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COMPANY PROFILE

Bertelsmann SE & Co.KGaA

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TABLE OF CONTENTS

Company Overview..............................................................................................3

Key Facts...............................................................................................................3

Business Description...........................................................................................4

History...................................................................................................................6

Key Employees...................................................................................................11

Key Employee Biographies................................................................................12

Major Products and Services............................................................................18

Revenue Analysis...............................................................................................19

SWOT Analysis...................................................................................................21

Top Competitors.................................................................................................26

Company View.....................................................................................................27

Locations and Subsidiaries...............................................................................30

Bertelsmann SE & Co. KGaA © MarketLine

Bertelsmann SE & Co. KGaATABLE OF CONTENTS

COMPANY OVERVIEW

Bertelsmann SE & Co. KGaA (Bertelsmann or "the company") is a media company engaged inactivities such as publishing, music, television (TV) and radio broadcasting, and storage media.Thecompany primarily operates in Germany, the US, France and other European countries. It isheadquartered in Gutersloh, Germany and employed 104,286 people as of December 31, 2012.

The company recorded revenues of E16,065 million ($20,656.4 million) during the financial yearended December 2012 (FY2012), an increase of 4.5% over FY2011. The operating profit of thecompany was E1,330 million ($1,710.1 million) in FY2012, a decrease of 7.2% compared to FY2011.The net profit was E484 million ($622.3 million) in FY2012, an increase of 4.1% over FY2011.

KEY FACTS

Bertelsmann SE & Co. KGaAHead OfficeCarl-Bertelsmann-Str. 270D-33311 GuterslohDEU

49 52 41800Phone

49 52 41809662Fax

http://www.bertelsmann.comWeb Address

16,065.0Revenue / turnover(EUR Mn)

DecemberFinancial Year End

104,286Employees

BTG4Frankfurt Ticker


Bertelsmann SE & Co. KGaACompany Overview

BUSINESS DESCRIPTION

Bertelsmann SE & Co. KGaA (Bertelsmann or "the company") is an international media companyinvolved in the creation and distribution of various media products and services. The company isprimarily engaged in books publishing, TV broadcasting, magazine publishing, and media services.The company has operations in more than 50 countries.

The company conducts its operations through six segments: RTL Group, Arvato, Gruner + Jahr,Random House, Be Printers and other operating activities.

RTL Group is a leading European entertainment network with interests in 53 television channelsand 28 radio stations in 10 countries and content production throughout the world. The televisionportfolio includes RTL Television in Germany, M6 in France, and the RTL channels in the Netherlands,Belgium, Luxembourg, Croatia, Hungary, and India, as well as the participation in Grupo Antena 3in Spain. With its subsidiary Fremantle Media, RTL Group is also one of the largest internationalcompanies outside the US involved in the production, licensing, and distribution of TV content. RTLGroup is a listed company in Brussels and Luxembourg.

As a global business process outsourcer, Arvato helps its business customers in a wide range ofsectors to manage their customer relationships. Arvato develops and implements custom solutionsfor this purpose in almost 40 countries.The range of services includes data management, customerservice, customer relationship services, management of supply chains, digital delivery, financialservices, qualified and customized IT services, and design and distribution services for printedproducts and digital storage media.

The printing and publishing company, Gruner + Jahr is represented in over 30 countries with around500 media activities, magazines and digital businesses. Gruner + Jahr’s largest foreign company isPrisma Media, the second-largest magazine publisher in France. Gruner + Jahr’s publishing activitiesalso include magazine, sales, and marketing operations in China, Italy, the Netherlands, Austria,Poland, Spain, the Adriatic Region, and Mexico.

The world’s largest trade book publisher, Random House, is comprised of nearly 200 editoriallyindependent imprints. The publishing group is represented in 15 countries with publishing housessuch as Doubleday and Alfred A. Knopf (the US), Ebury and Transworld (the UK), Plaza & Janes(Spain), Sudamericana (Argentina), and Goldmann (Germany). Each year, Random House publishesaround 10,000 new titles and sells over 400 million books worldwide. In addition to hard cover,paperback, and audio book formats, Random House publishes over 47,000 e-book titles in English,German, and Spanish.

The international printing group, Be Printers, offers a range of technical services for the printingindustry such as gravure, web, and offset printing as well as digital printing. Be Printers operates inthe core markets of Europe (Prinovis Germany and the UK, Italy, and Spain) and America (the US


Bertelsmann SE & Co. KGaABusiness Description

and Colombia). Operations at 17 production locations produce magazines, catalogs, brochures,books, and calendars.

Bertelsmann’s remaining operating activities are grouped under other operating activities or corporateinvestments. These include the participation in the music rights company BMG, education-relatedactivities, and the club and direct marketing businesses including the direct marketing businessInmediaone. The funds for digital media, Bertelsmann Digital Media Investments (BDMI), andBertelsmann Asia Investments (BAI), are also allocated to this segment.


Bertelsmann SE & Co. KGaABusiness Description

HISTORY

Bertelsmann SE & Co. KGaA (Bertelsmann or “the company”) was promoted by Carl Bertelsmann,under the name C. Bertelsmann Verlag in 1835. In the early years, the company published religiousbooks and newspapers. Bertelsmann transformed its operations in late 1920s and started thepublication of general education books, entertainment literature and newspapers. In the 1950s, thecompany started selling recorded music by establishing the 'Schallplattenring' and founded the Ariolalabel and the Sonopress pressing plant.

The company took over the Berlin film production company, Ufa in 1964. Bertelsmann later diversifiedinto the magazine business in 1965, with the purchase of 25% stake in Gruner + Jahr. In 1970, itset up France Loisirs and a year later, the company changed its name to Bertelsmann. It took overGoldmann Verlag in 1977. Three years later, it purchased Bantam Books in New York and publisherPlaza & Janes in Barcelona.

Bertelsmann acquired Spanish imprint Plaza y Janes as well as American publishing companies,Bantam Books and Doubleday during the 1980s. It also launched a music label RCA and set upBertelsmann Music Group (BMG) in New York. In 1990, the company expanded into East Germanyand Central Europe with clubs, magazines and printing offices. It marked the company's entry intothe daily newspaper business. Bertelsmann bought a majority of stake in Dresdner Druck- undVerlagshaus (Sachsische Zeitung) in 1991. In the following year, it acquired Berliner Verlag.

