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Finance

Despacito Helped Create Record Profits for This Media Group

By
Natasha Bach
Natasha Bach
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By
Natasha Bach
Natasha Bach
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September 1, 2017, 6:04 AM ET
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The song of the summer is helping to line the pockets of German media group Bertelsmann.

Sales from the song Despacito, along with contributions from Netflix series 13 Reasons Why and TV series American Gods, generated record first-half profits for Bertelsmann, according to the Guardian. The company’s profits topped 500 million euros (approximately $595 million)—a 4.1 per cent increase over the same period in 2016.

Bertelsmann’s operations include RTL Group (broadcaster of American Gods and the largest private TV group in Europe), BMG (music publishing group responsible for Despacito), and Penguin Random House, the world’s largest book publishing company.

Read: Pearson to Cut Another 3,000 Jobs Following Sustained Losses

Profits at Penguin Random House—owned in conjunction with Pearson—grew from 185 million euro ($220 million) to 206 million euro ($245 million) from revenues of 1.5 billion euro ($1.78 billion) in the first half of the year. Bertelsmann is increasing its stake in Penguin from 47% to 75%, in a $1 billion deal with Pearson due to close in the fourth quarter.

But even with the help from its Netflix hits, Bertelsmann’s TV operations couldn’t escape the pressures faced by all traditional TV companies as online platforms increasingly encroach on their turf. RTL’s revenue grew, but profits fell from 676 million euro ($804 million) to 624 million euro ($742 million). Earlier this week, its biggest rival in Germany, ProSieben, saw its shares fall 13% after a poor set of results, while France’s Vivendi was, like Bertelsmann, dependent on a strong performance from its music arm (Universal Music Group) to offset weakness at its Canal Plus TV unit.

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By Natasha Bach
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