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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
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
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
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
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.
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.
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
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
“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
“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.
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
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