The company entered into the multimedia industry in 1995 and set up AOL Europe with AmericaOnline. In 1996, Bertelsmann and Debis founded the network company Mediaways, a Germannetwork provider. In the following year, it opened a Book Club for China in Shanghai and mergedUfa Film-und Fernseh with the Compagnie Luxembourgeoise de Telediffusion (CLT). In the followingyear, it acquired publisher Random House. During 2000, Bertelsmann joined England's PearsonGroup in establishing a new business daily, the Financial Times Deutschland. In the following year,it acquired a majority stake in the RTL Group. The year also saw the establishment of joint sportsrights business with the Canal + Group and Groupe Jean-Claude Darmon through its RTL Groupdivision.

Bertelsmann acquired independent music company, Zomba and some of the Holtzbrinck Group'sradio and TV activities in 2001. In 2002, the company's Direct Group division divested from pure-playe-commerce companies like BOL in order to focus on its media clubs with more than 30 millionmembers in 19 countries.

In 2003, the company divested its trade publishing division, Bertelsmann Springer. During the sameyear, the company's Random House division acquired Munich-based Heyne Verlag. In the sameyear, Sony Music and Bertelsmann's BMG subsidiary formed a recorded music joint venture witheach company owning 50% of the combined group.


Bertelsmann SE & Co. KGaAHistory

Bertelsmann acquired a 40% stake in 21st Century Book Chain in 2004, marking China's firstSino-foreign book retailing joint venture.The company's division, Gruner + Jahr, bought the majorityshares in the magazine publisher Motor Presse Stuttgart and launched 16 new magazines in 2005.In the same year, the company's division, RTL Group, bought a stake in Ren-TV and acquired theremaining shares in the TV channel, Five. In the same year, the company's RTL Group acquiredthe remaining 35.4% shareholding in the UK TV station, Five taking RTL Group's shareholding to100%. The Direct Group division of the company bought the Le Grand Livre du Mois book club inFrance and DVD specialist retailer Columbia House, in the US in 2005.

In 2005, Direct Group Bertelsmann acquired 100% of shares in Privat, France's largest independentbookselling chain. In the same year, Gruner + Jahr entered into an agreement with Meredith to sellfamily circle, parents, child, and fitness magazines for $350 million. Bertelsmann sold BMG MusicPublishing Group to Vivendi in 2006.

Bertelsmann acquired the exclusive official publishing license for the UEFA EURO cup 2008 inAustria and Switzerland, in 2007.

In 2008, Najafi Companies, a Phoenix, Arizona-based private investment company, agreed to acquirethe direct-to-consumer business, Direct Group North America, from Bertelsmann. In the same year,Bertelsmann realigned its BMG towards music rights management. Also, the company sold its 50%stake in the Sony BMG Music Entertainment joint venture to the Sony of America. In the same year,G+J International acquired the Pixelate Ventures, which operates the Polish language youth portalnamed epuls.pl, the fashion community stylio.pl, and the photo blog story.pl. Later, VerlagsgruppeRandom House launched a Booking Agency.

During the same year, Bertelsmann began to build a new music rights business under the BMGbrand. In 2008, Arvato Digital Services signed a contract with America's Metro-Goldwyn-Mayer(MGM) to manufacture DVD and Blu-ray discs for all German-speaking countries and Spain. In thesame year, G+J Netherlands brought a new magazine to the market-"NG Adventure", which wasone more line extension of "National Geographic". Subsequently, the Greek Competition Commissionapproved RTL Group's acquisition of a 66.6% majority stake in Alpha Media Group. Later, ArvatoDigital Services opened a new customer service center in Eastwood City, the Philippines. In 2008,Wissenmedia signed an agreement to acquire all the rights to the Brockhaus brand (including allcontent and inventories) from Bibliographisches Institut & F. A. Brockhaus. Later, the German holdingcompany, Aurelius, acquired Book Club Associates (BCA), which comprises seven British Clubs.

In 2009, Arvato Services China partnered with two Chinese companies, Telling and SMT, to establishArvato Logistics Services China. Subsequently, Fremantle Media, RTL Group's subsidiary, acquireda 75% stake in the American TV production firm, Original Productions. Later in the year, Bertelsmannand Kohlberg Kravis Roberts agreed to create a joint venture to develop a global music rightsmanagement business to which Bertelsmann would contribute its BMG Rights Management musicrights unit. Also in the same year, BMG Rights Management agreed to acquire the music publishingassets of certain affiliates of Crosstown Songs America.



The "Geo" family launched a new publication, Geomini, a magazine for the young readers in 2009.In the same year, Arvato Print Management and the Reader's Digest Association signed five-yearagreement, covering a purchasing volume of more than $400 million over the term of the contract.Subsequently, Bertelsmann Asia Investments (BAI), Bertelsmann's investment arm in Asia, investedE2 million ($2.8 million) in the Chinese internet company. Phoenix New Media, in return for a 2.9%equity stake.

In the first quarter of 2010, RTL Nederland acquired Talpa Radio's Radio 10 Gold radio station. Inthe same quarter, Arvato and an Italian publisher, Feltrinelli, signed a contract under which ArvatoPrint Italy would produce at least five million paperbacks a year for the publishing house. The localbranch of BMG Rights Management acquired the catalog of the Pressing Line music publishingcompany, in the second quarter of 2010. In the same quarter, G+J International launched Gala inKuwait.

Arvato Digital Services took over the complete direct-to-consumer logistics of Warner Music Europefor the merchandising segment, in the third quarter of 2010. In the same quarter, RTL Interactiveand Vodafone formed partnership which enables internet users to access RTL video content in theform of short web clips from www.vodafonelive.de and www.arcor.de. Subsequently, Arvato ServicesHealthcare signed an agreement to distribute Epigenomics’ products. Later in the quarter, Arvato’ssubsidiary signed a contract to handle sourcing and fulfillment services to e-bay.

