Matra-Hachette S.A.

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Matra-Hachette S.A.

4, Rue de Presbourg
75116 Paris
(33) 1 40 69 16 00
Fax: (33) 1 47 23 01 92

Public Company
1826 as Librairie Louis Hachette
Employees: 40,314
Sales: FFr53.00 billion (US$9.9 billion) (1994)
Stock Exchanges: Paris
SICs: 5994 News Dealers and Newsstands; 2721 Periodicals; 2731 Book Publishing; 3663 Radio & TV Communications Equipment; 3661 Telephone and Telegraph Apparatus

Matra-Hachette S.A. ranks as Frances top communications enterprise and one of the countrys top 15 industrial companies. The conglomerate was formed through the 1992 merger of longtime affiliates Matra S.A., a defense electronics and transportation company, with Hachette S.A., one of the worlds top 20 media groups. The union was precipitated by Hachettes 1990 acquisition of the troubled French television station La Cinq. When La Cinq failed in 1991, Hachette recorded a loss of FFrl.9 billion (US$350 million) and its debt rose to more than Ffr8 billion (US$1.53 million). Jean-Luc Lagardère, whose Groupe Lagardère owned over 93 percent of Matra Hachette, oversaw the 1992 recapitalization and merger. The new company operated through nine divisions in 1995: distribution, press, book publishing, audio-visual production, telecommunications, defense, space, cars and transport equipment. Known in some circles as the Green Octopus, Hachette used its dominant, 30 percent share of the French book market as a springboard to expansion throughout Europe and overseas. By the early 1990s the conglomerate ranked as top magazine publisher in the world, with over 100 magazines, including the globally circulated Elle. International sales surpassed domestic sales for the first time in 1994.

In 1821, when Monsignor Denis Frayssinous, whom Louis XVIII had put in charge of the French universities, ordered the suppression and closure of the Ecole Nórmale Supérieure, one of the most prestigious educational establishments in France, he could not have known that he was participating indirectly in the foundation of what is now Frances largest publisher. In that very year Louis Hachette, a brilliant pupil of the ecole, was finishing his third year of studies there, and found himself thrown back upon his own resources; no longer a student, he decided to become a publisher. In 1826, after more than three years of planning and searching for financial backing, Hachette acquired the publishing house Librairie de Jacques-Francois Brétif, which he soon renamed after himself: Librairie Louis Hachette. He retained Brétif s list and began to publish educational journals and textbooks for primary schools. However, by 1831 he was already publishing the famous romantic historian Jules Michelet. His first catalog, which appeared in 1832, already reflected the diversity that lies at the roots of Hachettes success: it included a classical division, journals, and by 1836 two dictionary projects. Eight years after its creation, the Librairie Hachettes sales volume had tripled.

Louis Hachette soon realized the need for a partner in the business, and in 1840 Louis Breton filled this post. Together, Hachette and Breton launched numerous periodicals and both made known English-language literature: William Makepeace Thackeray, Henry Wadsworth Longfellow, and, most notably Charles Dickens, eleven of whose novels were published by Hachette. In 1851, Hachette returned from travels in England, where he had observed the parallel development of public transportation and public information technology. He followed the example of English news agent W.H. Smith, and in 1852 began to establish a network of bookstores and newspaper stands in French railroad stations. These emphasized interesting reading at a moderate price and offered tourist guides, general interest reading, and childrens books published by Hachette. Louis Hachette went on to diversify into newspaper and magazine publishing. In 1859 his company expanded overseas, opening a foreign language bookstore in London.

Louis Hachette took a keen interest in French literature. Having acquired the publisher Librairie Victor Lecou in 1855, he became publisher of such well-known writers as George Sand, Victor Hugo, Gerard de Nerval, and Gustave Doré. Later he became editor of the Emile Littré dictionary, known as the Littré, which is still the most respected reference dictionary used in universities and schools. At his death in 1864, Louis Hachette left his heirs a considerable fortune, and a company with 165 employees and sales which reached FFr18 million in 1878. His son George took over the bookselling license, but the Librairie continued to be managed by Louis Breton, until the latters death in 1883, and by a small group of partners who worked in close collaboration and sought rapid growth. This group included Emile Templier. He took the initiative of publishing the work of the Comtesse de Segur, who wrote several classics of childrens literature. The Franco-Prussian War of 1870 slowed down the activities of the Librairie considerably, but the companys recovery was as rapid as its decline had been. Tourist guides were particularly successful, but a major breakthrough came in 1897 with the creation of Messageries Hachette, a book and press distribution organization, which soon served the entire country and in 1914 employed more than 700 people. In 1900 Hachette opened the first newsstand in the Paris subway system.

