chapter  10
Becoming Global, Staying Local: The Internationalization of Bertelsmann, 1962–2010
ByHARTMUT BERGHOFF
Pages 22

Founded in Gütersloh, a small town in Eastern Westphalia, in 1835, Bertelsmann had grown to a medium-sized Protestant, all-German publishing and printing business by 1950, when it employed a workforce of 400 people, all based in Gütersloh. In 2010, by contrast, Bertelsmann’s staff numbered 101,058, with two-thirds of them employed outside Germany. Bertelsmann is now the largest European media company, generating approximately twothirds of its annual revenue abroad. 1

Despite its tremendous growth, however, Bertelsmann AG remains in many ways a family business. It was family-led for five generations by members of the Bertelsmann family from its founding until 1887, and then by members of the Mohn family until 1981, 2 when Reinhard Mohn (1921-2009), who had led the company since 1947, withdrew from his formal position as CEO. Nonetheless, the family remains heavily involved. For one thing, Reinhard Mohn continued to take part in all strategic decisions almost until his death, and several fifth-and sixth-generation family members have served on the supervisory board, although managers without kinship ties to the Mohns have led Bertelsmann and no family member has been on the executive board since that time. Moreover, the powerful BVG (Bertelsmann Verwaltungsgesellschaft) is half-comprised of family members. This six-person administrative body possesses all the voting rights in the Bertelsmann AG Annual General Meeting and, since 1999, it has selected the members of the supervisory board, made recommendations to the supervisory board for the CEO, and decided on general guidelines of financing and on the company’s statutes. In other words, it has a central position with far-reaching authority. To be sure, the three external managers-in 2010 the former Thyssen CEO, the Vice President of Nestlé, and the chairman of the BASF supervisory board-provide a formidable counterpoise to the family, but the family still has the final say on account of a complex pyramidal structure that distributes voting rights. All in all, Bertelsmann is still de facto family-owned and supervised, although the family’s power is moderated by outside experts. 3

By the 1990s, the medium-sized family printing and publishing house of 1950 had been transformed into a major international player. In 2010 it had five divisions: 1) RTL Group: television, radio, and TV production;

2) Random House: book publishing; 3) Gruner + Jahr: magazine publishing; 4) Arvato: media, communication and other services; and 5) Direct Group: book and media clubs and bookstores. In 2009, Random House and Direct Group had by far the highest international orientation with more than fourfifths of their revenue coming from outside Germany. RTL, with almost two-thirds, was slightly above the company’s average, while Arvato and Gruner + Jahr were below average but still generated more the half of their income abroad. This transformation occurred in six phases.