In the last quarter of 2010, Fremantle Media acquired 60% share in @Radical Media, a global mediabusiness that creates advertising and branded entertainment content. In the same quarter, DirectGroup and the Gruner + Jahr subsidiary, DPV Deutscher Pressevertrieb launched Pubbles, thecross-publishing platform for the distribution of digital newspaper and magazine content, as well ase-books, and opened the online shop, www.pubbles.de. Subsequently, e-bay and Direct GroupGermany signed a cooperation agreement for the sale of Direct Group's products on e-bay's site.Later in the quarter, Bertelsmann Digital Media Investments, the venture capital arm of Bertelsmann,partnered with KfW to acquire a minority stake in the online language school, LearnShip(www.learnship.com).

The company acquired digital media agency, Smashing Ideas for its Random House division in thesecond quarter of 2011.

Subsequently in the same quarter, RTL Group became minority shareholder in the Russian mediacompany, National Media Group which is a majority owner of Ren TV. As part of the agreement,RTL Group will swap its 30% shareholding in the Russian TV channel Ren TV for a 7.5% shareholdingin National Media Group. In the same quarter, Bertelsmann reorganized its Direct Group businesses.Following the reorganization, the company operates through four divisions RTL Group, RandomHouse, Gruner + Jahr and Arvato.

Bertelsmann launched a new logo and a modified corporate design to reflect the successful evolutionof its strategy and business in the following quarter. During third quarter 2011, G+J International, asubsidiary of Gruner + Jahr, acquired a 78.5% interest in MaXposure Media Group India, a publisherof upscale consumer magazines. In the third quarter of 2011, Mediengruppe RTL Deutschland, a



subsidiary of RTL Group, acquired the vertical content network, Netzathleten Media (netzathleten.netGmbH). Netzathleten Media bundles and markets web sites covering sports, entertainment, health,food and business, and is a leading operator of such vertical specific websites in German-speakingcountries.

Random House India signed an agreement with Bertelsmann’s sister company, Wissenmedia tolicense and adapt the company’s knowledge and learning book titles for publication into the Indianmarket, in the third quarter of 2011. In the same quarter, BMG acquired Bug Music, an independentmusic publisher. In the following quarter, Gruner + Jahr transferred its entire 37.5% stake in Prinovisjoint venture to Arvato.

In February 2012, Bertelsmann opened a new Corporate Center in New Delhi, India. The office willsupport further expansion of the company’s activities in India. In the same month, Bertelsmannentered into a partnership with ‘Sandbox’ Network, a community of young achievers and innovators,to promote and accelerate exceptional young achievers.

The company’s music rights subsidiary, BMG, acquired the American music catalogue R2M Music,in March 2012. In the same month, Random House’s Vintage Publishing division acquired the 10-yearlicense for Ian Fleming’s entire James Bond backlist in print and e-book format, along with Fleming’stwo non-fiction titles. In the following month, Bertelsmann’s venture capital fund Bertelsmann DigitalMedia Investments invested a seven-digit sum in the online startup, Dealvertise.

During May 2012, the company resolved the change of legal form Aktiengesellschaft toKommanditgesellschaft auf Aktien. In the following month, Bertelsman, through its University Ventureseducation fund, made an investment in UniversityNow, a provider of online educational offeringsbased in San Francisco, the US.

In August 2012, the company started to do business as Bertelsmann SE & Co. KGaA. The changeof legal form from Aktiengesellschaft (stock corporation) to Kommanditgesellschaft auf Aktien (KGaA;partnership limited by shares) with a SE (Societas Europaea) as general partner was completedwith the entry in the company register.

The printing business of the company started to operate under the name, Be Printers from October2012. In the same month, the company announced that it will combine its book activities (RandomHouse) with Pearson (Penguin Group). Bertelsmann will own 53% while Pearson will own the rest.

During November 2012, the company acquired 100% ownership of Random House Mondadori, itstrade book publisher in Spain and Latin America. Random House Mondadori will become part of thefuture new partnership announced by Bertelsmann and Pearson in October 2012, which will combinethe English- and Spanish-language trade publishing divisions and imprints of Random House andPenguin worldwide. The new company, whose corporate name will be Penguin Random House andwho is subject to regulatory approvals from a number of authorities around the world, including inNorth America and Europe, is expected to take place in the second half of 2013.



In April 2013, Bertelsmann’s subsidiary, Arvato acquired International Gothia Financial Group, afull-service provider for the entire invoice process chain. With the combination, Arvato will advancethe internationalization of its business information and financial services activities and will be ableto offer its payment handling solutions to clients all over Europe. In particular, Arvato will benefitfrom Gothia’s service portfolio in the rapidly growing eCommerce segment as well as in factoring.During the same month, Bertelsmann completed full acquisition of the music rights company, BMG.The company completed the acquisition of the shares previously held by Kohlberg Kravis Roberts(KKR) in BMG after receiving all required regulatory approvals.

During July 2013, Bertelsmann and Pearson signed the final contracts combining the worldwideactivities of Random House and Penguin Group, their respective trade book publishing companies.The transaction completes the formation of Penguin Random House, announced in October 2012,in which Bertelsmann will own 53% and Pearson 47%. Penguin Random House comprises all ofRandom House and Penguin Group’s publishing divisions and imprints in the US, Canada, the UK,Australia, New Zealand, and India, as well as Random House’s publishers in Spain and Latin America,and Penguin’s trade publishing activity in Asia and South Africa.



