Wrestling With The Public Option

In yesterday's story we announced a novel that's probably going to make a lot of money for Random House, one of the gems in Bertelsmann's collection of Media Companies that were aquired by and are still grouped around the profitability of their core print, logistic and distribution businesses.

And yesterday the International Herold Tribune started its business story chain on the ongoing inside fight about listing or not listing publicly the mostly family owned Bertelsmann group with two success stories from their book and record businesses.

Bertelsmann reported upbeat financial results Wednesday, propelled by pop-culture hits like Kelly Clarkson's vocals and Dan Brown's thriller "The Da Vinci Code." But the media company's most talked-about suspense story continues to be its own.

Bertelsmann's senior executives turned away a barrage of questions at a news conference about how they planned to respond to plans by a minority shareholder, Groupe Bruxelles Lambert, to push for a public listing of this family-owned company, possibly this year.

"I can only say that we are prepared, and we haven't any problem with it at all," said Bertelsmann's chief executive, Gunter Thielen. "Whether we are publicly listed or not, what determines our work on the executive board is that we define the right long-term strategy for Bertelsmann."

The fight comes from past changes in market forces that lead Bertelsmann, one of the large quintessential print based media houses of Europe to strongly diversify into Radio and TV, especially into advertisement based free to air television. Today, despite Random House and Gruner & Jahr, RTL, their Luxemburg based European TV group with a published value of 9 billion Euros is by far Bertelsmann's most valuable asset.

In the train of aquiring a controlling majority in RTL Group in a large complex swap deal they also aquired their largest outside stockholder, "Groupe Bruxelles Lambert", an investment company with a history going back to the coal in the steel days of yore. Bruxelles Lambert of course are keen on bringing their long term investments to fruit. As Beneluxians these people, who have more trust in financial glasnost and perestroika than the widow led Mohn family, seem to have contracted a clause that will allow them to do so in 2007.

Austrian TV managers have played a large and important role in said diversification as well as the success and profitability of RTL. Helmut Thoma and Gerhard Zeiler are the most well known and most important ones. On the back of that coin of success is boths' near complete disinterest in the Web as a medium that could be publicly witnessed pretty often in the past. It has been less obvious in the last 5 years than before, but for Mr. Zeiler we definitely witnessed this over several years and occasions.

Bertelsmann's removed chief executive Thomas Middelhoff, who negotiated the deal with GBL and got fired over his known opinion on going public (openly) and his extremely mixed track record in the emerging Internet business (large financial success with the investment in and later sale of AOL and complete defeat in building up substantial media and ecommerce businesses on the web) nevertheless seems to have been Bertelsmann's single top manager with a substantial interest in the Internet and IPO capital aquisition.

Now seems to become a game between Belgian billionaire Albert Frère (quite old), the guiding man of GBL and Liz Mohn (widow), the chair of the Bertelsmann Stiftung, who has already announced the replacement of Mr. Thielen as the CEO of BG in January next year.

Having said all this, from today for 6 weeks, we take bets on the following questions:

• Who's going to win the fight, Liz or Albert?
• Who's going to be Liz' new darling at the top of BG?

PS: Thielen said Bertelsmann would achieve a 10 percent return on sales by 2007, at the end of which he is scheduled to retire as the chief executive officer. The company, he said, will announce his successor in January or February next year and it would probably be someone from its executive board.

If Bertelsmann were forced to go public its listing value would rank among the biggest in Germany's history.