Keep an Eye on Lagardère: Media Revenues Up 8%, Dumps Most of Its T-Online Stake, Readies Investment in Le Monde and Canal Plus, and Has Eyes Set Firmly on US Expansion

Philip Stone February 14, 2005

Lagardère is a French media company on the move. Its radio, television and books divisions are doing better than most analysts had predicted, magazines are still a bit soft because of weak advertising, but its 15% stake in European Aeronautics, Defense and Space (EADS) -- the company that brings you the ever more profitable Airbus – now provides some 35% of the company’s overall revenues.
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And Lagardère is not sitting still. It has just turned a €70 million profit, after capital gains tax, by selling back to Deutsche Telecom 55.9 million shares in its T-Online mobile unit, and it still holds another 10 million shares.

So, how does the company plan on spending all this money?

It has two major investment projects in France – Le Monde and Canal Plus – and co-chairman Philippe Camus, currently at EADS, will leave that position in the summer and move to the US where he will head Lagardère’s North American media operations.  Camus says he believes there are great investment opportunities particularly within the US Hispanic market.

But the investment the media world awaits most impatiently for, however, is Le Monde. That newspaper often appears in the listings of the world’s top five most influential newspapers, but like almost all French national newspapers it has fallen on very hard times.

Lagardère is following in the footsteps of other White Knights who have come to the rescue of other nationals, although all has not gone smoothly.

Serge Dassault, who runs France’s most important defense industry of the same name, bought  around 80% of Socpresse, which owns Le Figaro among other notable titles, for €1.5 billion. His editorial  “spike” has made clear that stories that describes  in a negative manner  Dassault defense business or personalities, in particular, and the defense industry in general have no place in his publications. Some 10% of Socpresse journalists have since resigned.

Edouard de Rothschild, scion of the banking family, paid €20 million for a 37% stake in Liberation. If the saying, “Opposites Attract” has any truth then this deal must be it – Liberation with roots going back to the 1968 Paris student riots, founded by left-wing philosopher Jean-Paul Satre, its politics still to the very far left, now has as its largest shareholder a member of a family whose name is synonymous with capitalism.  De Rothschild could, under certain circumstances, actually gain 52% of the company, but he has restricted himself to 40% of the voting rights and he says he will not interfere in editorial policy. Rather he wants to use Liberation as an anchor for a media empire he wants to build.

And Egyptian businessman Rami Lakah, who appears to have left Egypt under some financial clouds,  has undertaken to turn around France-Soir, the afternoon newspaper that used to have a circulation of around 1 million but now is down to around 60,000.

Le Monde, like other nationals, has been hit hard because of new free tabloids, free news on the Internet, a soft advertising climate, and uniquely because of some riveting scandal published in a best selling book describing how the newspaper was run. The bottom line was that this proud newspaper is seeing  circulation continue to decline, and debts increasing to around €135 million, and it needs some  €50 million pretty quickly.

Arnaud Lagardère succeeded his father, Jean-Luc Lagardère, in 2001

Lagardère chief executive Arnaud Lagardère says he is willing to take a 17% stake for some €35 million. He says he cannot take a majority share because he also owns France’s leading Sunday newspaper, Le Journal du Dimanche, and current French law prohibits a group from owning more than one national daily newspaper.

He says he welcomes additional investors to get the total investment up to around €135 million with Francois Pinnault, the billionaire who controls the €24 billion PPR luxury goods and fashion company, most often mentioned as one who could come to the rescue. 

The sensitivity with the Lagardère investment is what editorial control it will exert. With already one defense industrialist laying down the law at Le Figaro on what can and cannot be printed about the defense industry, will Lagardère try to restrict a bad press for EADS and other bastions of the French industrial complex? 

Meanwhile, there had been talk of a possible merger between Lagardère and France’s largest media conglomerate, Vivendi Universal, but Lagardère made clear from the start it preferred some sort of partnership than a merger. 

The two companies hold television assets together – Lagardère currently owns 34% of CanalSatellite – the pay television platform for Canal Plus pay television,   owned by Vivendi Universal. Lagardère says it wants to exchange its CanalSatellite holding for a similar percentage holding in the Canal Plus parent company and is willing to pay up to an additional €1billion to make the swap.

Lagardère certainly seems to be a company on a roll. Stay tuned for when Camus hits American shores later this year and he really starts to get his arms dirty in increasing the US  business.

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Lagardère Becomes 20% Shareholder in Canal Plus France - February 17, 2006

It was a longtime coming but Lagardère has finally got its fingers into Canal Plus in France. Following the merger of Vivendi’s Canal Plus and the rival TPS, owned by TF1 and M6, Lagardère is now buying a 20% stake in the new company by transferring its 34% in CanalSat to the new company and buying additional shares for €525 million. The €150 million in cash on CanalSat’s books will reduce that cash outlay.

Lagardère also has an option to buy an additional 14% of the company three years after completion of the initial buy, expected by the end of Q3 this year. At the same three-year period TF1 and M6 have an option to sell their 15% of the company.

Vivendi Universal still remains Canal Plus France’s largest shareholder with a 65% stake.

The Canal Plus deal comes shortly after Lagardère agreed to a $540 million payout for the Time Warner books division.