KEY EMPLOYEES

BoardJob TitleName

Non Executive BoardChairman of the Supervisory BoardChristoph Mohn

Non Executive BoardVice Chairman of the Supervisory BoardJoachim Milberg

Non Executive BoardMember of the Supervisory BoardWerner J. Bauer

Non Executive BoardMember of the Supervisory BoardWulf H. Bernotat

Non Executive BoardMember of the Supervisory BoardKarl-Ludwig Kley

Non Executive BoardMember of the Supervisory BoardKai Brettmann

Non Executive BoardMember of the Supervisory BoardHelmut Gettkant

Non Executive BoardMember of the Supervisory BoardIan Hudson

Non Executive BoardMember of the Supervisory BoardHorst Keil

Non Executive BoardMember of the Supervisory BoardLiz Mohn

Non Executive BoardMember of the Supervisory BoardBrigitte Mohn

Non Executive BoardMember of the Supervisory BoardHartmut Ostrowski

Non Executive BoardMember of the Supervisory BoardHans Dieter Potsch

Non Executive BoardMember of the Supervisory BoardKasper Rorsted

Non Executive BoardMember of the Supervisory BoardLars Rebien Sorensen

Non Executive BoardMember of the Supervisory BoardChristiane Sussieck

Non Executive BoardMember of the Supervisory BoardBodo Uebber

Senior ManagementChairman, Chief Executive Officer, and Memberof the Executive Board

Thomas Rabe

Senior ManagementChief Executive Officer, Arvato and Member ofthe Executive Board

Achim Berg

Senior ManagementChief Executive Officer, Penguin Random Houseand Member of the Executive Board

Markus Dohle

Senior ManagementChief Financial Officer and Member of theExecutive Board

Judith Hartmann

Senior ManagementPresident, Corporate Development and NewBusinesses and Member of the Executive Board

Thomas Hesse

Senior ManagementChief Executive Officer, RTL Group and Memberof the Executive Board

Anke Schaferkordt

Senior ManagementHead of Mergers and Acquisitions and EducationJorn Caumanns

Senior ManagementCo-Chief Executive Officer, RTL GroupGuillaume de Posch

Senior ManagementChief Executive Officer, Be PrintersBertram Stausberg

Senior ManagementChief Executive Officer Clubs and DirectMarketing

Fernando Carro


Bertelsmann SE & Co. KGaAKey Employees

KEY EMPLOYEE BIOGRAPHIES

Christoph Mohn

Board: Non Executive BoardJob Title: Chairman of the Supervisory BoardSince: 2013

Mr. Mohn has been the Chairman of the Supervisory Board at Bertelsmann since January 2013. Heis also the Chairman at the Reinhard Mohn Foundation Executive Board and the Managing Directorat Christoph Mohn Internet Holding.

Joachim Milberg

Board: Non Executive BoardJob Title: Vice Chairman of the Supervisory Board

Dr. Milberg serves as the Vice Chairman of the Supervisory Board at Bertelsmann. He is also theVice Chairman of the Supervisory Board at BMW.

Werner J. Bauer

Board: Non Executive BoardJob Title: Member of the Supervisory BoardSince: 2012

Dr. Bauer has been a Member of the Supervisory Board at Bertelsmann since 2012. He is also theExecutive Vice President at Nestle.

Wulf H. Bernotat

Board: Non Executive BoardJob Title: Member of the Supervisory Board

Dr. Bernotat serves as a Member of the Supervisory Board at Bertelsmann. He is also the formerChairman of the Executive Board at E.ON.

Karl-Ludwig Kley



Bertelsmann SE & Co. KGaAKey Employee Biographies

Dr. Kley serves as a Member of the Supervisory Board at Bertelsmann. He is also the Chairman ofthe Executive Board at Merck.

Kai Brettmann


Mr. Brettmann serves as a Member of the Supervisory Board at Bertelsmann. He is also the Chairmanat RTL Group European Works Council and the Chairman at Mediengruppe RTL DeutschlandCorporate Works Council.

Helmut Gettkant


Mr. Gettkant has been a Member of the Supervisory Board at Bertelsmann since 2012. He is alsothe Vice Chairman at the Bertelsmann Works Council.

Ian Hudson


Mr. Hudson serves as a Member of the Supervisory Board at Bertelsmann. He is the Chairman ofthe Management Representative Committee at Bertelsmann (BMRC) and Deputy Chief ExecutiveOfficer at Random House.

Horst Keil


Mr. Keil has been a Member of the Supervisory Board at Bertelsmann since 2012. He is the Chairmanat Bertelsmann Corporate Works Council.

Liz Mohn




Ms. Mohn serves as a Member of the Supervisory Board at Bertelsmann. She is the Vice Chairwomanof the Executive Board, Bertelsmann Stiftung and Chairwoman of the Board, BertelsmannVerwaltungsgesellschaft.

Brigitte Mohn


Dr. Mohn serves as a Member of the Supervisory Board at Bertelsmann. She is the Chairwoman atGerman Stroke Foundation and a Member of the Executive Board at Bertelsmann Stiftung.

Hartmut Ostrowski


Mr. Ostrowski has been a Member of the Supervisory Board at Bertelsmann since 2012. He is FormerChairman of the Executive Board at the company.

Hans Dieter Potsch


Mr. Potsch serves as a Member of the Supervisory Board at Bertelsmann. He is Member of theExecutive Board, Volkswagen and the Finance and Controlling division Chief Financial Officer atPorsche Automobil Holding.

Kasper Rorsted


Mr. Rorsted serves as a Member of the Supervisory Board at Bertelsmann. He is Chairman of theExecutive Board at Henkel.

Lars Rebien Sorensen




Mr. Sorensen serves as a Member of the Supervisory Board at Bertelsmann. He is also the Presidentand Chief Executive Officer at Novo Nordisk.

Christiane Sussieck


Ms. Sussieck serves as a Member of the Supervisory Board at Bertelsmann. She is the Chairwomanof the Corporate Center works council/Management Club and Direct Marketing Businesses atBertelsmann.

Bodo Uebber


Mr. Uebber serves as a Member of the Supervisory Board at Bertelsmann. He is a Member of theExecutive Board at Daimler, Finance and Controlling/Daimler Financial Services.

Thomas Rabe

Board: Senior ManagementJob Title: Chairman, Chief Executive Officer, and Member of the Executive BoardSince: 2012Age: 48

Mr. Rabe has been the Chairman, Chief Executive Officer, and Member of the Executive Board atBertelsmann since 2012. Prior to this, since 2006, he was the Chief Financial Officer and Head ofthe Corporate Center, Bertelsmann. Till 2008, Mr. Rabe was also the Head of Bertelsmann MusicGroup.

Achim Berg

Board: Senior ManagementJob Title: Chief Executive Officer, Arvato and Member of the Executive BoardSince: 2013Age: 49

Mr. Berg has been the Chief Executive Officer, Arvato and Member of the Executive Board atBertelsmann since April 2013. Since 2009 he has been a Member of the University council of CologneUniversity of Applied Sciences. From 2008 to 2010, Mr. Berg was the Vice President and a Member



of the Executive Board at BITKOM, Germany’s association for the information telecommunicationsand new media industry, Berlin.

