Bertelsmann, the German media group which owns Channel Five and book publisher Random House, yesterday promised substantial growth in earnings this year after reporting an 8.1% increase in first-half operating profits.
The world's fourth-biggest media group said the rise in profits was mainly due to good performances at its traditional books and magazine publishers. It was hit by poorer performances at its RTL radio and TV business and BMG music division.
Operating profits at the UK division of Random House, which published Britain's six best sellers of the first half, and at Gruner & Jahr, its magazine business, improved substantially on the back of new books by John Grisham (The Broker) and the success of Gruner & Jahr's French TV guides.
Bertelsmann paid a little under £250m in late July to take full ownership of Channel Five, buying out the 35.4% stake in the channel owned by Lord Hollick's UBS.
The group planned to invest €2bn (£1.35bn) in acquisitions in 2005, most of which had now been spent, but it had about €500m left in this year's war chest, said its chief financial officer Siegfried Luther. It had so far booked spending of €756m (£511m), including stakes in a Russian TV channel and Columbia House, a CD direct seller in the US.
Bertelsmann said operating profits rose to €644m in the first half on sales marginally down at €8bn. Net income dropped from €550m to €349m, largely owing to one-off items last year and restructuring costs at BMG.
Gunter Thielen, chairman and chief executive, said the group, which posted an 8.1% return on sales, was well on its way to its target of 10% by 2007 and told employees that sales and profits should grow "considerably" by the end of the full year.
Sales slumped 20% at BMG, which has artists including Jennifer Lopez, Beyoncé and the Backstreet Boys on its Sony BMG label, but they are expected to pick up in the second half with more new releases. Earnings dropped to €48m from €80m.
RTL, which has a separate listing, last week reported a drop in earnings to €71m, hit by poor results in Germany, but Random House saw its earnings rise from €31m to €48m and Gruner & Jahr boosted its earnings from €96m to €126m.
