France's press in turmoil as state support fades

Wed Dec 14, 2011 4:41pm GMT

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* France Soir, La Tribune may go Internet-only

* Les Echos to cut nearly 10 pct of workforce

* Sector saddled with higher costs than EU neighbours

* Some family-owned regional titles in trouble

By Leila Abboud and Gwénaëlle Barzic

PARIS, Dec 14 (Reuters) - France's press is facing a run of bad news as declining readership, slumping advertising sales and structurally higher printing and distribution costs take their toll on once-proud national titles.

Tabloid France Soir and business paper La Tribune are teetering on the brink of liquidation and may soon kill their print editions to go Internet-only, while leading financial daily Les Echos announced a cost-cutting plan to trim nearly 10 percent of its 430 staff.

Such travails have become familiar as print media outlets in the United States and across Europe have struggled in the past decade as the Internet stole chunks of ad revenue and readers.

But France's press had until now been somewhat protected by a generous system of state aid that prolonged the lifespan of otherwise doomed titles and delayed painful reforms to manufacturing and distribution to bring down costs to levels in line with other countries.

SHOCK ABSORBER

Such aid was boosted temporarily in 2008 during the last economic crisis and accounts for roughly 10 percent of revenue for the press, and an even higher proportion for niche opinion titles, according to Jean-Marie Charon, an expert on the press at France's National Center for Scientific Research.

"The aid acted as a shock absorber, but now we've come to the end of the system since the state can no longer afford it."

"We are not going to be able to avoid a brutal period of deep restructuring and probably will see the death of some titles or their shift to Internet-only models," he said.

In 1989, 43 percent of France's population reported reading a paid daily paper, falling to 36 percent in 1997 and 29 percent in 2008, according to a French government report.

Some readers likely shifted to free dailies like 20 minutes and Metro, distributed in metro stations and on street corners, while others get their news online.

Although attention this week has focused on France Soir, where angry unionists occupied its offices and dumped thousands of papers on Paris' Champs Elysees, the probable end of the tabloid's print edition may be a relatively minor development given its circulation of less than 60,000.

In its 1960s heyday, France Soir had 1.5 million readers, but a revamped version created by Russian businessman Alexander Pugachev in 2009 never took off.

Beyond the symbolism of France Soir's demise, cracks are emerging at other magazines and regional papers across France.

Family-owned media group Hersant is locked in painful negotiations with its creditors to renegotiate its heavy debt load and pave the way for a possible merger with a Belgium competitor or an outright sale.

It has already shuttered its classified ads publications and laid off 1,650 people.

Hersant's regional newspapers such as La Provence, in Marseille, Paris-Normandie and Nice Matin have also struggled to woo younger readers and are behind on shifting to the Internet.

Such pressures have fuelled concentration among regional papers as traditional family-owned groups weaken and give way to new power players.

In October, co-operative bank Credit Mutuel bought two regional papers, L'Est Republicain and Dernieres Nouvelles d'Alsace, which were once owned by the Lignac family.

LABOUR CONFLICTS

Credit Mutuel has scooped up nine such regional newspapers in recent years, turning the bank's chief executive, Michel Lucas, into an unlikely media baron who has said little about his ambitions for his press holdings.

Amid these changes, industry experts say the key issue of high printing and distribution costs needs to be resolved for the press to have a chance of prospering in the Internet era.

Unlike in the UK and the U.S. where press bosses broke powerful unions in the 1980s to sharply reduce printing costs, France has not gone through such a painful reckoning.

Each time labour conflicts with its unions came up, the government stepped in to try to negotiate compromises and pledged aid, said press expert Charon, delaying true reform.

Direct state aid to France's press will total 580 million euros ($759 million) next year, government statistics show.

France's printing and distribution costs remain roughly 30 percent higher than in neighboring countries, Charon said. The press has had to invest heavily to upgrade printing facilities in the past decade, but some titles have not done enough.

The International Herald Tribune told a government commission in 2008 that the cost of printing 30,000 copies of a 22-page edition came to 3,854 euros in France, 2,334 euros in London and Madrid, and 2,350 euros in Belgium.

The IHT, owned by the New York Times Co., saw its deliveries interrupted by a strike for more than two weeks in November when it sought to cut costs by moving its printing operation from France to Belgium.

A spokeswoman for the IHT did not return a call for comment.

"In France, newspapers have been paying far too much for production and have not invested enough in their content," said Charon. "Many of them today are in a fragile state and not well positioned for today's tough environment." ($1 = 0.7641 euros) (Editing by Helen Massy-Beresford)

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