Havas, SA

views updated

Havas, SA

136, avenue Charles-de-Gaulle
92522 Neuilly-sur-Seine Cedex
France
(33) 1 47 47 30 00
Fax: (33) 1 47 47 32 23

Public Company
Incorporated: 1835
Employees: 12,430
Sales: FFr 28 billion
Stock Exchanges: Paris London
SICs: SIC 4833 Television Broadcasting Stations; SIC 2711 Newspapers: Publishing, or Publishing and Printing; SIC 7011 Hotels and Motels; SIC 7311 Advertising Agencies; SIC 4724 Travel Agencies

As France’s largest media and communications group, with a diverse range of businesses and investments in France and abroad, including audiovisual and other media, advertising, tourism, and publishing, Havas has played a remarkably powerful role in the control of information in Europe. In the early 1990s, Havas was the fourth largest pan-European media company, owning France’s top tourism agency, retaining a 25 percent interest in Europe’s top pay-TV channel, Canal Plus, and having a 45 percent interest in Euro-RSCG, the world’s seventh largest advertising group, among other investments. The company has consistently been a major player in news and publicity since its conception in 1835.

The history of Havas may traced to its founder, Charles Havas, a former supply officer in Nantes who, from a very early age, recognized the importance of information as a commodity. While working as a banker and importer in the international cotton trade, Havas gained exposure to the governmental business of translating foreign newspapers, becoming co-proprietor of the newspaper Gazette de France from 1813 to 1815. When Louis-Philippe proclaimed freedom of the press in 1830, Havas was convinced that the traffic of news could be organized and made public.

In 1832, Havas founded Bureau Havas in Paris to supply the rapidly growing number of French newspapers with translations of foreign publications. In 1835, he added the service of translating French publications for foreign newspapers, and the bureau was renamed Agence Havas, an international press agency. From the onset, the agency recognized the importance of being the quickest to supply news to the press and was constantly exploring new methods of transporting information, from carrier pigeons to the electric telegraph. Moreover, Havas founded his company with a belief in cooperating with the government in order to gain financial support, avoid conflicts, and have exclusive access to governmental information. This status as official government supplier of news both facilitated the company’s enormous success over the following 150 years and caused much corruption, exploitation, and public mistrust of the media until the end of World War II.

In 1851, in addition to operating a successful press agency, Havas founded the first publicity agency in France. Despite the limits imposed upon the press under the Second Empire, Havas prospered during the great commercial and industrial expansion of the era. The company’s success and power stemmed from the faith that the French government, business community, and press had in its services, as well as from its expansion into newspaper circulation, improvements in the telegraph, and the increasing importance of public opinion. When Charles Havas died in 1858, his sons assumed control of the business and inherited their father’s belief in the need to be a loyal instrument of the state in order to retain the agency’s monopoly on information. In 1862, Auguste Havas finalized an agreement with the Minister of the Interior to make Havas the exclusive diffuser of official news.

During this time, Paul-Julius Reuter, a former employee of Havas, opened a press agency in London, while another former Havas worker, Bernhard Wolf, opened a similar office in Berlin. By 1856, Havas, Reuter, and Wolf had signed an accord to exchange information and cooperate to exploit future markets, while still retaining monopolies in their respective regions. Following attempts by German statesman Otto von Bismarck to retain control of the German-language press, Havas, Reuter, and Wolf signed a new agreement in 1869, establishing new geographic domains for each agency. Wolf controlled Austria, Scandinavia, and Russia, while Reuter covered England, Holland, and their dependencies. France, Italy, Spain, and Portugal became the domain of Havas. Reuter expanded into Australia, Egypt, the Antilles, and the Far East, while Havas established itself in South America and Indochina. Since 1867 when the transatlantic telegraph cable linked London and New York, the United States was declared neutral, with each agency establishing relationships with clients and collecting news independently. Each agency signed a separate accord with the American Associated Press. The three agencies retained close ties to one another in order to discourage the foundation of competition.

During the Franco-Prussian War, the exchange of news between Havas and Wolf took place through Reuter in London. With the siege of Paris by the Prussians, Auguste Havas installed himself in Tours, and Havas Paris depended upon Gambetta’s hot-air balloons to communicate the news of the besieged capital to the rest of France and abroad. The Prussians released falcons to intercept the messenger pigeons used by Havas Paris to get news from Tours. During the Paris Commune of 1871, the insurgents took control of the Havas dispatches. Auguste Havas returned to Paris immediately after the Commune fell. By this time, 24 of 164 parts of Havas’s press agency division were controlled by Auguste Havas and his son. The remaining divisions were in the hands of industrialists, politicians, and businessmen, whose connections played a large role in Havas’s success.

Auguste Havas sold the business to Emile d’Erlanger, an international financier, and, in 1879, the company sold stocks to the public. The agency’s international network expanded yearly and was enjoying exceptional prosperity by 1881. Havas’s threefold function as press agency, publicity agency, and liaison between the government and the business community made the company very appealing to investors. The company was expanding in France, adding newspapers in Lyon, Lille, Marseilles, Toulouse, and Dijon. Havas’s commercial activity increased tenfold, and its connections to influential financiers were augmented by its involvement with the Banque de Paris et des Pays-Bas (Paribas). This period in the company’s history was marked by efforts at discretion in relation to its customers and at trying to follow government objectives without losing journalistic credibility, despite a climate of journalistic corruption.

