RTL is a gamble on the future of old-fashioned TV

Bertelsmann is reducing its exposure to TV by selling a chunk of RTL. The German broadcaster seems well-placed to deal with the status quo, but the longer term prospects are less clear. Internet distribution channels present free-to-air terrestrial TV huge headaches.

The rise of the Internet has already forced change in the way the music industry and the print media do business. Television could be next in line. New media consumption patterns, as well as fierce competition for advertising revenue from Google, among others, are likely to shake up traditional business models. Continue reading

Comments Off

Filed under Allgemein

BMW, VW and Daimler: similar and unequal

The leading German carmakers have ignored the most severe crisis of the European auto market in decades. After record results, they reckon they can cope with a worsening environment. Yet there are differences between them – which markets only partly appreciate.

At 383 billion euros, the joint annual revenue of Volkswagen, Daimler and BMW is equivalent to the gross domestic product of Belgium. The three German carmakers have defied the European automobile crisis, dubbed “carmageddon” by JP Morgan. The big three booked record revenues in 2012, increased their sales in the first quarter and reckon they can cope with a worsening environment. They are in a league of their own. Continue reading

Comments Off

Filed under Allgemein

German caution will make banking union stronger

 Germany’s finance minister says that a pan-European bank resolution scheme requires changing the EU treaty. This is less an attempt to delay the banking union than a statement of fact. It does not impact the common bank supervisor, nor direct recapitalisation through the ESM.

 German Finance Minister Wolfgang Schaeuble is Europe’s leading doom monger, regularly throwing cold water on ideas or suggestions to amend the way the euro zone does business. He seemed to live up to his reputation over the weekend by pointing out that full European banking union, including a resolution scheme, would necessitate changes in the EU’s founding treaties. Continue reading

Comments Off

Filed under Allgemein

Inflation fear shouldn’t constrain monetary policy

Central banks have more room to manoeuvre than inflation hawks think. Even temporarily excessive economic stimulus is unlikely to derail price stability, as a new IMF analysis suggests. Monetary policymakers should use this leeway – especially in the euro zone.

A nagging fear of out-of-control inflation is deeply engrained in the psyche of any proper central banker. For the time being though, they can relax. Current monetary policymakers enjoy more room to manoeuvre than past experiences – and today’s inflation hawks – suggest. Continue reading

Comments Off

Filed under Monetary Policy

German eurosceptics strong enough to nudge Merkel

A new anti-euro party is unlikely to make it into parliament in the 2013 elections, but its appeal will make it harder for the chancellor to appear too generous to troubled periphery nations, despite her popularity. The rest of the euro zone should understand her predicament.

The biggest surprise about Germany’s fledgling anti-euro party is that it took so long to emerge. Many Germans object to the bailouts for stricken euro zone members, are haunted by fears of inflation and just don’t trust the euro. But unlike in Finland and the Netherlands, German eurosceptic voters have had no place to turn to, as all the respectable parties are staunchly pro-European. Continue reading


Filed under Allgemein

German minimum wage talk mostly symbolic for now

The country is one of the few in the EU without a minimum wage. Political parties agree it’s time to end that anomaly. The macroeconomic impact of the reform will be muted. Yet the debate suggests there’s a limit to Berlin’s appetite for deregulated labour markets.

Germany has been urging southern European countries to deregulate their labour markets. Meanwhile, it seems to be headed in the opposite direction. While the technical details are still up for debate, there is a consensus among all political parties that Germany needs a minimum wage at last.

Such a move would break a longstanding policy of keeping the government out of wage setting. The right to free collective bargaining is enshrined in the constitution. Even the social democrats of the SPD party and union leaders opposed government intervention in matters related to wages and pay. Continue reading

1 Comment

Filed under Allgemein, Labour Market

Bertelsmann faces 50 shades of digital challenges

The success of the “50 Shades” erotic trilogy boosted Bertelsmann’s 2012 profit. Yet the media giant’s successful book publisher hides structural weaknesses. Many of the company’s markets are shrinking, and its many attempts to adjust to the digital age haven’t been convincing.

The fictitious adventures of Anastasia Steele and Christian Grey, the protagonists of the “50 Shades” erotic trilogy may have spared Bertelsmann’s management some nasty questions on declining profitability. The books’ global success helped boost operating profit at the German media group’s publishing unit, Random House, by 76 percent to a record of 325 million euros – 19 percent of group profit on only 13 percent of its revenue. Continue reading

Comments Off

Filed under Allgemein

Benefits of German 2003 big bang are overstated

Germany started liberalising its labour market 10 years ago. That brought some welcome results, but the Hartz reforms’ impact on Germany’s economic resurgence tend to be overestimated. Wage restraint and a global demand boom for capital goods have been more important.

Ten years ago, then-German Chancellor Gerhard Schroeder outlined what appeared like a bold programme of labour market liberalisation. It included an overhaul of the way the German labour agency works and severe cuts in benefits for the long-term unemployed. Continue reading

Comments Off

Filed under Allgemein, Economic Policy, Labour Market

VW’s mega-profit hides risky governance weak spot

The carmaker’s 25 bln euros of pre-tax earnings are the highest ever for a listed German company. Despite a dismal European car market, current prospects are bright. But in the long term, politically charged and family-dominated governance is a source of vulnerability.

Volkswagen is defying gravity. Even though the European car market has been in terrible shape for two years, VW’s 25.5 billion euros of 2012 pre-tax profit was the highest ever for a listed German company. Continue reading

Comments Off

Filed under Allgemein