Bertelsmann eyes sale of RTL stake

Bertelsmann, Europe’s largest media group, suggested it could sell 15 per cent of RTL, the TV group, to finance a large acquisition, possibly the UK’s ITV.

The move suggests Hartmut Ostrowski, chief executive, has completed the portfolio pruning of his first eight months at the helm – which included the sale of a half share in Sony BMG to Sony – and is preparing a step change.

The prospect of the family-controlled company mobilising €1.5bn ($2.2bn) in cash – Luxembourg-based RTL has a market capitalisation of €10bn – will feed speculation Bertelsmann wants to buy the UK’s ITV, currently worth €2bn.

Mr Ostrowski said he could imagine “further expanding” RTL’s Fremantle production company, which competes with ITV’s, but he also stressed he felt under “no pressure” to make a big move soon.

In the first six months of the year, Bertelsmann saw operating earnings before interest and taxes fall 7.8 per cent to €681m.

The company said economic woes would also drag full-year operating numbers below last year’s.

Bertelsmann owns 90.3 per cent of RTL and long eyed buying out minorities to gain full control, making the sale of individual TV assets much easier. But Luxembourg authorities blocked a last attempt in December.

With Luxembourg unlikely to change its law to allow a renewed attempt before mid-2009, Bertelsmann was now prepared to lower its RTL-stake to 75 per cent to raise money, said Thomas Rabe, chief financial officer.

As Bertelsmann has interests in print, books and media services, and the stated aim to enter education, it is not clear whether the next big deal would have to be in TV. But executives on Thursday seemed cool about alternatives.

Mr Ostrowski said it was “by no means certain” whether G&J would submit a binding offer for the trade-magazine unit of UK publisher Reed Elsevier after showing initial interest during the current auction.

Although Mr Rabe would not rule out a western European TV deal, a banker with knowledge of Bertelsmann said ITV’s performance meant a deal was not realisable “yet”. Deals in central and eastern Europe were more likely.

ITV stock gained 1½p or more than 3 per cent on Friday to 45.3p, making it one of the best performers on the FTSE 100. But this is still off the 112p seen last September – before advertising slumped and authorities ordered main shareholder British Sky Broadcasting to sell more than half its 17.9 per cent stake.

An alternative to ITV could be Central and European Media Enterprises, which has caught the eye of several rivals. The Nasdaq-listed group is worth €2.2bn, with founder and chairman Ronald Lauder holding 64 per cent of votes.

– By Gerrit Wiesmann in Frankfurt, Ben Fenton in London and Andrew Edgecliffe-Johnson in New York

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