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The Making of Giants - Bertelsmann Takes Aim at AOL Time Warner
By Eric de Fontenay (Founder & Publisher)
(more articles from this author)
2001-02-05
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In every industry there is a perceived 'Holy Grail' that companies continually pursue, and occasionally attain (like Microsoft). For the telecom-media sector, that 'Holy Grail' has been the formula to being able to deliver a convergence of all forms of media through one unique pipe and interface. The telecom industry tried and fell on its face. They were followed by the cable industry that did just slightly better. However, today the general consensus seems to be that AOL Time Warner might have found just the right recipe.

AOL Time Warner is the first company to effectively combine all media assets, deliverable on nearly every type of distribution network and a unique interface.

* Media Assets: Time Inc. & Time Warner Trade Publishing (print), Warner Bros. & New Line Cinema (film), Warner Music Group (music)

* Distribution networks: Turner Entertainment Networks, CNN News Group, Home Box Office (cable), The WB Television Network (broadcast TV), Time Warner Cable (broadband)

* Interface: America Online

AOL Time Warner now has major stakes in each link of the production chain, not through partnerships and joint ventures, but under one completely vertical, integrated entity able to create, package/repackage, and distribute media in every format, using every distribution channel. Competitors lacking the 'complete package' now risk progressively losing market share as AOL TW leverages its converged assets into one ubiquitous, omnipotent force.

And competitors obviously have reacted to this new reality as illustrated by the trinity of Vivendi-Seagrams-Canal Plus. However, one player, Bertelsmann, had thus far been left in the dark - that is, until the announcement of its acquisition of an additional 30% share in the RTL Group. This gives Bertelsmann a controlling stake with a 67% share. The RTL Group is the biggest media giant in the European video and radio sectors controlling major markets with household names like M6 (France), RTL & RTLII (Germany), and Radio RTL (france).

Facts About RTL Group

TV and radio broadcasting in Europe
- 18 radio stations and 22 TV channels in 11 countries
- leading positions in three of Europe's six largest media markets (Germany, France and the Netherlands)
- 120 million viewers every day

Content (production & rights)
- up to 200 programs produced in 35 countries
- over 10.000 hours of programming per year
- 250 million viewers worldwide every month

Largest independent distribution company after US majors
- broadcasting rights for 17.500 programming hours in over 100 countries

- European leader in sports rights

RTL Group represents a perfect and logical fit with Bertelsmann's presence in the music (Bertelsmann Music Group (BMG)) and print industries. "From both a strategic and a historic point of view, this is a significant step that will lastingly shape the company's future. It will strengthen Bertelsmann's position as the driving force in television, a future growth market," commented Thomas Middelhoff, Bertelsmann Chairman and CEO. The deal fills a gaping whole in the video sector, both at the production and distribution levels, while giving outlets for BMG content. And while EU approval is not guaranteed, the deal should expect smooth sailing with regulators.

Aware of the importance of the Internet in the media giant mix, Bertelsmann eCommerce Group and RTL Group had announced days earlier an agreement to merge their interactive television and broadband operations. Klaus Eierhoff, Head of DirectGroup Bertelsmann and Member of the Board of Bertelsmann AG, said, "We can also focus on our strategic aim and expand our multi-channel strategy to include the promising interactive and broadband television sectors." Despite grand boasting like "market leader in the area of interactive media solutions" and "most successful German general interest website," or ownership of Lycos and Tripod, the lack of a real rival to AOL's dominance will hobble not only this new media giant, but all other would-be challengers.

Linkography

AOL Time Warner - www.aoltimewarner.com
Bertelsmann - www.bertelsmann.com
RTL Group - www.rtlgroup.com
Vivendi - www.vivendi.com

Related MusicDish e-Journal Articles:
» My, Have Times Changed! BMG and Napster in a Partnership? (2000-10-31)
» New Digital Advances for BMG (2000-10-15)

Related News from Mi2N:
» Bertelsmann Acquires Majority Of RTL Group / GBL To Become New Partner In Bertelsmann
» DirectGroup Bertelsmann And RTL Group To Develop Broadband Activities Together


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