Thomas Rabe - Bertelsmann ceo - from punk rock to family values

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Thomas Rabe - Bertelsmann ceo - from punk rock to family values

  1. 1. THE MONDAY INTERVIEW April 27, 2014 3:26 pm Thomas Rabe, Bertelsmann CEO: from punk rock to family values By Henry Mance and Jeevan Vasagar ©Getty Mohn man: Mr Rabe answers to Bertelsmann’s family owners Europe’s biggest media group has a problem. It is a family-controlled German conglomerate competing in a digital age dominated by Amazon and Apple. One of its peers, publisher Axel Springer, has confessed to being “afraid of Google”. Another, France’s Vivendi, is breaking up after investors judged it less than the sum of its parts. So it is lucky that the man in charge of Bertelsmann has some experience of transformation. Thirty years ago Thomas Rabe was a punk rocker with green hair. Today he is a teetotal fitness fanatic who tries to run, row or cycle 100km a week.
  2. 2. High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. As chief executive, the cosmopolitan Mr Rabe, who drinks ginger tea and speaks five languages, has put Bertelsmann into expansion mode. “We were not a frontrunner; we’ve never been. We were probably lagging,” he says at the company’s stately Berlin office. “But I honestly think that we have caught up massively in the past 15 to 18 months.” Since his promotion to the top job in 2012, Bertelsmann has merged its book division Random House with rival Penguin to create the world’s biggest publisher by sales, Penguin Random House (which is part-owned by Pearson, owner of the Financial Times). It has taken full control of BMG, the world’s fourth-largest owner of music rights (and handler of The Rolling Stones’ catalogue), in a deal worth €570m including debt. And it has earmarked up to €3bn for potential acquisitions with a focus on digital education. All those moves were intended to allow Bertelsmann to grow in the new media landscape. “Until two years ago at Bertelsmann, digitisation was primarily seen as a threat and not an opportunity,” says Mr Rabe, who has been with the group since 2000. “People were looking for this famous red button to press to stop digitisation.” Eyes are on the top line. Last year revenues rose less than 2 per cent to €16.4bn – it is targeting “around €20bn” by 2018, with most of the growth through acquisitions. When Mr Rabe gave up alcohol three years ago, it was after a fleeting encounter with Tony Blair. The former UK prime minister, visiting Bertelsmann’s headquarters in the backwater town of Gütersloh, had stopped drinking for Lent. “I said, if Tony Blair can do it, I can do it,” says the thin-framed Mr Rabe, who has not had a drink since. Are we overdoing it? There are a number of people who think . . . we’ve got too many balls in the air. Maybe Changing Bertelsmann is proving a trickier task. Mr Rabe’s drive to centralise functions across Bertelsmann’s different divisions has proved unpopular with some staff. His top digital lieutenant, Thomas Hesse, resigned last year, reportedly after his initiatives met opposition. And then there are the Mohns, Bertelsmann’s controlling family. Their ancestor, Carl Bertelsmann, founded the company as a publisher of hymn books in 1835. It
  3. 3. subsequently grew to encompass book clubs – and then expanded into magazines, television, music and beyond. Its logistics arm does invoicing for Amazon and Google, for instance. For the Mohns, the business is in effect a wealth fund; focusing its activities would mean putting all of their eggs in one basket. Mick Jagger The group handles the catalogue of Mick Jagger and the other Rolling Stones The family saw off one previous chief executive, Thomas Middelhoff, who had argued Bertelsmann should list on the stock market. Mr Rabe also considered that route but now argues that the conglomerate would have had to accept a discounted valuation. “To explain all the businesses we are in, including their transformation, to analysts would have been a nightmare,” he says. Instead last year Bertelsmann sold €1.4bn in shares in its subsidiary RTL Group, which owns broadcasters across Europe. That compromise met Mr Rabe’s wish for capital with the Mohns’ focus on control. There are rumours of differences of opinion on other matters: Mr Rabe reportedly considered acquiring Callcredit, a UK consumer data company; the Mohns were said to be less keen. The CV Born: Luxembourg, August 6, 1965 Education: Diploma and PhD in economics, University of Cologne Career: 1993: Joins Berlin venture capital firm Beteiligungsgesellschaft Neue Länder 1996: Moves to clearing house Clearstream, becoming chief financial officer 2000-05: Joins Bertelsmann as CFO of RTL Group 2006-11: Becomes Bertelsmann CFO 2012: Appointed as Berteslmann’s chairman and chief executive after Hartmut Ostrowski steps down. Family: Married, no children. Interests: Running, mountain climbing, music and reading