World War I caused difficulties for the Librairie; the companys greatest problem was the loss of personnel. The men sent to the front were often replaced by women, many of whom had no experience in the business. However, this change did not seem to prevent the Librairie from further expansion, and in 1916, in the midst of war, the Librairie Hachette bought the company Pierre Lafitte, which included several newspapers, bestsellers, a bookshop, and a photographic studio.

After World War I, the Librairie Hachette underwent significant restructuring. Despite the reluctance of the employees and the fact that the company was essentially a family business, the Librairie became a société anonymea public company in 1919. This change was prompted by a growing need to increase its registered capital and to issue redeemable stock. The new public limited company had five active partners and 24 sleeping partners, all relatives by marriage or direct descendants of Louis Hachette or Louis Breton. An increase of capital took place, which would be multiplied again in 1939, by nine times. Hachette also expanded overseas. The Librairie took over AGLP, a book and newspaper wholesaler that also operated retail bookshops throughout South America and in several European countries. From 1932, Hachette began to secure exclusive distribution rights for other publishers and in particular for the prestigious N.R.F. Gallimard, for Fasquelle, which would soon become a subsidiary of the group. In the 20 years between the two world wars, the Librairies volume of business tripled. World War II slowed down this growth considerably, as it did for other publishers.

The occupying Germans began by requisitioning Hachettes offices in rue Reaumur and boulevard Saint-Germain, and by forcing out the companys directors. Finally the Germans tried to take over the Librairie, but were unsuccessful. During the four years of German occupation, Hachettes funds were nil. Little by little, however, a passive resistance was organized so effectively that as early as 1944 the directors returned to the company. Messageries dHachette was the most affected, the distribution system and transport system having changed considerably during the war. In 1947, after several fruitless attempts at recovery and the failure of the Messageries Françaises de la Presse, created in 1944, Hachette created the Nouvelles Messageries de la Presse Parisienne (N.M.P.P.). This organization, which continued to enjoy a worldwide influence throughout the postwar era, worked on a cooperative basis, and Hachette merely gave it its structure, only accepting a fee in compensation. In 1963, the N.M.P.P. achieved sales of FFrl.5 billion, half the sales of Hachette. In 1991, Hachette owned 49 percent of N.M.P.P., the remaining 51 percent being owned by nine other newspaper and magazine publishers.

Meanwhile, and after World War II, Hachettes book division expanded through a large number of acquisitions and through an original and important creation in literary publication, the Livre de Poche. The latter joined the four publishing divisions already in existence: the educational division, the young readers division, the general literature division, and the tourist guide division. The new publishers that Hachette acquired retained their individual company styles and character. The first of these was the Editions Bernard Grasset, publisher of Marcel Proustat the authors own expenseof Paul Morand, and of Montherland. Hachette had come to the aid of this company as early as 1938, but it was not until 1954 that the Librairie acquired a major holding in Grasset, which had been founded in 1907. Grasset then merged rapidly with Fasquelle, in which Hachette had held a majority stake since 1931. The process was similar in the case of the Librairie Fayard, founded in 1955. Hachette acquired an initial stake, which became a majority shareholding in 1958. Next came Stock, a publisher specializing in translations, in 1961. Livre de Poche was the creation in 1960 of the Librairie Générale Françaisea subsidiary of Hachette created in 1922and was largely inspired by publishing in Britain, where good literature in very cheap editions was becoming increasingly popular. Livre de Poche, a series including the best writers since the beginning of the century and a large number of classics at unrivaled prices, achieved considerable success. One year after the creation of the series, 15 million books had already been sold, and two years later, 24 million. Livre de Poche achieved such fame that, from being the proper name of a series, it has become a common name in French, designating paperback editions. In later years, when other paperback editions appeared in France, bookshops were obliged to distinguish a paperback of the Livre de Poche series by the name poche-Poche.

