Acquisition Frenzy Driving Billionaires To Distraction, Regulators Sigh

Michael Hedges February 23, 2022 - Follow on Twitter

With mergers and acquisitions in the media world rampant opinions abound on consolidation, concentration and competition. Most legal frameworks in those directions are meant to blunt monopolies, always viewed negatively. The rise and rise of digital media and related technologies continues to confound rule makers, still getting their regulatory sea-legs together after a generation. Add to that the vast sums of money involved. Then, too, there are the culture wars.

Recently the French Sénat held hearings on media concentration, calling all the main actors, players and critics. The media sector in France has become particularly attractive for investors seeking to what has been for thirty years quite stable and rather boring. The regulatory lasso has kept French media - and French business generally - on a tight rope. That has loosened considerably this decade.

Arnaud Lagardère, chief executive of Lagardère Group, appeared before the Sénat Commission (February 17) to share his thoughts. Lagardère Group was founded by his father, Jean-Luc Lagardère, in 1992 as an offshoot of major aerospace manufacturer Matra. At this moment, Lagardère Group encompasses book publishing, Hachette Livre, newspapers and broadcasting, Lagardère News, and the Travel Retail division, operating kiosks at airports and train stations, as well as a games division. In recent years Lagardère Group has exited most French newspaper titles, more than a dozen foreign radio broadcasting businesses, television channels, a sports marketing company and film/TV studios. And the divestiture continues.

In his statement to the Sénat Commission M. Lagardère mostly railed about the European Commission (EC) and, of course, Big Tech. "I don't see why we should be forbidden to have ambition, even in France, in the name of pseudo concentration, which in any case will be regulated by Brussels,” he offered. “There is no point in shouting before you have pain. Don't be mistaken about the enemy. The enemy is not in France, they are the Gafams,” the oft used acronym for Google, Apple, Facebook, Amazon and Microsoft.

What remains of Lagardère Group has been a takeover target in recent months, which big French conglomerate Vivendi, with considerable media assets, is on a path to expedite the process. Vivendi is principally controlled by Vincent Bolloré, who has been stalking media operators, including Lagardère, for several years. On Monday Vivendi filed with the French financial markets regulator (Autorité des marchés financiers - AMF)) its bid to offer a premium to Lagardère shareholders who sellout before May, reported Le Monde (February 21). Last December Vivendi acquired the 17.9% stake in Lagardère held by Amber Capital. If all goes to plan, Vivendi would take board control over Lagardère, thus able to shape corporate governance. The AMF filing indicated Arnaud Lagardère would remain chief executive.

There is little doubt the EC will examine the Vivendi Lagardère acquisition mostly about the book publishing business that reaches across Europe and beyond. Vivendi owns book publisher Editis and intends to merge it with Hachette Livre. This does not sit well with other book publishers, in France and elsewhere. "It is desirable that one and two do not merge," said French publisher Madrigall Group president Antoine Gallimard to the Sénat Commission, quoted by Le Figaro (February 17). "I think that, if there is to be a number two, it must be a real number two, with real distribution and distribution tools of its own to really reopen competition.”

"It's not (about) Vincent Bolloré,” he continued. “This is really concentration: much emphasis has been placed on diversity, and market access. Even if Mr. Bolloré had all the best angelic intentions in the world, he will still know that it will be in his hand. If one day he is not of the opinion to participate cooperatively with other publishers, well, he can close the tollgate. And there will be only his cars that will go on the highway.”

For his contribution to the Sénat Commission M Bolloré offered (January 19) a contrite confession. “I answer individually, I have no title.” He then deflected nearly all questions. "My personal ability to impose things is not very important.” He is, after all, officially just an “advisor” to Vivendi, in which he is the controlling shareholder. When asked about the notorious right-wing talk channel CNews that appears on the Canal+ platform, which Vivendi owns, he said only, “It is of no interest.”

The Sénat Commission hearings also produced a fiery exchange between Xavier Niel, owner of telecom Free and, principally, newspaper Le Monde and construction company and telecom operator Bouygues, owner of television broadcaster TF1, Martin Bouygues. The issue was a different, also significant, transaction; the merger, in progress, of TF1 with M6, the French television subsidiary of RTL Group. "My country is a great democracy, I believe in its justice, but sometimes I have a small doubt in its authorities,” began M Niel, quoted by Le Monde (February 18). "The president of the competition authority said ‘we’ll examine this’ and she is fired. So, at that point, we are not too confident. "Creating a monopoly is a fantastic thing. Bravo if they can do it!”

For his part, M Bouygues said the TF1/M6 merger is “essential… even if it will not solve everything.” He went on to detail the various digital challenges. "The merger project is not a project of media or economic political power. It's different, it's a sovereignty project. TF1 belongs, in a way, to the heritage of this country.”

See also...

• Hot Topics - Media in France

• Hot Topics - Mergers and Acquisitions

• Hot Topics - Competition and Antitrust Law