growing pains Passage to India – and Back

Bertelsmann, Germany’s biggest media group, has decided to sell its publishing holdings in India despite making a profit there, Handelsblatt has learned.
There is no shortage of reading matter.

Three years after marching into India, German publishing giant Bertelsmann Group has decided to retreat from the highly populous country to focus on smaller markets.

The group's magazine and newspaper-publishing arm, Gruner + Jahr, will withdraw from India completely, Handelsblatt has learned.

The company is leaving the country because the “expectations of our portfolio and the growth potential there hadn’t been fulfilled in recent years,” a Gruner + Jahr spokesperson confirmed.

The move marks a u-turn in the German publishing giant's strategy in south Asia and raises questions about the group's expansion strategy in other promising emerging markets.

Bertelsmann chief executive Thomas Rabe may now want to eat his own words.

When announcing its expansion plans in the region at the time, Mr. Rabe referred to India as an "important international growth market" for the group. "The country’s demographic, economic and technological development offer great opportunities," he said.

Gruner + Jahr, Europe’s second-largest publishing group, now intends to sell its shares in the four companies it owns in India, including a 79 percent stake in Maxposure Media Group.

The Johari family, the Indian partner in Maxposure, plans to buy back the company.

The German publisher will also sell its stakes in video, advertising and mobile marketing firms.

India is a highly attractive growth market with magazine sales revenues of half a billion dollars. Torsten-Jörn Klein, Bertelsmann, Foreign Expansion Director

In 2011, India offered promising prospects, with double-digit growth rates in its magazine market.

“India is a highly attractive growth market with magazine sales revenues of half a billion dollars,” said Torsten-Jörn Klein, the executive responsible for foreign engagements.

An insider confirmed that Bertelsmann profited from the three-year participation in India. “'The company made a bunch of money – out of the initial €2 million investment, they made €7 million,” the source said.

But that apparently wasn't enough for Bertelsmann to stay.

 

Gruner + Jahr's Julia Jaekel will focus on profitable markets.

 

In the future, the publisher will focus mainly on France, Spain and Austria.

Gruner + Jahr is withdrawing from several of its international ventures. The step out of India follows the sale of activities in Poland, Serbia, Slovenia and Croatia. Gruner + Jahr’s Italian arm is also up for sale.

 

Karl-Hinrich Renner writes about media for Handelsblatt; Hans-Peter Siebenhaar has also covered media, telecoms and broadcasters. To contact the authors: [email protected], [email protected]