By 1963 the Hachette group had become a complex of public limited companies or of limited-liability companies, and achieved sales of FFrl.5 billion, not including N.M.P.P. The publishing division accounted for FFr700 million. Of the total sales figure, FFr200 million came from Hachettes 36 subsidiaries and branch offices scattered around the whole world.

Between 1964 and 1980, the date of Matras takeover of Hachette, the Librairie grew under the leadership of Robert Meunier de Houssoy, and after 1976 under that of Jacques Marchandise. The companys growth included a number of significant events. The breakmade final in 1970between Hachette and Gallimard, whereby Hachette lost the right to distribute Gallimards books, was a blow to business. Five years later Hachette brought out the Encyclopedic Generale d Hachette and thereby entered the highly competitive field of dictionaries. The encyclopedia, which covered 100,000 words in 12 volumes, was a success. In the newspaper and magazine publishing sector, Hachette acquired in 1976 the company Jean Prouvost, which owned most notably the weekly Tele 7 Jours, with the greatest circulation of any French newspaper or magazine, and Paris Match. In 1977 Jean Marchandise decided to change the groups name from the slightly old-fashioned Li-brairie Hachette to, simply, Hachette. A year later, armed with its new modern image, Hachette opened an immense distribution center, which was almost entirely operated by robots, and which won worldwide admiration. The Centre National de Distribution du Livre (CDL), soon renamed the Cathedral of Books, consisted of 50,000 square meters dedicated to the storage and distribution of books.

Nevertheless, faced with increasing competition, Hachette was still vulnerable. Its middle-class, family-business management was not successfully meeting competition. Hachettes share price had fallen low enough for a takeover attempt to be made without excessive risk. As Jacques Sauvageot explained in Le Monde, December 10, 1990, the real problem is that Hachette no longer presents to the powers that be the guarantees considered necessary. Giscard dEstaings government supported Matra, its principal arms supplier. After a takeover bid by the head of Matra, Jean-Luc Lagardère, Matra became the controlling owner of Hachette stock; by means of holding companies, Matra took control of the capital without holding a majority stake. This operation aroused varied and extreme reactions from the French press. Jérome Carcin expressed his fears in Les Nouvelles Litteraires: The publishing industry is gradually losing its financial and intellectual independence, while Guy Sitbon of the Nouvel Observateur admitted to a belief that Jean-Luc Lagardère was perfect for the role of proud and flamboyant servant required by Giscard dEstaing.

As the countrys Manager of the Year for 1979, Lagardère has been called Frances most successful entrepreneur. Born in 1928, the budding media mogul had started his career in engineering, moving up through the ranks at Matra to eventually become its chief executive officer. By the early 1980s, his empire included racing cars, a professional soccer team, a stud farm, Matra, Hachette, and investment bank Arjil. With a view to making it the worlds biggest publisher, Lagardère began restructuring Hachette, making more than 400 employees redundant as early as June 1981. Lagardère, who seemed to be nurturing his political connections, nevertheless managed, in October 1981, to ensure that Hachette escaped the tidal wave of nationalizations, which caught Matra head on. Indeed, while Matra was state-owned until a new administration reprivatized it in 1987, Hachette remained in the private sector.

Meanwhile the restructuring continued. Immediately after the takeover of the publisher Jean-Claude Lattès, Lattès himself, against all expectations, became managing director of the book division of the new multimedia group. The latter launched itself into an intensive period of acquisition in France and especially abroad. This began in 1985 with the purchase of a 50 percent stake in the publisher Harlequin, specialists in low-priced romantic novels. Shortly afterward came the creation of four new series in the Hachette Jeunesse division, which became one of Hachettes most promising divisions. In 1988, in its expansion in the United States, Hachette launched a successful, $450 million takeover bid for Grolier, one of Americas leading publishing companies specializing in encyclopedias and information publishing. Although Grolier ranked third among the U.S.s top encyclopedia publishers, it led the pack in such new delivery technologies as CD-ROM and on-line database access. The Grolier acquisition also gave Hachette entree into the high-potential Asian market. At the beginning of 1989, Hachette set its sights on Spain, buying Sal vat, Spains fifth-largest publisher of encyclopedias and dictionaries.

