When it comes to championing a diversity of media voices and cultural influences, the French have always been quick to man the barricades. One favorite target: U.S. powerhouses such as Walt Disney Co. (DIS
) and AOL Time Warner Inc. (AOL
), which the French accuse of wantonly spreading English-language pop culture around the globe. And it's not just les Anglo-Saxons who have felt France's wrath. Paris has even aimed its fire at Italian Prime Minister Silvio Berlusconi because of his supposed control over public and private television, which drowns out the chorus of voices needed for public debate.
But it seems the cause of combating media monopolies doesn't apply to the French themselves. When debt-ridden conglomerate Vivendi Universal put the group's publishing interests on the block in late summer, interest was high on both sides of the Atlantic. After all, Vivendi Universal Publishing (VUP) is France's largest publisher, with venerable houses such as dictionary specialist Larousse and academic publisher Nathan in its portfolio, along with American textbook giant Houghton Mifflin (HTN
). Soon, private equity groups like Carlyle and Blackstone associated themselves with French partners to bid for the business.
That proved too much for French authorities. Larousse--whose Dictionnaire Larousse de la langue française is the bible of the language--falling into the hands of the Americans? Quelle horreur! The potential acquirers, opined French Minister of Culture Jean-Jacques Aillagon, were nothing but "asset-strippers" and "bone-pickers." VUP had to remain French. And what do you know, one bidder fit the bill: Lagardère, the aerospace-and-media conglomerate. On Oct. 23, Lagardère's $1.25 billion bid--for all of VUP except Houghton Mifflin--was accepted. Aillagon immediately hailed the success of the "French solution."
Just one problem: Lagardère, through its Hachette division, is already France's No. 2 publisher. After buying Vivendi's assets, the combined group would be the unbeatable No. 1. It would control more than 80% of wholesale book distribution, around 75% of textbooks, and almost 100% of dictionaries and encyclopedias.
What's going on? The French have ditched their rhetoric of diversity to indulge in traditional dirigisme: the building of a fortress company to defend French interests. But some Frenchmen don't want to be defended. "When just one group owns 80% of the textbook market and more than 50% of paperbacks, there's reason to tremble with fear," says Antoine Gallimard, the CEO of France's largest independent book publisher.
Tellingly, the French are making their move just when Europe's antitrust watchdogs find themselves in a weakened position--too weak, perhaps, to respond vigorously to the Lagardère deal. During the same week that the deal was announced, the European Court of First Instance overturned two EU decisions to block mergers. The court's action may give EU Competition Commissioner Mario Monti second thoughts about nixing the all-French transaction.
For its part, Lagardère is being shrewdly candid. "Concentration is inevitable," wrote Group Chairman Jean-Luc Lagardère in an op-ed piece in Le Monde. Lagardère, however, claims altruism as his cause: His article is entitled, "We want VUP France for the love of books." Furthermore, the company says it will give up assets to get approval by French and European antitrust authorities. "But we're going to try to keep the maximum," clarifies Lagardère spokesman Jean-Pierre Joulin.
That maximum may be enough to quash serious competition in some key media sectors, but that doesn't seem to bother a French government that prefers a national solution to a market one. That leaves Brussels. This is clearly one case where Monti, besieged as he is, must play a forceful role, if only to save the French from themselves.
Rossant covers French politics and business from Paris.
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