INTERNATIONAL: MEDIA OWNER PROFILE: French media empire relies on alliance of odd elements - Richard Cook traces the history of Matra-Hachette’s programme of expansion and diversification

There is something charmingly idiosyncratic about the French, especially in a world where the blurring of national boundaries is the norm. So it is appropriate that Matra-Hachette, the country’s largest media company, does things a little differently.

There is something charmingly idiosyncratic about the French,

especially in a world where the blurring of national boundaries is the

norm. So it is appropriate that Matra-Hachette, the country’s largest

media company, does things a little differently.



Firstly, Matra-Hachette is not really one company at all, but two. Matra

was, and is, one of the world’s leading defence electronics companies,

involved in hi-tech electronics from space to the Renault Espace.

Hachette, on the other hand, was France’s answer to W. H. Smith, a

company that developed from its humble bookselling beginnings to emerge

as the country’s leading book publisher. In 1945 the company launched

Elle magazine, and by the 70s it was the nearest thing French publishing

had to a grande dame.



But things change, and necessity can provide some pretty unlikely

bedfellows.



The problem was that the 70s preached diversification and Hachette,

unfortunately, listened.



Enter Jean-Luc Lagadere, who had helped build up the Matra business.



Hachette had quickly floundered precisely because of its poorly judged

diversification policy and Lagadere was able to take over the publisher

in 1980. At first, the two companies were kept separate and Lagadere

made use of Hachette to turn himself from a national figure into an

international media mogul. He realised the importance of Elle as a brand

and launched a series of successful international versions of the title,

including one for the hugely important US market with Rupert Murdoch in

1985.



It was the 80s now and diversification had given way to expansion as the

business mantra - and there were few better sectors to be in than media.

Elle prospered abroad and Lagadere embarked on a furious expansion

drive, buying stakes in France’s second largest radio station, Europe 1,

and launching another soft rock FM station, Europe 2. Also, the company

bought a US magazine distributor and picked up the Spanish encyclopaedia

publisher, Salvat. The acquisition frenzy culminated in Lagadere buying

out Murdoch’s share of Elle in the UK, and in a dollars 1.1 billion deal

for the Grolier Encyclopaedia empire.



It was all going a bit too smoothly. And for Hachette, as for so many

other companies, when the 80s came to an end they did so with a

crashing, searing violence. Lagadere had seen the progress made in

television by many of the other media groups, not least the strides

achieved by Canal Plus in France. And the ambitious media king had long

hankered after completing his own media operations with the right kind

of broadcasting operation. Unfortunately, La Cinq was far from that.

Hachette took just a quarter share in the already loss-making TV network

but, by the time it had to pull the plug a year later, these losses had

escalated. In the end, the venture cost the company a dollars 643

million write-off and prompted a rescue plan that involved merging Matra

and Hachette.



Lagadere retained voting control of the merged company but was left with

only a minority equity stake. So, once Matra-Hachette was in better

financial shape, he set about acquiring more shares and formally

absorbing his stake into his own listed company, the Lagadere Group. By

1994, Lagadere’s personal stake in the company had grown from 37.6 per

cent to 93.4 per cent and his voting rights from 51.2 per cent to 94 per

cent.



The company was split into three sections - a hi-tech arm comprising

most of the former Matra interests, an automobile arm comprising the

former Matra companies that had been involved in the development of the

Renault Espace, plus the media arm. The media interests were, in turn,

concentrated into Hachette Filipacchi Presse, which publishes newspapers

and magazines across the globe, and Europe 1 Communications, which

manages the group’s radio and outdoor interests.



The restructuring has freed the company and enabled it to get on with a

more focused management of its interests, and the magazine arm has made

significant inroads into both the North American and Asian Pacific

markets.



In the US, the company’s most significant acquisition has been of the

cinema magazine, Premiere, and the auto title, Car and Driver.



Lagadere is aiming to develop both magazines as worldwide brands

following the Elle blueprint.



Confirmation of Hachette’s success in getting to grips with the tough US

marketplace came with the launch 18 months ago of George, a glossy

lifestyle magazine for people interested in politics. Although the

magazine has only limited circulation ambitions, the fact that it is run

by John F. Kennedy Jr, the son of the late president, has excited most

of the big publishing groups.



However, much of the group’s growth is likely to come from Asia as

Lagadere intends to launch up to four titles a year in the area.

Hachette has stolen a march on many of its rivals by fostering close

links with China. There has been a Chinese edition of Elle since 1988

and Hachette is one of only a few international publishers entitled to

print and distribute in the country that most observers believe will

become the single most important new market over the next few years.



And if they don’t want magazines, Hachette can always sell them

satellites.



Who said there was no synergy between Matra and Hachette?



MATRA-HACHETTE AT A GLANCE



MEDIA AND MULTIMEDIA



Magazines and newspapers



The company owns the controlling 66 per cent stake in Hachette

Filipacchi Presse, the engine of the company’s media operations. It

publishes over 100 titles in 25 countries. Around half the division’s

revenues still come from France, although that figure as a percentage

has been declining.



It owns seven newspapers, including the Dernieres Nouvelles d’Alsace and

Le Provencal and publishes around 25 magazines. The highest circulation

titles are the listings guides, Tele 7 Jours and TV Hebdo. Other titles

range from Le Journal de Mickey to the financial periodical, Le Nouvel

Economiste. The division publishes Elle, Elle Decor and Elle Top Model

across Europe.



The company publishes 27 titles in the US including Mirabella, Premiere,

Video and Car and Driver. It has also diversified into TV and Hachette

Filipacchi Productions was launched in 1994 to develop programmes based

on the group’s magazine titles and to run the Automotive Channel on

cable.



In China the division publishes the sports title, Bo, a version of

Woman’s Day and Car and Auto China in addition to the Elle

spin-offs.



Audiovisual



The company owns a 45 per cent stake in Europe 1 Communications. It

controls the Europe 1 and 2 French national radio stations as well as a

portfolio of stations across Spain, Germany, Eastern Europe, Russia and

China. Europe Images is one of the major programme suppliers to French

television.



Multimedia



Grolier Encyclopaedia is now on CD-Rom and the company operates

Matra-Hachette Multimedia.



Books



Hachette Livre owns several French book publishers.



OTHER



Hachette Distribution Services runs magazine distribution companies.



Matra operates companies concerned with the space, defence,

telecommunications and transport fields. Matra sales represent around 40

per cent of total group revenues.



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