During this time, the publicity division of Havas made an agreement with the Compagnie Generale de Publicite Etrangere, facilitated by an American, John Jones. Like the accord between Reuter and Wolf in 1856, the new agreement divided the publicity market geographically to avoid a price war. Havas won exclusive rights to publicity in Spanish, Portuguese, and Russian newspapers, while Jones retained rights in Dutch, Scandinavian, Danish, and Austrian journals. Hungarian, Swiss, and Belgian customers were shared equally so that competition remained only for British customers.

In the figure of Leon Renier, Havas found a natural leader who played a major role in establishing the company as a powerful and diversified news monopoly. Under Renier, Havas and Paribas invested in telegraph communications linking France with northern Europe, the Antilles, and the United States. Renier played a large role in Havas’s contract for exclusive advertising in the Parisian subway system and at kiosks in Paris. As the number of daily newspapers with large circulations increased and the business of publicity grew larger, Renier made Havas a more dynamic enterprise and became one of the most powerful men in France.

The immense power Havas wielded in the media was evidenced by the fact that most newspapers depended so completely on Havas dispatches for national and international news that they did not maintain their own offices in Paris. The philosophy of efficiency and speed of dispatches upon which Havas was founded continued through the agency’s progressive use of the telegraph and the telephone. One example of the company’s commitment to efficiency involved the dispatching of news on the Dreyfus affair at Rennes in 1899. To obtain news about the trial of the alleged traitor, Alfred Dreyfus, Havas employed cyclists to pedal between the Palais de Justice and the central telegraph agency, and maintained a telephone at the stock exchange, incurring costs of Ffr 1 million.

Around the turn of the century, Havas became the privileged intermediary for financiers and foreign governments seeking to influence French public opinion discretely through the press. For example, after Russia borrowed money from French banks in the last years of the nineteenth century, the revolutionary events of 1905 in Russia were smoothed over by reassuring dispatches by Havas. The banks, including Paribas, made big profits by avoiding public anxiety about the loans, which amounted to 80 percent of Russia’s public debt. Havas also received FFr 1.5 million from Banque Perier and Banque Imperial Ottomane to assure support in Parisian newspapers for loans to the Turkish government. According to Antoine Lefebure in Havas, les arcanes du pouvoir, Havas was one of the principal instigators of corruption of the French press by foreign governments. This corruption had limited political consequences during the time, but that was not to be the case in the next century.

In January 1914, Societe Generale des Annonces, a joint stock publicity company, became part of Havas, which then came under the control of the Syndicat Central de Publicite, whose sole purpose was to control the publicity of the four big Paris newspapers. In each of these four papers, Le Journal, Le Matin, Le Petit Journal, and Le Petit Parisian, the Syndicat Central de Publicite and Leon Renier played major roles. With Renier’s election as head of both Havas Information and Societe Generale des Annonces, press and publicity became even more united within the company. With the beginning of the war in 1914, the need to control public opinion became all the more important. Havas took part in propaganda campaigns against the Germans and received FFr 6 million from the French government for propaganda distribution. The agency received money from Greece in 1919 and from Yugoslavia in 1920 to influence the French press in their favor against Italy.

The postwar period was very profitable for Havas, despite the corruption scandals and the high amount of government involvement in the press. The agency added newspapers in Mul-house, Nice, and Bordeaux to its publicity administration. Paribas increased its influence in Havas and took part in that company’s move to increase capital by selling stocks. While the agency did by no means have a monopoly on the publicity market, it did expand its business after the war by combating a general mistrust of advertising in France. In 1931, advertising budgets in France were eight times less than in the American market. Havas therefore took a more subtle approach with its clients by avoiding newer media, such as radio. Big businesses did not want to appear to be directly controlling the press, and so Havas played the role of intermediary between the press and the business community, protecting the anonymity of companies. The agency also influenced the contents of a newspaper to benefit such clients as the government, banks, and small companies. The French government, which relied on the press for its own electoral motives, did not intervene in these manipulations of publicity.

After World War I, Renier convinced the publishers of the five largest Parisian dailies that competition for publicity could damage their profitability, and the five papers gave over to Havas their publicity offices, with a percentage of their capital being put aside for operations of common interest. As the meeting point of political groups and powerful financiers, Havas and this publicity consortium played a powerful role in French politics between the wars. One formidable competitor was Francois Coty, who had made a fortune in perfumes before he began to construct a newspaper empire. When Havas and its consortium refused to distribute, print, or sell any of Coty’s journals, they was forced to pay FFr 14 million in damages for unfair competition. By 1934, however, Coty’ s empire had disintegrated, and Havas bought him out.