  4. 4. Nonetheless, the chief executive dismisses reports of ructions. “I spent a minimum of 15 months when I became CEO to build consensus with all the constituencies,” he says. “What I am asking myself all the time is, is the pace the right pace? Are we overdoing it? There are a number of people who think – not so much in the company, certainly not those I talk to all the time – we’ve got too many balls in the air. Maybe.” In the boardroom, Mr Rabe is known for trying to minimise the machismo. He has encouraged more decisions to be taken by the broader management team, which includes more women and more nationalities. He emphasises his close relationship with Christoph Mohn, who has taken over from his 72-year-old mother Liz as the chairman of Bertelsmann’s supervisory board. “Our offices are 15 metres apart, we see each other regularly,” he says. Mr Mohn’s CV features a chastening decade in charge of Lycos Europe, before, during and after the dotcom bust. His father, Reinhard, led Bertelsmann for 34 years. The company was “always part of our identity”, Christoph Mohn said in 2009. Nonetheless, says Mr Rabe, “the family, generally speaking, is not sentimental”. “In the past people told me, ‘Thomas, never touch the German [book] club business’, or ‘never sell the Chinese club business’, or ‘you can’t reduce headcount in Gütersloh’. “We’re in the process of shutting down the German book club, large parts of it. I liquidated the Chinese book club during the Olympic Games in 2008 when it attracted less attention,” he says. Perhaps the part of Bertelsmann that most embodies Mr Rabe’s vision is RTL, the broadcasting group where he was once chief financial officer. RTL has been hit by cyclical advertising downturns in Spain, France and Germany. It is also facing a structural threat from the rise of online video; streaming service Netflix is expected to launch in Germany and France later this year. In response RTL has launched new channels in Asia and bought a majority stake in Canada’s Broadband TV, one of the largest networks on YouTube. “What RTL has achieved in the online media business is much more than any other European TV company,” says Mr Rabe. There is still much to do. FremantleMedia, RTL’s production arm, relies on The X Factor and American Idol, reality formats with declining audiences. There is still no proven online business model for Bertelsmann’s magazine arm, Gruner + Jahr.
  5. 5. Yet Mr Rabe may ultimately look for a fresh challenge. Last year he was reported to have been a candidate for the vacant chief executive’s job at Vivendi, even though it might have inflamed local feeling for such a flagship of French capitalism to appoint a foreigner as its leader. Bertelsmann said “he [wasn’t] available for any other position”, but the story was an embarrassment. The company is known for its life-long employees. Perhaps the restless Mr Rabe will not end his career there. Bertelsmann battles: The challenges ahead RTL: €5.9bn annual sales Television advertising has been falling in all its major markets, including Germany. Can investments in online video revive growth? Penguin Random House: €2.7bn Last year’s merger was an attempt to counter the power of Amazon. The publisher may struggle to thrive unless another retail platform emerges BMG: €300m (estimated) Handles The Rolling Stones’ rights but a push into lucrative recorded music hinges on pulling in more best-selling artists Arvato: €4.4bn The ‘dull’ bit of Bertelsmann, logistics arm Arvato is also struggling for growth. Under a former Microsoft executive, it is seeking to compensate for declining printing business with growth in China All sales figures are for 2013

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