Building Alliances

Interview with Thomas Rabe

“We will not be able to win alone.“
Thomas Rabe

Mr. Rabe, “Building Alliances” is the central theme of this Annual Report. More collaboration is one of eight priorities you have set for Bertelsmann. Why is this so important for Bertelsmann?

Because the world at Bertelsmann and around it is changing fundamentally. Inside the company, the generation of managers now responsible for the business believes sharing and teamwork are more important than ego and elbows. And no matter what business they work in, they all face the same big challenges: digitalization and competition with US tech giants. Specialized skills and size have become crucial factors. For us and our business, this means that we will not be able to win alone. We must overcome internal boundaries and work together, but also cooperate with external partners. In this way we gain size, relevance and expertise in the global competition. And it opens up entirely new possibilities for us.

What kind of alliances are you thinking of here?

I see great potential for stronger collaboration in the three areas of content; in ad sales, booking and technology; and in new technologies and data. This may constitute partnerships, alliances or shareholdings – the form a collaboration ultimately takes will have to be decided on a case-by-case basis. We want to leverage synergies – while of course ensuring the corporate responsibility of the businesses involved.

Are there any promising examples of such alliances already?

Our prime example is the Ad Alliance, founded in 2017 by Mediengruppe RTL Deutschland and Gruner + Jahr. For decades, their marketers competed for the advertising budgets of the same customers. Today they jointly form Germany’s largest ad marketer, with more and more partners joining, recently including Springer. In this way, the Ad Alliance reaches almost every household in Germany. Further examples are the netID login alliance, the automated advertising booking platform d-force that is jointly operated with ProSiebenSat.1, Bertelsmann Tech & Data and of course the Bertelsmann Content Alliance. For Bertelsmann, the Content Alliance is a big step – and it has already been immensely successful in its first year.
“We will consolidate and expand existing alliances.“

What makes the Bertelsmann Content Alliance so important for you?

Prior to its founding in February 2019, Bertelsmann content companies had tended to cooperate on an ad-hoc basis. Today, the Bertelsmann Content Alliance pools collaboration among all the Group’s German content businesses. Where appropriate, it jointly develops content, brands and businesses, and sets its own agenda. It presents artists and creative professionals with a unique range in which Bertelsmann invests €2 billion a year – and that’s in Germany alone. When Mediengruppe RTL, RTL Radio Deutschland, UFA, Verlagsgruppe Random House, Gruner + Jahr and BMG join forces, as in the Bertelsmann Content Alliance, one thing is clear: this is unique in Germany. We can already see this in the Alliance’s first successful projects such as Audio Now and Arctic Drift, whose stories we tell in this Annual Report.

Why are you calling for more collaboration in the area of data and technology?

Because Bertelsmann wants to become the technologically leading media, services and education company. We will use new technologies to further develop existing businesses and to build new ones. Bertelsmann must pool all its strengths, expertise and resources, and has formulated a Tech Agenda that focuses on three key areas of technology: cloud, data and artificial intelligence. Our newly founded Bertelsmann Technology and Data Advisory Board is in charge of mainstreaming the Tech Agenda and putting it into action. The Board promotes transparency, cooperation and exchange, as well as pooling technological expertise, platforms and resources across the Group.

In data and technology, specialist skills are a very important factor. How do you plan to ensure they are in place?

For one, we are awarding 50,000 scholarships as part of the Udacity Technology Scholarship Program, to enable people to be successful in the digital world – especially our own employees. Second, the Bertelsmann digital campaign is designed to get people to embrace digitalization, with its exciting changes, great opportunities and new possibilities. The response to the campaign and scholarship program has been tremendous. The digital campaign reached more than 30 million people in the fall, and more than 45,000 interested people from 180 countries around the world applied for the first 15,000 scholarships.

What are your next steps in matters of alliances and partnerships?

We will consolidate and expand existing alliances by winning new partners, including external ones, and by increasing the number of projects. The focus is still on Germany at this point, because all our divisions are represented there, and can therefore mutually gain valuable experience. But France, too, already has two successful alliances in place with Salto, the planned joint video-on-demand platform for commercial and public service television channels, lead-managed by Groupe M6; and the data and media alliance Gravity. RTL Nederland is planning to build an integrated advertising marketing network for the Dutch market, modeled on Germany’s Ad Alliance. The Dutch Ad Alliance will sell advertising for RTL Nederland, BrandDeli, Adfactor and Triade Media, and is open to other partners. We are also examining the possibility of setting up content alliances for our core markets of the United States, the United Kingdom and France.

2019 was an eventful year for Bertelsmann beyond the establishment of alliances and partnerships as well. What were the milestones?

Shortly before the end of the year we agreed to acquire the remaining shares in Penguin Random House. As its sole owner, we will expand the world’s largest book publishing group in the years ahead, through organic growth and acquisitions. The book business is part of Bertelsmann’s identity, and Penguin Random House is ideally positioned for further growth. The founding of Majorel was completed right at the beginning of the year, in January 2019, when we created a global CRM company with our partner Saham. Another key moment of the year was the unveiling of the new Bertelsmann Essentials: “Creativity and Entrepreneurship.“ They are the foundation and drivers of our success. They epitomize our aspiration to be the home for creative minds, and the company for entrepreneurs. The 2019 Employee Survey with its strong results once again confirmed just how greatly these Essentials are already put into action at Bertelsmann.

From Ortler to Große Zinne, you’ve personally scaled some challenging peaks in your second home of South Tyrol. Has Bertelsmann also reached a peak with the record results achieved in 2019?

Our strategy has taken us to impressive new heights, as evidenced by the results for the 2019 financial year presented in this Annual Report. We are proud of that. But we can climb higher; we take a long-term view, and will continue to work on the company’s sustainable success in the next few years. We’re not there yet; it’s still a marathon. I have always compared Bertelsmann’s path to this – and as an avid runner I know what I’m talking about. That metaphor is more apt in other ways as well, because a peak would be followed by a descent. And there is definitely none in sight for Bertelsmann.
“We need to work together across in-house boundaries, as well as cooperate with external partners. We must be open to collaboration and partnership wherever it makes sense. Good precedents exist in the areas of content, advertising, data, technology and management resources.“
Thomas Rabe, at the Management Meeting 2019