski, a long-serving executive who heads its printing and services division, Arvato, will take over as chief executive at the start of 2008.