Gradually the book divisions performance improved. By 1983 its balance sheet showed positive results in spite of two disappointing setbacks. The first concerned the opening of the Hachette multi-store in Paris in the Opera district, which failed rapidly. The second, concerned the creation of the series Succés du Livre in 1987. Jean-Claude Lattés tried to emulate the France-Loisirs club and launched a series of reprinted bestsellers at a 30 percent discount. FFr15 million were spent on publicizing this project and some nine months later, in December 1987, Hachette sold the ill-named series to a clearance dealer in Lyons.

Nevertheless Lagardère remained essentially a communications man. The recovery of the book division owed a great deal to the intensive growth of the newspaper and magazine publishing division. As early as 1984, Hachette acquired the U.K. Seymour Press which, together with Cordon & Gotch, became Seymour International Press Distributor Ltd. In 1986, it was the turn of the Curtis Circulation Company, the second-largest distributor of magazines in the United States. The U.S. offensive continued with the 1988 acquisition of Diamandis Communications Inc., the seventh largest U.S. press group, for $712 million. Diamandis stable of 12 magazines included Womans Day, Car and Driver, and Stereo Review. Finally, after the arrival of Lagardère, the magazine Elle extended its distribution worldwide to 17 editions, including Japanese and Chinese editions. By 1988, Elles global circulation reached 2.5 million.

Under Lagardère, Hachettes revenues multiplied from US$1.3 billion in 1981 to US$3.5 billion by 1988 and Lagardères MMB S.A. grew into Frances third-largest holding company. With this string of successes under his belt, the mogul began expanding his publishing empire into other media in 1986 with the acquisition of one of Frances largest radio stations, Europe I. His first foray into television was thwarted in 1988, when he was unable to take over TFI, the leading French television network. In 1990 he acquired a 25 percent stake in the struggling French television station La Cinq and thus became its largest shareholder. It was an opportunity that soon turned into a disaster.

Lagardère was so confident that he could make La Cinq profitable that he promised his fellow shareholders that Hachette would make good on virtually all the channels debts and losses, even though the publisher was only due one-fourth of the stations profits. His high-stakes gamble began to unravel in 1991, when La Cinq failed, Hachette recorded a loss of FFrl.9 billion (US$350 million) and its debt rose to more than Ffr8 billion (US$1.53 million). Jean-Luc Lagardère, whose Groupe Lagardère by then owned over 93 percent of Hachette, engineered a 1992 recapitalization and merger with the then-profitable and virtually debt-free Matra.

Although the union was financed by at least US$506 million in loans from some of Frances largest state-owned financial institutionsCredit Lyonnais and Banque Nationale de Parissome analysts criticized the merger as an illogical attempt to save face. In 1992 Regis Lefort of Didier Philippe told Advertising Age that This is simply a rescue of Hachette by Matra. The bottom line on this was that Hachette could no longer continue alone. It has no more money. An analyst with The Economist implied that the French banks saved Hachette to keep it from being bought out by foreigners.

Matra-Hachette sold an estimated FFrl.6 billion (US$290 million) in assets for debt reduction and was able to generate a US$64 million profit for 1992. The new companys annual revenues remained flat, at around Ffr54 billion (US$10 billion), from 1992 through 1994, but its net income rebounded to Ffr615 million (US$152 million) during that same period.

