French Dailies: Help Wanted

To counter freebies, old-line papers are linking up with Big Business

Ever since Serge July, a former Maoist student leader, founded Libération in 1973, the left-wing Paris tabloid has prided itself on lambasting France's Establishment. Radical philosopher Jean-Paul Sartre was a co-founder and frequent contributor. But that was then. "Now, we have reached adulthood," says François Wenz-Dumas, a journalist and union representative on the staff of Libé, as the daily is universally known.

The change became evident on Jan. 20, when the paper's 370 employees did the most politically incorrect thing imaginable: They sold a 37% stake to Edouard de Rothschild for $26 million, giving the scion of the banking dynasty effective control of the paper. Why would they do that? Libé has been losing money for years, including some $5 million in 2004.

Like newspapers worldwide, French dailies have been hit hard by an advertising downturn. Ad revenues at French national dailies fell almost 40% between 2000 and 2003, according to Paris media consulting group BIPE. Elsewhere in Europe, media groups such as Spain's Grupo Prisa and Italy's Gruppo Editoriale L'Espresso have kept their newspapers profitable by slashing costs while luring new readers with color printing, glossy supplements, and DVD giveaways.

But France's three leading dailies -- Le Monde, Le Figaro, and Libération -- have done little to curb costs and have been too strapped for cash to invest in circulation-boosting schemes. One serious obstacle to cost-cutting is the immense power of the Syndicat du Livre, a union that controls virtually all printing and distribution jobs. France's leading dailies must now also contend with freebies. 20 Minutes, a free tabloid published by Norway's Schibsted, and its rival Metro, put out by Sweden's Metro International, now boast higher daily circulation numbers than those of the traditional papers. 20 Minutes and Metro have hired non-union workers to hand out copies, defying Syndicat du Livre protesters who tried to block distribution. Although 20 Minutes and Metro have both been losing money, the freebies are drawing away coveted twenty- and thirtysomething readers. "If there isn't a huge restructuring of the industry, it will be difficult to make any money in France," says Maurice Lévy, chief exec of ad shop Groupe Publicis.

To survive, old-line papers are scouting for deep pockets. Libé found its savior in Rothschild. The conservative Le Figaro, hurt by a 3% drop in sales, was acquired last summer by defense tycoon Serge Dassault for an estimated $1.6 billion. So far, no white knight has emerged to rescue Le Monde. The parent company of the influential daily posted an estimated net loss of $70 million on sales of less than $890 million last year. The paper recently replaced its editor and announced plans to lay off 90 of 740 employees. Lagardère, the conglomerate that owns 15% of Le Monde, says it is not interested in taking control. Le Monde managers hope to preserve their independence by finding several minority shareholders.

Why is Big Business interested in these sinking ships? Influence, for one thing. The government wields enormous power over the economy, and industrialists are always looking for ways to promote their interests. But that can lead to newsroom clashes. Last August, Dassault told Le Figaro not to publish part of a story referring to talks between France and Algeria over buying Dassault's Rafale fighter. "The journalist was told that the line he wrote about the Rafale negotiation would make our group uncomfortable," says Le Figaro board member Rudi Roussillon. Dassault declined to comment.

The question now is whether the new owners can ever make money. At Le Figaro, Dassault is plowing an undisclosed sum into a new printing plant in Southern France to reduce the cost of distributing Le Figaro in that region. A snazzy new look for the paper is in the works. To pump up circulation, Libé may cut its newsstand price to $1.30, from about $1.55. Hard-nosed capitalism, it seems, is the best hope to save France's dailies.

By Raphael Kahane in Paris

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