Bertelsmann AG, staking that its future on the Internet does not lie in the ISP business, is divesting itself of its stake in America Online and AOL Europe and focusing its attention on content e-commerce and a new Internet-oriented venture capital fund.
The company said Wednesday that its stake in mediaWays, operator of Germany’s second-largest IP network for digital data communications, is another possible candidate for divestiture. Bertelsmann said divesting these three companies should generate more than 20 billion marks ($8.8 billion). In June, Telefonica SA, the Spanish telecom, indicated its interest in mediaWays and offered $1.6 billion for Bertelsmann’s stake.
Bertelsmann believes that content e-commerce will be one of its core businesses. It noted that BOL now has a foothold in 14 countries — including Japan and Korea. It has expanded its joint U.S. venture, bn.com, and acquired Internet audio retailer CDnow for $117 million. These moves, along with Bertelsmann’s other lines of business, allowed the company to increase its revenues by 25 percent over the previous year. In addition, Bertelsmann said its Web presence — BOL, bn.com, CDnow, bokus.com, booksonline.com, BMG Music and other brands — have racked up 32 million unique visitors.
“This performance elevates Bertelsmann into a new dimension,” said Thomas Middelhoff, Bertelsmann’s chairman and chief executive officer. “In just two years, the company has lifted its revenues by the amount generated in 1989/1990. Our Internet operations are recording strong increases in value. We’re approaching by leaps and bounds our strategic goal of achieving global market leadership as a content provider and a provider of e-commerce with media products. We’re making huge investments into our content business and into our core businesses’ Web applications.”
To keep its momentum, Bertelsmann is financing eBertelsmann, a new venture capital fund with a total volume of up to $1 billion. The company said it will be the largest media/Internet fund in Europe. This will be the fourth Internet-related fund in Bertelsmann’s stable, joining Bertelsmann Ventures, Venturepark Incubator AG, and Bertelsmann Valley. eBertelsmann will support the company in developing or acquiring new businesses and in developing new business fields and new technologies relevant to the creation and distribution of media content, the development of new services, and for BeMobile (Bertelsmann eCommerce Group).
“With this step, we’re strongly expanding our venture capital business,” Middelhoff said. “The ‘eBertelsmann’ fund will not only achieve attractive yields but recognize trends at an early point in time and develop new businesses that are relevant to Bertelsmann.”