Principal Subsidiaries

Matra Marconi Space BV (Netherlands) (51 %); Matra Marconi Space France (51%); Matra Espace Holding BV (Netherlands) (51%); Matra Espace Participations (51%); Matra Marconi Space Systems Ltd (UK) (51%); Matra Marconi Space UK Holdings (51%); Matra Marconi Space UK Ltd; Matra Space Systems Participations BV (Netherlands) (51%); M.C.N. SAT Holding; M.C.N. SAT Service (99.8%); M.C.N. SAT US; S.C.I. Matra Toulouse (99.89%); Sofimades; Fairchild Controls (USA); Germantown (USA); M.A.I. (USA); Manhattan Beach (USA); Matec (99.77); Matra Defense; Matra Défense-Espace; Matra Électronique; Matrel; M.P. 65 (99.3%); M.P. 98 (99.3%); Intecom Inc. (USA); Matra Communication USA Inc.; Matra Nortel Communication; Matra Nortel Holding; Matra Systémes de Sécurité (M2S) (50%); Stratcom; Matra Datavision (73.94%); M.P. 13; SFMRA (Société Financiére Matra Renault Automation) (65%); c.R.L.F. (73.94%); DTB International (70.25 %); Matra Datavision Ben (Belgium) (73.9%); Matra Datavision GmbH (Germany) (73.94%); Matra Datavision SPA (Italy) (73.94%); Matra Datavision Kk (Japan) (73.94%); Matra Datavision Ltd. (UK) (73.93%); Matra Datavision Inc. (USA) (73.93%); Matra Transport; Matra Transfinex; Matra Transit Inc. (USA); Matra Transport International; Matra Automobile; Hachette Libre; Alpha Editions (93.31%); Brodard et Taupin; Calmann-Levy (52.28%); Celiv; Diffulivre (Switzerland); Edition N° 1; Editions Classiques dExpression Fran£aise (EDICEF); Editions Gerard de Villiers (80.2%); Editions Gras-set et Fasquelle (84.78%); Editions Jean-Claude Lattés; Editions Rombaldi; Editions Stock; Grolier Hachette International (Italy); Grolier Hachette Gestione Clienti SRL (Italy); H.L. 93; Le Libre de Paris; Librarie Artheme Fayard (99.84%); Librairie des Champs-Élysées (99.37); Librairie Generale Fran£aise (L.G.F.); Nouvelles Editions Marabout (Belgium); Sylemma Andrieu; Salvat Editores SA (SESA) (Spain); Difedi SA (Panama); EPFSA (Spain); Hachette Latino America (Mexico); PAGSA (Spain); Salvat Editores Argentina SA (Argentina); Salvat SA de Distribución (Spain); Hachette Filipacchi Presse (65.96%); Affichage Centre Ville (A.C.V.) (65.96%); B.I.P. (61.8%); Brodard Graphique SNC (65.96%); Distriser-vice (63.33%); Echo Communication (63.32%); EDI 7 (65.96%); Elle Hong Kong (65.96%); Elle Publishing (USA) (65.96%); Exploitation Commerciale dEditions de Presse (E.C.E.P.) (65.96%); F.E.P. U.K. Limited (65.96%); Gestao e Publicidade (Portugal) (65.29%); Hachette Filipacchi Australia (65.96%); Hachette Filipacchi Japan (65.96%); Hachette Filipacchi Magazines Inc. (USA) (65.96%); Hachette Filipacchi Publicacoes (Portugal) (65.89%); Hachette Filipacchi SA (Spain) (65.20%); Hachette Filipacchi USA (65.96%); Hachette Interdeco SA (Spain) (54.49%); Hachette Magazine House H.K. Ltd. (Hong Kong) (65.96%); Hachette Sverige HB (Sweden) (65.96%); H.C.B. Graphic (65.96%); Imprimerie Helio Corbeil (I.H.C.) (65.96%); Inter-Hebdo (63.3%); International Media Holding BV (Netherlands) (65.96%); International Publications Holding (Netherlands) (65.96%); Interquot (57.07%); Inter Regies Centre Quest (I.R.C.O.) (63.31%); Iota (65.96%); Media Informatique Service (M.I.S.) (65.96%); Publications France Monde (65.96%); Publications France Monde (65.96%); Publications Groupe Loisirs (P.G.L.) (65.96%); Publiprox (65.96%); Quillet S.A. (65.96%); Société dÉtude et de Développement de la Presse Périodique (S.E.D.P.P.) (65.96%); Sograph (62.18%); Hachette Distribution Services; Aéroboutiques France; Agence et Messageries de la Presse (A.M.P.) (Belgium) (92.3%); A.M.P. Transports (Belgium) (92.3%); Centre de Coordination Hachette Distribution Services (Belgium) (92.3%); Chaussem (Belgium) (92.3%); Curtis Circulation Company (USA) (90%); Diffusion Payot (Switzerland) (62.22%); Distrisud (Belgium) 92.06%); Dynapresse (Switzerland) (62.24%); Eastern Lobby Shops (USA); Hachette distribution Inc. (USA); H.D.H. Ltd. (UK); H.D.S. UK Ltd.; I.B.D. (Belgium) (75.69%); International Press Distributors Ltd. (UK); Les Messageries de Presse Internationale (Canada); Naville; Navistar; Payot Naville Distribution (Switzerland) (62.24%); Payot SA (Switzerland) (62.22%); Press-Shop Alg. (Belgium) (71.04%); Reíais H SNC; Saarbach GmbH (Germany) (75.1 %); Santino (Switzerland) (62.24%); Sigma (Spain) (50%); Sociedad General Española de Librería (S.G.E.L.); Sodipress (Switzerland) 62.24%); Matra Hachette Multimedia; Armisse; Matra Hachette Multimedia On Line; Matra Hachette Multimedia Voyager (50%); Grolier Inc. (USA); Caribe Grolier (Puerto Rico); Children Press Inc. (USA); Federated Credit Corp. (USA); Grolier Australia PTY Limited (Australia); Grolier Education Corporation (USA); Grolier Electronic Publishing Inc. (USA); Grolier Enterprises Corporation (USA); Grolier Enterprises Inc. (USA); Grolier International Inc.(USA); Grolier International Limited (UK) (99.9%); Grolier Limited (UK) (99.9%); Grolier Limited Canada; Grolier Limited New Zealand (Australia) (99.9%); Grolier Overseas (USA); Grolier Publishing Inc. (USA); Grolier Reading Program Inc. (USA); Grolier Telemarketing Inc. (USA); Grolier Yearbook Inc.; Latco II Inc. (USA); Lexicon Publications (USA); Publishers World Trade Corporation; Scarecrow Press Inc. (USA); Waverly House Limited (UK) (99.9%); Legion UK Ltd; (UK) (99.78%); Legion International SA (99.78%); Fabian Holdings BV (Netherlands) (99.78%); Legion AG (Switzerland) (99.78%); Legion Ltd (UK) (99.78%); Legion Telecall PTY Ltd (Australia) (50.89%); Legion Telekommunikation GmbH (Germany) (99.78%); Telecom Scandinavia A/S (Denmark) (99.78%); Aberly; Abianne; Compagnie Versaillaise de Transports; Fradis France Distributique (98.37%); Hachette 5; Holpa; Lagardère Groupe North America (USA); Matra Hachette General; Matra Participations; M.P. 55; SNC Sofrimat 4; Sofrimo; Sogemat Participations; Sopredis (89.2%).