Markus Dohle

Board: Senior ManagementJob Title: Chief Executive Officer, Penguin Random House and Member of the Executive BoardSince: 2008Age: 45

Mr. Dohle has been the Chief Executive Officer, Penguin Random House and Member of the ExecutiveBoard at Bertelsmann since 2008. During 2006–08, he was a Member of the Arvato Executive Boardand from 2002 until 2008, Mr. Dohle was the Chief Executive Officer at Mohn Media Group.

Judith Hartmann

Board: Senior ManagementJob Title: Chief Financial Officer and Member of the Executive BoardSince: 2012Age: 44

Ms. Hartmann has been the Chief Financial Officer and Member of the Executive Board atBertelsmann since 2012. Prior to this, she was the Chief Financial Officer at GE Group Germany,Frankfurt am Main.

Thomas Hesse

Board: Senior ManagementJob Title: President, Corporate Development and New Businesses and Member of the ExecutiveBoardSince: 2012Age: 46

Mr. Hesse has been the President, Corporate Development and New Businesses and Member ofthe Executive Board at Bertelsmann since 2012. From 2005 to 2012, he was the President, GlobalDigital Business, Sony Music Entertainment, New York and from 2002 to 2004, Mr. Hesse was theChief Strategy Officer, BMG Entertainment, New York.

Anke Schaferkordt

Board: Senior ManagementJob Title: Chief Executive Officer, RTL Group and Member of the Executive BoardSince: 2012



Age: 50

Ms. Schaferkordt has been the Chief Executive Officer, RTL Group and a Member of the ExecutiveBoard at Bertelsmann since 2012. Prior to this, she was the Chief Executive Officer, RTL Televisionand Mediengruppe at RTL Deutschland.

Jorn Caumanns

Board: Senior ManagementJob Title: Head of Mergers and Acquisitions and EducationSince: 2013Age: 40

Mr. Caumanns has been the Head of Mergers and Acquisitions and Education at Bertelsmann sinceJune 2013. He will head this department in addition to his role as Chief Financial Officer of CorporateDevelopment and New Businesses. Previously, Mr. Caumanns worked at J.P. Morgan in Londonand Frankfurt before joining Bertelsmann’s Finance department in 2001. He worked on a variety ofM&A transactions since starting at Bertelsmann. In Education, Mr. Caumanns was involved infounding University Ventures in 2011 and since then he and his team have overseen the developmentand expansion of this line of business.



MAJOR PRODUCTS AND SERVICES

Bertelsmann AG (Bertelsmann or "the company") is an international media company involved in the creation and distribution of various media products and services. The company's key products and services include the following:

BooksNewspapersCDsDVDsMagazinesTV broadcastingRadio broadcastingTV programsBook publishingGeneral publishingOnline servicesMusic clubsPrintingData managementCRM servicesSupply-chain managementDigital distributionFinancial servicesProfessional and custom IT servicesDirect-to-customer distribution of educational mediaMultimedia servicesMedia clubsBookstores


Bertelsmann SE & Co. KGaAMajor Products and Services

REVENUE ANALYSIS

Overview

The company recorded revenues of E16,065 million ($20,656.4 million) during the financial yearended December 2012 (FY2012), an increase of 4.5% over FY2011. For FY2012, Germany, thecompany's largest geographic market, accounted for 36.1% of the total revenues.

Bertelsmann generates revenues through six business segments: RTL Group (37.3% of the totalrevenues during FY2012), Arvato (26.6%), Gruner + Jahr (13.8%), Random House (13.3%), BePrinters (6.2%), and other operating activities (2.8%).

Revenues by segment

In FY2012, the RTL Group division recorded revenues of E5,996 million ($7,709.7 million), anincrease of 3.3% over FY2011.

The Arvato division recorded revenues of E4,271 million ($5,491.7 million) in FY2012, an increaseof 6.3% over FY2011.

The Gruner + Jahr division recorded revenues of E2,211 million ($2,842.9 million) in FY2012, adecrease of 3% compared to FY2011.

The Random House division recorded revenues of E2,138 million ($2,749 million) in FY2012, anincrease of 22.5% over FY2011.

The Be Printers division recorded revenues of E996 million ($1,280.7 million) in FY2012, a decreaseof 3% compared to FY2011.

The other operating activities division recorded revenues of E453 million ($582.5 million) in FY2012,a decrease of 7.7% compared to FY2011.

Revenues by geography

Germany, Bertelsmann's largest geographical market, accounted for 36.1% of the total revenues inFY2012. Revenues from Germany reached E5,805 million ($7,464.1 million) in FY2012, an increaseof 3.3% over FY2011.

The US accounted for 16.3% of the total revenues in FY2012. Revenues from the US reachedE2,617 million ($3,364.9 million) in FY2012, an increase of 19.7% over FY2011.


Bertelsmann SE & Co. KGaARevenue Analysis

France accounted for 15.8% of the total revenues in FY2012. Revenues from France reached E2,540million ($3,265.9 million) in FY2012, a decrease of 3.1% compared to FY2011.

Other European countries accounted for 24.9% of the total revenues in FY2012. Revenues fromother European countries reached E3,995 million ($5136.8 million) in FY2012, a decrease of 1.4%compared to FY2011.

Other countries accounted for 6.9% of the total revenues in FY2012. Revenues from other countriesreached E1,108 million ($1,424.7 million) in FY2012, an increase of 24.8% over FY2011.


Bertelsmann SE & Co. KGaARevenue Analysis

SWOT ANALYSIS

Bertelsmann SE & Co. KGaA (Bertelsmann or “the company”) is a media company engaged inactivities such as publishing, music, TV and radio broadcasting, and storage media. The companyhas a significant market position in all the operating segments which enhances its brand image andserves as a competitive advantage. However, intense competition may lead to pricing pressuresthereby adversely impacting the company's operating margins and market share.

