BERTIE DISCLOSES $4 BILLION
WAR CHEST

Just one day after Bertelsmann announced its net earnings were up despite its music arm and weakened ad dollars dragging it down (hitsdailydouble.com, 9/27), Bertie Chairman/CEO Thomas Middelhoff added the good news that the German media giant had nearly $4 billion in spending money, currently burning a hole in his pockets.

According to the Los Angeles Times, the $4 billion has fueled speculation that Middelhoff would once again attempt to buy British music giant EMI, whose stock has taken a bit of a beating recently (hitsdailydouble.com, 9/26). Exactly how the company would weasel its way around regulators—certainly we’re not the only ones who recall the scrapped BMG-EMI merger attempt earlier this year—remains to be seen.

Middelhoff disclosed the $4 billion war chest and the intention to look for potential acquisitions shortly after announcing that Bertie’s 2000 earnings fell 3.3%, while earnings rose 79% (primarily from the sale of its stake in AOL Europe). Sadly, none of the profit spike was a result of the company’s music division, BMG, which posted a $4.5 million EBITDA loss and a one-time write off of $250 million for restructuring. The restructuring will total 600 jobs worldwide, a good many of them reportedly in the U.S.

Bertelsmann has also spent upwards of $100 million trying to develop former renegade swappery Napster into a viable pay service (hitsdailydouble.com, 9/27).

Despite all this, the company has vowed to stick with its music interests and promised improved margins of 6-8% over the next two or three years. Not that anyone is counting.