W. Germany’s Bertelsmann on Buying Spree in the U.S.

Billing itself as the world’s largest and oldest publishing company--established in 1835, it has annual sales of $6 billion and 40,000 employees worldwide--Bertelsmann AG has been on something of an American buying binge in recent years, acquiring Bantam Books, Doubleday & Co., Dell Publishing and Parents Magazine, among others. In 1984, the West German firm made an unsuccessful bid to acquire U.S. News & World Report for $150 million.

Bertelsmann has operated Ariola Records in Europe since the late 1950s and entered the U.S. record business in 1979, when it acquired Arista Records from Columbia Pictures Industries. It sold 50% of Arista to RCA in 1983, and the two companies later merged their worldwide record operations in a joint venture called RCA/Ariola International, which was 75% owned by RCA.

In addition to owning the RCA and Arista labels, Bertelsmann Music Group also manufactures and distributes for Los Angeles-based A&M; Records, the largest privately owned record company in the United States, with annual sales of more than $200 million. That makes BMG the third-largest record distributor in the world. BMG Co-Chairman Michael Dornemann said recently that the music group had a pretax operating profit of $75 million in 1987, after losing $35 million in 1986.

Even so, BMG lags far behind industry leaders CBS Records--now owned by Sony Corp.--and the Warner Communications record labels. Both CBS Records and the Warner labels reported pretax operating profits of more than $200 million last year.