Changing Of Le Garde: Hachette Faces Hatchet, Consolidation

Hachette Filipacchi, one of the world's largest publishers of consumer magazines, is poised to be restructured following a quiet reorganization at its parent company, Paris-based Lagardère SCA. Big moves including consolidation, management changes, and potential sales and/or acquisitions are expected to follow the reorganization, which puts a single executive in charge of Lagardère's two media divisions: Hachette Filipacchi and Lagardère Active, which specializes in digital and mobile media.

Didier Quillot, formerly chief of telecom giant Orange France, last week was named chairman of both Hachette Filipacchi and Lagardère Active, and Quillot is expected to consolidate and coordinate their print and digital media strategies.

Hachette's magazine properties are well known in the U.S. Founded in 2004, Lagardère Active North America has already worked with Hachette properties to create mobile content, including Car & Driver Mobile, Elle Mobile and American Photo Mobile.



In addition to planning big media acquisitions in the United States, rumor has it Quillot may sell some Hachette properties, and has already begun firing executives from businesses slated for the auction block. To make room for Quillot, in September one of the grand old men of French media, Gerald de Roquemaurel, chairman and CEO of Hachette for 35 years, was kicked up to a supervisory board.

On Quillot's advice, the boards have also appointed two new members who will sit on both company boards: Olivier Chapuis, formerly President of Interdeco, and Alain Lemarchand, formerly CEO of Lagardère Active. Although their roles are still unclear, it seems likely they will bolster Quillot's influence on each board, helping coordinate the activities of the two companies. To this end, Quillot is also expected to build a team of directors with authority over both companies.

Hachette Filipacchi is one of the world's largest consumer magazine publishers, reaching an audience of about 50 million in the United States alone through enthusiast magazines, including American Photo, Boating, and Flying as well as Elle and Premiere, among others.

Although some of these titles are category leaders, overall, Hachette has seen total advertising pages and profits fall 6.2% to 10,490, according to the Publishers Information Bureau. Meanwhile, total ad dollars fell slightly--1.7%--to almost $1.085 billion.

It's not clear how increased coordination with Lagardère Active will affect Hachette's American magazine business, but an increased focus on multiplatform digital content is clearly in the works.

Arnaud Lagardère has also signaled his intention to make major acquisitions in the U.S. print and Internet sectors, tabling up to $5 billion for these purchases. While Lagardère says the company remains committed to magazines as its core business, he has expressed skepticism about the future of print newspapers--saying he thinks product costs will make them financially untenable within a decade.

Lagardère may also be contemplating the sale of the rest of his company's stake in EADS, the European defense contractor that produces Airbus planes under joint European management.

Recently, EADS suffered major setbacks, due to production and delivery delays in its new model A350 and A380 planes. The earlier sale of half of Lagardère's stake contributed to the company's $5 billion war chest for M&A.

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