The hegemony of this consortium limited the diversity of the press, which was mostly controlled by political conservatives. A Socialist movement, led by Leon Blum, who served as premier from 1936 to 1938, denounced Havas for its omnipotence, manipulation, and corruption. Citing the American example, Blum called for a separation of news and publicity and for the publication of newspaper budgets without secret financing by foreign governments. Renier agreed to the latter regulation and agreed to cooperate with Blum’s government if the agency was not dismantled. Blum accepted, and Havas received the contract for the publicity of the 1937 World Exposition.

With the beginning of World War II, the accord between Havas, Wolf, Reuter, and Associated Press ended. Wolf became a propaganda office for the Nazi regime, and Havas’s correspondent in Germany was expelled from the Reich by the Gestapo. Abroad, Havas’s offices became press agencies for the French embassies. The consortium of five Parisian dailies was dismantled, and Havas came upon difficult financial times. By 1940, many of its former clients were no longer advertising; on June 9, 1940, the French government retreated to Tours, and the next day Havas suspended its news service.

The occupying German forces considered Havas an agent of French propaganda and forbade its operations in the occupied zone while taking over a large share of its stock. Moreover, Havas was forced to agree to the harsh regulations imposed upon it by the Vichy government in 1940. The agency was both careful not to offend Hitler or Mussolini and anxious to reinforce its ties to Vichy, creating an “official propaganda” service to run ministerial publicity. Despite the adverse conditions, Havas’s capital increased from FFr 300 million in 1942 to FFr 400 million in 1943. The company’s collaboration with the Vichy government and the Germans was an effort to protect the company’s interests and investments, which had increased before the war. However, in the postwar movement of nationalization, Havas and Renier were seen as open participants in economic collaboration with the occupiers, as well as instigators of corruption under the Third Republic. Called a traitor, Renier was replaced by Jean Schloesing, who set about reestablishing Havas’s reputation. In 1944, Havas was nationalized, with the French government controlling the stocks previously held by the Germans.

By 1947, the agency had a FFr 62 million deficit and was competing with Publicis for advertising clients. In these difficult years, Havas finally eliminated editorial work from its press agency and separated information activity from publicity. The final split between news and publicity came in 1959, when Jacques Douce was named commercial publicity director. Havas’s president Jean Chevalier focused the agency’s operations on private industry to offset the business it no longer conducted with the government. The company also invested in travel agencies, cinema, and radio.

By 1952, Havas’s publicity contracts reached 1938 levels, and from then on, contracts doubled every ten years. By 1972, the publicity market in France was seven times larger than prewar levels, due to the explosive expansion in television, radio, news weeklies, and industrial investment in publicity. In 1974, Douce created Eurocom, a publicity subsidiary of Havas, and, in 1978, Havas agreed to develop new media interests with its direct competitor, Publicis.

On November 4, 1984, Havas president Andre Rousselet launched Canal Plus, the first cable television station in France. While some observers were surprised that the top publicity group in France would become involved in a medium that needed no outside publicity, Rousselet hoped that the innovative move would open up a potentially profitable market. In 1985, President Francois Mitterand announced the opening of private commercial television channels, and Canal Plus’s subscription rate declined sharply. However, the channel continued in operation, and, with aggressive advertising and competent management, Canal Plus became one of the biggest French audiovisual successes of the 1980s.

In 1986, with French President Edouard Balladur’s plans for massive privatization, publicity contracts poured into Eurocom. Havas, itself, was privatized in 1987, ending 40 years of government control. In 1988, American Robert Maxwell bought almost five percent of Havas in his quest for a French communications acquisition. Also that year, Rousselet left Havas to head Canal Plus, in which Havas had gained a 25 percent interest by 1992. Publicity skyrocketed for Havas in the 1980s, as revenues from television advertising doubled between 1983 and 1989. The company showed less expansion in areas in which it had traditionally been successful, such as information and newspaper publicity.

During this time, Havas made investments in cinema through Canal Plus and took part in several large acquisitions, including the publicity group RSCG (Roux, Seguela, Cayzac, Goudard) in 1992, which made Euro-RSCG the seventh largest publicity group in the world. In the early 1990s, with the international recession, business slowed, and the publicity market weakened due to depressed consumer spending.

Nevertheless, in 1992, Havas was France’s largest media and communications group, comprising a wide range of business and investments, including local and audiovisual media, international multimedia sales, tourism, full-service advertising, and publishing. With the deregulation of European television markets, Havas emerged as one of the top four pan-European companies. While Europe remained the company’s first priority, Chairperson Paul Dauzier announced plans to expand aggressively outside of France. Euro-RSCG opened an office in Poland in 1992 and reorganized its offices in the United States. Havas’s publicity department took part in a joint venture with Czechoslovak Television to bring Western commercials and programming to Czechoslovakia and made similar arrangements with Magyar Television in Hungary.

The flexibility and diversity that Havas exhibited in the second half of the twentieth century were expected to help ensure its future success in the industry. Moreover, the company’s position at the forefront of communications in France and throughout Europe seemed stable, due largely to the wide range of business in which it was involved, the broad geographical spread of its activities, and its continual innovation in new media.