WeaknessesStrengths

Exposure to the European economySignificant market position enhances brandimage and serves as a competitiveadvantageBroad product and services portfolio allowsit to attract new customers

ThreatsOpportunities

Intense competition may impact operatingmargins and market share

Strategic acquisitionsFocus on digital business expansion toprovide incremental revenues Increasing paper pricesMerger with Pearson Slowdown in the global economy could

impact sales

Strengths

Significant market position enhances brand image and serves as a competitive advantage

Bertelsmann is the one of the leading international media companies.The company operates throughfive subsidiaries which are leaders in their respective markets. RTL Group, a subsidiary of thecompany, is the leading European entertainment network. It is the Europe’s largest broadcaster witha portfolio of 53 TV channels and 28 radio stations in 10 countries. RTL Group’s TV portfolio includesRTL Television in Germany, M6 in France, and the RTL channels in the Netherlands, Belgium,Luxembourg, Croatia, Hungary, and India, as well as the participation in Grupo Antena 3 in Spain.With its subsidiary Fremantle Media, RTL Group is also one of the largest international companiesoutside the US involved in the production, licensing, and distribution of TV content.

Bertelsmann’s subsidiary, Arvato is one of the leading outsourcing service providers. Arvato helpsits business customers in a range of sectors to manage their customer relationships. Arvato developsand implements custom solutions for this purpose in almost 40 countries. The range of servicesincludes data management, customer service, customer relationship services, management of supply


Bertelsmann SE & Co. KGaASWOT Analysis

chains, digital delivery, financial services, qualified and customized IT services, and design anddistribution services for printed products and digital storage media. Arvato communicates with endusers in 37 languages – from Arabic to Hebrew and Ukrainian, among others – and across 141countries.

Significant market position in all the operating segments of the company enhances its brand imageand serves as a competitive advantage.

Broad product and services portfolio allows it to attract new customers

The company offers a broad portfolio of products and services. Bertelsmann’s business activitiesinclude TV and radio, book publishing, magazines and newspapers, media and communicationservices, media clubs, and direct marketing. Through RTL Group, the company operates in the TVand radio sector and is also engaged in TV production.

Arvato offers networked media and communications services, including, services related to thecreation and distribution of printed materials and digital storage media, as well as data management,customer care, CRM services, supply-chain management, digital distribution, financial services,professional and custom IT services, and the direct-to-customer distribution of educational media.Bertelsmann also offers magazines and periodicals through Gruner + Jahr. It engages in trade bookpublishing through the company’s corporate segment and is engaged in operation of corporatecenters and corporate investments activities. The company offers a range of technical services forthe printing industry such as gravure, web, and offset printing as well as digital printing through BePrinters. Its operations at 17 production locations produce magazines, catalogs, brochures, books,and calendars.

In addition, Bertelsmann developed well balanced revenue streams. The company’s own productsand merchandise revenues accounted for 39.8% of the company’s total revenues during FY2012.This was followed by advertising (26.1%), services (22.9%) and rights and licenses (11.2%). Broadproducts and services portfolio helps the company to effectively cater to all the segments of themedia and information services market and enables it to attract new customers. In addition, itdiversifies Bertelsmann’s business risks and provides cross selling opportunities.

Weaknesses

Exposure to the European economy

Bertelsmann derived 76.8% of its revenues from Europe (Germany: 36.1%, France: 15.8% and otherEuropean countries: 24.9%) in FY2012, which indicates high exposure to the region despite forayinto fast growth markets and ongoing geographic expansion. In recent years, the European economyhas undergone significant turmoil amid stock market volatility, difficulties in the financial servicessector, tightening of the credit markets, softness in the housing markets, concerns of inflation anddeflation, reduced corporate profits and capital spending, reduced consumer spending and various



other economic difficulties. According to IMF, the Euro area is expected to pose a large downsiderisk to the global outlook. In particular, risks of prolonged stagnation in the Euro area as a whole areexpected to rise in the near term. During 2013, the Euro area is expected to witness a negativegrowth of 0.3%, while the Central and Eastern Europe is expected to be sluggish with a growth rateof 2.2%.

Owing to the above factors, the recovery in the European economy is likely to remain weak. This islikely to have a greater impact on the company’s business, as it derives significant portion of itsrevenues from Europe.

Opportunities

Strategic acquisitions

Bertelsmann is continuously focused on expanding its presence through acquisitions. For instance,in April 2013, Bertelsmann’s subsidiary, Arvato, acquired International Gothia Financial Group, afull-service provider for the entire invoice process chain.This acquisition will enable Arvato to advancethe internationalization of its business information and financial services activities and be able tooffer its payment handling solutions to clients all over Europe. In particular, Arvato will benefit fromGothia’s service portfolio in the rapidly growing eCommerce segment as well as in factoring. Thecompany will benefit from the pan-European use of the PayByBill payment solution established byGothia. Integration of this product rounds out Arvato infoscore’s portfolio in business-to-consumer(B2C) factoring, which includes its own Trust’nPay solution. During the same month, Bertelsmanncompleted full acquisition of the music rights company, BMG.

In November 2012, the company acquired 100% ownership of Random House Mondadori, its tradebook publisher in Spain and Latin America. Random House Mondadori is part of the new partnershipby Bertelsmann and Pearson, which will combine the English- and Spanish-language trade publishingdivisions and imprints of Random House and Penguin worldwide.

In March 2012, the company’s music rights subsidiary, BMG acquired the American music catalogue,R2M Music. The assets acquired include the LeFrak catalogue, home to seven Number One pophits by the likes of 2Pac “California Love”, Neil Sedaka “Laughter in the Rain”, Captain and Tennille“Love Will Keep Us Together”, Jim Croce “Time in a Bottle”, and Tony Orlando and Dawn “KnockThree Times”. BMG also acquired the catalogue of Die Toten Hosen, representing the majority ofthe songs on the six albums the band has recorded since 1996. The transaction expands BMG’smusic publishing assets through the addition of 12,000 copyrights including 35 top-10 hits and othertop songs from the 60s, 70s, 80s and 90s to BMG’s music publishing assets. In January 2012,Mediengruppe RTL Deutschland, a subsidiary of RTL Group, entered the couponing business byacquiring Gutscheine.de, one of Germany’s biggest coupon portals. The acquisition strengthensRTL Group’s transaction-driven lines of business and further expands its non-advertising relatedbusinesses.



