German media group Bertelsmann and the family behind Vogue publisher Condé Nast are to invest in innovative media and technology companies, as they look to diversify away from their traditional markets.
According to a company statement, German media conglomerate Bertelsmann, controlled by the Mohn family, will spend up to €1.3 billion ($1.45 billion) a year until 2020 on acquisitions aimed at accelerating its shift to digital video and online education.
The Newhouse family, which owns American mass-media company Condé Nast, is set to invest $200 million in a fund that will target innovative media and technology companies.
Both companies said the change in strategy stemmed from significant increases in revenues, brought about by investments in new media, most notably at Condé Nast Digital, which revealed a 40% increase in revenue year-on-year in 2015.
The Newhouse family will invest in innovative media and technology companies through its new fund Advance Vixeid Partners, which was spun-off in 2015, and is set to close its first independent pool by June. Half of the capital for this $400 million target comes from its former parent company.
Bertelsmann alike is looking to invest in new media, reinventing itself as a digitally focused new media company since the appointment of non-family chief executive Thomas Rabe in 2012.
Rabe told the Financial Times: “We have the potential to invest €1 billion to €1.3 billion every year . . . without raising more debt than would be healthy for the company long-term.”
The investment strategy is a bold departure from the company’s origins as a hymnbook publisher in 1835, of which the Mohn family still owns 77.4%. The ownership structure of Condé Nast is not publicly available.