Principal Divisions

Space; Defense; Telecommunications and CAD/CAM; Matra Datavision Group; Transit Systems; Automobile; Book Publishing; Salvat Group; Print Media; Distribution Services; Broadcasting, Film and Display; Multimedia.

Further Reading

Alderman, Bruce, Hachette Big Loser in La Cinq Fiasco, Variety, March 30, 1992, p. 39.

_____ Lagardère Loses La Cinq Dare, Variety, April 6. 1992, p. 1.

Crumley, Bruce, Hachette Woes = Filipacchi Gain, Advertising Age, May 10, 1992, p. 10.

Edition: La Tournée des Pages, Les Dossiers du Canard, June-July,1989.

Gibson, Paul, Consolation Prize, Financial World, December 13, 1988, p. 26.

Lalanne, Bernard, and Nathalie Villard, Le Grand Ecart dHachette, LExpansion, February 7-20, 1991.

Lepape, Pierre, Hachette-Groupe de la Cité: Le Face a Face de LEdition. Le Monde Affaires, February 20, 1988.

Lottman. Herbert R.. The World of Hachette. Publishers Weekly, September 9, 1988, p. 102.

Misler, Jean, La Librairie Hachette de 1826 a Nos Jours, Paris: Hach-ette Editeur. 1964.

The Odd Couple, The Economist, May 9. 1992. p. 89.

Sasseen, Jane, Family Dynasty, International Management, February 1990, p. 24.

Sauvageot, Jacques, Dans la Presse Hebdornadaire. Hachette: La Nouvelle Arme de Matra, Le Monde, December 1980.

_____, LEtau, Le Monde, December 10, 1980.

Selinger, Iris Cohen. Match: A European Magazine in 5 Languages, ADWEEK Eastern Edition, January 16, 1989, p. 4.

Smith, Evan, Hachette lands $2M Ad Sale, Mulls Buying 1,001 Home Ideas, MEDIAWEEK, February 4, 1991, p. 5.

Wilson, Claire. Green Octopus Reaches Across the Sea, Advertising Age, October 24, 1988, p. S22.

Sonia Kronlund. Translated from the French by Jessica Griffin.

updated by April Dougal Gasbarre