Lagardere magazine giant goes digital with print closures

25th January 2007, Comments 0 comments

PARIS, Jan 25, 2007 (AFP) - The media arm of French group Lagardere, a leading world magazine publisher, announced on Thursday the likely closure of titles and job cuts under a plan to become a leading digital content provider.

PARIS, Jan 25, 2007 (AFP) - The media arm of French group Lagardere, a leading world magazine publisher, announced on Thursday the likely closure of titles and job cuts under a plan to become a leading digital content provider.

The strategy was to raise sales from digital activities from less than one percent last year to up to 10 percent within two years, generating higher margins from digital content than from paper editions.

The business, Lagardere Active Media, said that it would shed 7-10 percent of its workforce of 9,900 people in about 40 countries, with the loss of 240-350 jobs in France, under the three-year plan.

The strategy to improve profitability should generate overall cost savings of about 70 million euros (90.7 million dollars) in a full year by the end of 2009.

The restructuring would cost from 2007 to 2009 would cost 80.0-100.0 million euros.

Lagardere Active Media counts "Elle", "Car and Driver", "Women's day" and "Paris-Match" among its portfolio of magazine assets. The business was formed of a merger in September of the print activities and audiovisual businesses of the Lagardere industrial group.

The company said that its restructuring plan was intended to make the business a "leader in the generation of content, particularly digital, and in aggregation on markets where the group is present".

In a first stage, it would rationalise its businesses.

The closure of magazines would be considered. The effect on current operating profit of the companies concerned, for a full year and on the basis of the accounts in 2006, would be a net contribution of about seven million euros, but sales would contract by about 90 million euros.

The group did not say which titles were candidates for closure but said that they tended to have falling sales and operating losses.

In addition, the company would dispose of some international operations which were too small or insufficiently profitable, or would set up licencing arrangements.

The net effect of these measures in a full year would be to reduce sales by 40 million euros and increase operating profits by one million euros.

The sale of press photo agency activities, concluded on Tuesday, and of regional press interests and some other activities, once completed, should reduce sales by 260 million euros and increase operating profit by four million euros.

The overall impact on employment would be the loss of 7-10 percent of the workforce of 9,900, varying from country to country.

This would involve the loss of 245-350 jobs in France, but no-one would be forced into unemployment since the cuts would be made on a voluntary basis, the company said.

At the end of 2009, digital activities would account for 5.0-10.0 percent of sales, depending on opportunities for takeovers, from less than 1.0 percent in 2006 on the basis of figures which have not yet been audited.

The company said that "these sales should generate a higher operating margin than that from magazines on paper".

Copyright AFP

Subject: French News, Media  

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