Such acquisitions would enhance the company's portfolio of offerings.

Focus on digital business expansion to provide incremental revenues

The company has been focusing on the digital media business, primarily the e-book market, toexpand its revenues. The e-book market is expected to grow in the coming years. New e-bookformats are driving e-book growth which is mainly led by Apple's iPad, Amazon's Kindle and SonyReader. According to industry estimates, the US eBook market is forecasted to reach $8.2 billionby 2017.

To tap the emerging market for mobile and eTablet media platforms, the company has launched amulti-faceted approach. Bertelsmann’s Random House is the leading provider of trade-books. In therecent times, Random House has broadened the scope of its cross-divisional digital transformation.Its divisions maintained triple-digit percentage growth in terms of digital publishing revenue, increasingthe company’s overall e-book portfolio to almost 47,000 titles. Moreover, Random House hasdiversified its digital content and increased its technological capabilities with the acquisition of USdigital media agency, Smashing Ideas. Increased focus on digital business expansion positionsRandom House to benefit from the growing popularity of e-book devices and increased digital readingby consumers in the coming years. This will provide incremental revenues to the company.

Merger with Pearson

In July 2013, Bertelsmann and Pearson signed the final contracts combining the worldwide activitiesof Random House and Penguin Group, their respective trade book publishing companies. Thetransaction completes the formation of Penguin Random House, announced in October 2012, inwhich Bertelsmann will own 53% and Pearson 47%. Penguin Random House comprises all ofRandom House and Penguin Group’s publishing divisions and imprints in the US, Canada, the UK,Australia, New Zealand, and India, as well as Random House’s publishers in Spain and Latin America,and Penguin’s trade publishing activity in Asia and South Africa. Thus, through this merger, theactivities of this division of the company will spread globally, ensuring greater revenues and a largercustomer base.

Threats

Intense competition may impact operating margins and market share

The company operates in an intensely competitive advertising and communications services industry.The company's principal competitors include large multinational advertising companies as well asregional and national advertising and/or marketing services firms and new media companies.Bertelsmann's principal competitors include Axel Springer, Lagardere, ProSiebenSat.1 Media, andR.R.Donnelley. Intense competition may lead to pricing pressures thereby adversely impacting thecompany's operating margins and market share.



Increasing paper prices

The price of paper is a significant expenditure relating to the company's print products includingnewspapers and magazines. During 2012, the price of paper increased and is expected to grow infuture. Closure of several mills, rising energy and manufacturing costs are driving the price increase.In addition, prices are subject to volatility arising from variations in supply and demand.

With the increase in paper price, Bertelsmann would incur more operating cost including printingcosts. In an intensely competitive environment, increase in selling price of products may impact theconsumer's behavior and will adversely impact the company’s competitiveness. This will impact thedemand for Bertelsmann's products, and could result in customer losses. Rising paper prices willincrease the company's printing costs, which will adversely impact its margins and circulation of thenewspapers and magazines.

Slowdown in the global economy could impact sales

The global economy has slowed down in the last few years. According to IMF, the global growth isprojected to drop from about 4% in 2011 to about 3.3% in 2013 because of weak activity.The declineis due to deteriorating sovereign and banking sector developments in the Euro area. The outlookfor the European economy has been worsening since the last two years. In addition, Europe's debtcrisis has threatened the global economic recovery. Deteriorating confidence and intensified financialturmoil has impacted investment and consumption, while domestic demand and weakened globaleconomic conditions held back exports. Growth in the European region is expected to be sluggishin 2013 with a negative growth rate of 0.3%. In addition, the real GDP growth in the emerging anddeveloping economies is projected to slow from 6.4% in 2011 to 5.3% in 2013.

A continued or further decline in economic conditions or an increase in price levels generally due toinflationary pressures, could adversely impact demand for any of the company’s products andservices and have a negative impact on its results of operations. Further, any disruption in the globalfinancial markets may impact Bertelsmann’s ability to obtain financing on acceptable terms. If theseweak economic conditions continue or deteriorate, the company’s business, results of operationsand financial condition may be adversely impacted. In addition, prolonged recession and recoveryin one or more of the countries in which the company operates in may lower the demand foradvertising and communications services thereby adversely impacting its business in near term.



TOP COMPETITORS

The following companies are the major competitors of Bertelsmann SE & Co. KGaA

Axel Springer AGProSiebenSat.1 Media AGR. R. Donnelley & Sons CompanyLagardere SCA


Bertelsmann SE & Co. KGaATop Competitors

COMPANY VIEW

A statement by Thomas Rabe, the Chairman and Chief Executive Officer at Bertelsmann is givenbelow. The statement has been taken from the company’s 2012 annual report.

The past year was a time of change for Bertelsmann: We have initiated a corporate reshaping thatwill make us a faster-growing, more digital, and more international company in the years ahead. Itwill be based primarily on a strategy with four cornerstones, and a business performance that willgive us the necessary impetus to rapidly drive this transformation process forward. This AnnualReport provides information about both – our performance in 2012 and our strategic priorities forthe next few years ahead.

Bertelsmann had a solid business year in 2012. Despite a difficult economic environment, our revenuegrew year on year by 4.5 percent to €16.1 billion. Most of this growth – about three-quarters of it –was attributable to organic effects. Positive impetus was provided mainly by the Random Housebook business, Mediengruppe RTL Deutschland’s TV channels, our TV production arm FremantleMedia, as well as Arvato’s financial and IT services.

At €1.74 billion, operating EBIT nearly matched the high level of the prior year. Record results bykey profit centers across all divisions contributed to this – for example, Mediengruppe RTLDeutschland, Random House worldwide, Gruner + Jahr’s China business, and Arvato Infoscore.However, there were declining sales in some important advertising markets – especially in print –and scheduled expenditure for the reshaping of our Group. Bertelsmann’s ongoing high profitabilitywas confirmed by the Group’s overall return on sales of 10.8 percent.

While our Group result was impacted by high one-off expenses in structurally declining businesses,at €619 million, it was still slightly above the prior-year figure. We also strengthened our financialposition last year.Thanks to strong cash flow from operations we were able to reduce our net financialdebt by a third. It now amounts to about €1.2 billion and stands in a good ratio to operating EBITDA.During the reporting period we also used the favorable market environment to place a €750 millionbenchmark bond.

