Hubert Burda Media looks back at a steady business year 2008 and continues its transformation from traditional German publishing and printing company to international multimedia group. Over the last few years, the company’s activities have been structured in five business divisions (Domestic Publishing, Foreign Publishing, Printing, Digital, and Direct Marketing). This diversification has led to further growth in 2008 despite the challenging business environment so that Hubert Burda Media has been able to report a satisfactory result in the operational business. Operating performance increased by 3.8 percent, from € 2,214.0 million to € 2,297.4 million. Consolidated group turnover (external sales) rose by 3.7 percent, from € 1,687.3 million to € 1,750.4 million.

Domestic Publishing accounted for 39.2 percent of external sales (2007: 42.1 percent), Foreign Publishing for 24.0 percent (2007: 22.2 percent). The business division Digital improved significantly, from 16.3 percent (2007) to 19.5 percent while Printing and Direct Marketing achieved increases of 8.7 percent (2007: 9.3 percent) and 8.3 percent (2007: 9.8 percent) respectively. Other activities contributed 0.3 percent (2007: 0.3 percent) to external sales. In 2008, the group’s investments amounted to € 142.9 million (2007: € 222.7 million). As of 31 December 2008, the company employed 7,592 people (2007: 7,941). Overall, the global portfolio of Hubert Burda Media and its partner publishing houses included 261 publications (previous year: 262), thereof 75 (previous year: 74) in Germany.

In the past business year, the reach of German magazines (MA 2009/I) improved slightly to 81.7 percent (2007: 80.4 percent). External sales of domestic publishing houses decreased by 3.3 percent while gross advertising sales dropped by 6.7 percent. The downward trend in the German distribution market continued in 2008. Defying the trend, Hubert Burda Media managed to keep sales almost stable across all business segments. In the reporting year, the number of copies sold totaled 386.3 million (2007: 401.2 million).

Hubert Burda Media’s digital investments comprise 41 growth companies in the online business. Despite the difficult market situation in 2008—particularly during the second half of the year—the Internet business demonstrated a very dynamic development. Like in previous years, growth rates were considerably beyond the average. At the same time, the revenue situation was improved further. The activities of ConsumerTech Group with CHIP, COMPUTERUNIVERSE.NET, CYBERPORT as well as those of TOMORROW FOCUS Group with HOLIDAYCHECK and ELITEMEDIANET were particularly successful. The investments GAMEDUELL and ZOOPLUS also developed nicely.

In 2008, the BURDA BROADCAST investment portfolio remained, on the whole, unchanged. It includes investments in radio stations such as ANTENNE BAYERN, RADIO FFH and the investment company STUDIO GONG. The contribution to operating income continued to be on a high level.

Outlook and Opportunities

Germany will be affected by the continuing downward trend of the global economy in the years to come. The declining development will most likely have an impact on the majority of business segments. The strategic diversification successfully established in the past will only offer limited protection during this crisis. The implementation of the group’s restructuring program, launched in 2008, will be continued consistently in all business divisions in 2009. Hubert Burda Media is determined to make best use of all opportunities to optimize the result situation.

The changes in the German media market, accelerated by the recession, require companies to maintain strict cost discipline and to strategically align operations with increasingly convergent advertising markets. In the current business year, advertising revenues in the domestic publishing business, just like in the entire magazine industry, are facing the severe effects of the general economic development. To prepare the national publishing business with its areas Marketing and Sales for the dual challenge of recession and digitalization, the Management Board section Publishing—headed by Philipp Welte—has launched the program CHANGE (Concentrate, Integrate, Innovate) in 2009. It comprises the reevaluation of all processes with regard to their efficiency and capacity for innovation. Initial measures have included the adjustment of the magazine portfolio and the integration of BURDA STYLE GROUP. Next is the creation of a central competence center for establishing and expanding the digital offering, called MEDIA INNOVATION LAB (i-Lab). BURDA FOOD.NET will serve as an umbrella for the company’s competence in the field of food journalism. The main goal is to guide the business division Publishing through the recession successfully and—despite the revenue crisis—to align it with the convergent future.

Notwithstanding the fierce global economic climate, Hubert Burda Media is in a good position. The current weakness of the domestic and foreign publishing markets will intensify the consolidation process and subsequently lead to excellent opportunities for acquisitions. Another important point is that media digitalization and thus the importance of the division Digital will increase further. Over the course of the years, Hubert Burda Media has built a sound position in this field—with both its portfolio of own products and investments.

Innovation remains a key factor for success. The development of new brands and products as well as the adaptation of existing activities play a crucial role. In the current business year, the investment focus is on the digital business (investments and publishing) and foreign operations.