Bertelsmann chief flags scale of challenge Bertelsmann head Thomas Rabe has told top executives that the group does "not have all the skills required" to profit from the shift of media to the internet and called the company's position in the US "insufficient." In a blunt assessment of his challenge eight months after taking the helm of the media conglomerate, which controls RTL TV and Random House books, Mr Rabe used an annual closed-doors meeting of 500 executives on Wednesday to make his "case for change" after years of low growth. Participants at the gathering in Gütersloh, Bertelsmann's north German home, told the Financial Times that Mr Rabe had said the group was plagued by "low growth and low growth potential," averaging only 0.7 per cent organic annual sales growth in recent years. "We lack growth and the world around us is changing," Mr Rabe was quoted as saying, although he also asked executives to take heart given "the strong position" the company had been able to achieve through restructuring in the past few years. The company, controlled by the Mohn family, has gone through years of torpor after buying back one-quarter of the group from an outside investor in 2006, a move that resulted in Bertelsmann's debt jumping and closed the option of an initial public offering. As chief financial officer, Mr Rabe helped the two preceding chief executives pare the group's portfolio to raise funds and profitability. But revenues fell as a result, from about €20bn to about €15bn in 2011 - with 80 per cent coming from low-growth Europe. According to participants at the Gütersloh meeting, Mr Rabe said these moves had left Bertelsmann with "strong market positions," with most businesses "number one or number two" in their respective markets. Operating return on sales was running at 10 per cent since 2010, he was quoted as saying. But Mr Rabe added that Bertelsmann needed to return its focus to growing its business in order to create value for its investors, but also attract the kind of talent the company needed to push existing businesses online and to make use of the new opportunities presented by digital platforms. Mr Rabe said he would seek to make Bertelsmann expand faster, become more digital and more international "over the next five to 10 years" - although he gave no details to how he might fund any bigger deals, according to those present. The company this summer changed its legal form to a KGaA. This made the Mohn family general partners with control of the executive board, but gives them the option to sell stakes in the underlying operations - such as consumer goods group Henkel or Merck, the German drugs maker. Apart from "strengthening core businesses" - RTL, Random House, Arvato media services and G+J magazines - Mr Rabe said he would focus on digital, arguing that the internet meant media use was "bigger than ever" and Bertelsmann had "to make sure we get a piece of that cake." He pledged to put "a significant amount of investment funds" into growth platforms, of which BMG music rights, a joint venture with Kohlberg Kravis Roberts, the private equity group, is the most developed, and an online education fund, University Ventures, the most recent example. Mr Rabe also said Bertelsmann would focus on fast-growing emerging markets including Brazil, India and China but also on the US, where Bertelsmann's mainly presence is Random House books. The German group had to "do more" to be present "in the world's leading media market," Mr Rabe added.