This satisfactory operating and financial performance provides a strong foundation for Bertelsmann’sstrategic evolution. Given the limited long-term growth potential of our portfolio and a dynamicallychanging market environment, in the first half of last year we looked closely at how, during the nextfew years, we can make Bertelsmann a higher-growth, more digital, and more international company.In close consultation with all relevant Group entities – employee and management representatives,the Group Management Committee (GMC), the Executive Board, the Supervisory Board, and ourshareholders – we developed a strategy that will serve to further develop our business in the yearsahead based on four strategic thrusts: strengthening our core; digital transformation; building growthplatforms; and expanding in growth regions.


Bertelsmann SE & Co. KGaACompany View

I am very pleased that we have made significant progress in all these areas in a very short periodof time.

The most noteworthy development in connection with strengthening our core is the announcedcombination of Random House with Penguin.We are confident of receiving all the necessary antitrustapprovals in the second half of the current financial year, allowing us to form a book publishingcompany that will set creative and commercial standards. The merger is not only one of the largesttransactions in the recent history of Bertelsmann, but also demonstrates our commitment to shapingthe consolidation of our most important core businesses at an early stage.

We also strengthened our core in many other areas. In 2012, RTL Group launched five new channels– more than ever before – including RTL Nitro in Germany and 6ter in France. The completeacquisition of Random House Mondadori has enhanced our position in the Spanish-language bookmarket. And by forming our separate printing unit, Be Printers, we focused Arvato on the fast-growingservices sector.

In the past year we also accelerated the digital transformation of our businesses. RTL Group expandedits activities in the field of next-generation TV. Across Europe, our video-on-demand servicescollectively generated more than 2.4 billion views – 25 percent more than the previous year. RandomHouse now offers 47,000 titles as e-books. Gruner + Jahr recorded dynamic growth in digital marketingwith EMS and Ligatus. And Arvato is seeing disproportionately strong growth with customers in thehigh-tech and IT industry, for example, due to the global online sales of Microsoft’s new operatingsystem, Windows 8. We will continue to step up these and other digital activities in the years ahead.

The same goes for the development of our growth platforms, where we achieved a major milestonethis winter: the complete takeover of BMG, agreed at the beginning of March, will make music anintegral part of Bertelsmann once again. Working in close partnership with KKR, we developed thiscompany into the world’s fourth-largest music publisher in less than five years. BMG is a primeexample of our development of additional growth platforms not only because it meets our investmentcriteria – long-term growth potential, global reach, proven digital business model, scalability – butalso because it represents an entrepreneurial and innovative approach to business building. We arepursuing a comparable model in the education sector, for example, a field where we already madesome successful investments with our University Ventures Fund last year.

In the next few years, University Ventures will be increasingly active in the growth regions of Asiaand Latin America, thereby supporting Bertelsmann’s regional expansion. Our divisions alreadymade good progress here in 2012: RTL Group launched a television channel in India.The upcomingcombination with Penguin and the full acquisition of Random House Mondadori open up new optionsfor Random House. Gruner + Jahr was not only more successful in China than ever before, but alsosuccessfully expanded in India. And Arvato strengthened its market position in China thanks to newcustomers. These efforts are now supported by three Corporate Centers in Beijing, Delhi, and SãoPaulo, as well as by investment funds that give Bertelsmann access to innovative start-ups in China,India, and Brazil, and which form a perfect complement to the activities of our Bertelsmann DigitalMedia Investments fund.



All this creates important preconditions for optimally developing Bertelsmann’s creative andentrepreneurial capital going forward. Even in times of change, this remains the core of our valuecreation.The past year has shown, not least with the great success of our bestselling “Fifty Shades”trilogy, the added value a media company is capable of in the digital age, for example, in terms ofselecting, marketing, and distributing high-quality, professionally curated content.

We will build on this progress over the next few years. Bertelsmann not only has a clear strategy,but also sufficient financial room for maneuver. The past year also saw some landmark personneldecisions at Bertelsmann. With Judith Hartmann as the Group’s new CFO and Anke Schäferkordtas Co-CEO of RTL Group, we have further strengthened the diversity of the Executive Board andGMC. Achim Berg, a proven technology expert, will soon be taking over the helm of Arvato, and willfurther promote its focus on high-growth services. In addition, I look forward to the collaboration withChristoph Mohn, who has contributed his business expertise and deep understanding of Bertelsmann’scorporate culture as Chairman of our Supervisory Board since January 1 of this year. I also sincerelythank his predecessor Gunter Thielen for our many years of cooperation and trust.

I hope you enjoy reading our Annual Report, and I am pleased by your interest in our company’sdevelopment!



LOCATIONS AND SUBSIDIARIESHead Office

Bertelsmann SE & Co. KGaACarl-Bertelsmann-Str. 270D-33311 GuterslohDEUP:49 52 41800F:49 52 41809662http://www.bertelsmann.com

Other Locations and Subsidiaries

Gisela Albrecht Intern. MediaRepresentatives Ltd.

arvato AustraliaNew South Wales 2143 Regents Park

Anzeigen VerkaufsburosAUSSudafrikaRivonia 2128ZAF

arvato Singaporearvato Thailand18 Cross Street #07-12195 Empire Tower 24th FloorMarsh & McLennan CentrePark Wing South Sathorn48423 Singapore10120 Yannawa SathornSGPBangkok

THA

Random House UK LtdRTL Belgium20 Vauxhall Bridge Road2 Avenue Jacques GeorginLondon SW1V 2SA1030 BruxellesEnglandBELGBR

arvato - USMotorpress Iberica S.A.108 Monticello RoadCalle Ancora 4028787 9442 Weaverville North Carolina28045 MadridUSAESP

Chile / Random House MondadoriRandom House Studio LLCEditorial Sudamericana Chilena S.A.1745 Broadway 14th FloorSanta Isabel 1235New York 10019Profidencia - SantiagoNew YorkCHLUSA


Bertelsmann SE & Co. KGaALocations and Subsidiaries

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