Hachette

83, avenue Marceau
75116 Paris
France
(1) 40 69 16 00
Fax: (1) 47 23 01 92

Public Company
Incorporated: 1826 as Librairie Louis Hachette
Employees: 31,000
Sales: FFr29.00 billion (US$5.70 billion)
Stock Exchange: Paris

Groupe Hachette is France’s largest publishing company and communications group, with activities including news services, audiovisual services, television, film production, and distribution. It is part of the Matra group, which is better known for arms and motor vehicle manufacturing. It is difficult to make a complete distinction between Hachette’s book publishing activities and its vast communications business, a term that includes everything to do with information and knowledge. In 1989, out of total group sales of FFr29 billion, the book division accounted for FFr7 million, of which 50% was earned abroad. The activities of the book division encompass the fields of general literature, through the publishing houses Hachette-Littérature, Grasset-Fasquelle, and Stock, among others; of education; of popular literature, through Livre de Poche and the well-known Harlequin; and of children’s books. The division consists of around 40 publishers that employ 17,000 people, more than half the work force of the entire group. Under the guidance of Jean-Luc Lagardère, head of Matra-Europe 1-Hachette, and of Jean-Claude Lattés, managing director of the book division, Hachette has more than 30% of the French book market, closely followed by its rival, Groupe de la Cité, with 20%. Hachette remains in first place because of the strength of its sales network and the diversity of its publications. There is hardly a sector in which the books division is not represented. The effect of the synergy between the books division and Hachette’s other activities, newspaper and magazine publishing in particular, is important.

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 Normale 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 France’s 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 the Librairie Louis Hachette. He retained Br étif 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 Hachette’s success: it already included a classical division, journals, and by 1836 two dictionary projects. Eight years after its creation, the Librairie Hachette’s 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, 11 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 children’s books published by Hachette. Louis Hachette went on to diversify into newspaper and magazine publishing. In 1859 his business expanded overseas, opening a foreign-language bookstore in London.

Louis Hachette took a keen interest in French literature. Having bought the publisher Librairie Victor Lecou in 1855, he became publisher of such well-known writers as George Sand, Victor Hugo, G érard 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 latter’s 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 S égur, who wrote several classics of children’s literature. The Franco-Prussian War of 1870 slowed down the activities of the Librairie considerably, but the company’s recovery was as rapid as its decline had been. The tourist guides were particularly successful, but the 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 company’s 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 anonyme —a 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 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 Librairie’s volume of business tripled. World War II slowed down this growth considerably, as it did for other publishers.

The occupying Germans began by requisitioning Hachette’s offices in rue R éaumur and boulevard Saint-Germain, and by forcing out the company’s directors. Finally the Germans tried to take over the Librairie, but were unsuccessful. During the four years of German occupation, Hachette’s 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 d’Hachette 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 Fran çaises de la Presse, created in 1944, Hachette created the Nouvelles Messageries de la Presse Parisienne (N.M.P.P.). This organization, which still enjoys a worldwide influence, 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 FFr l.5 billion, half the sales of Hachette. In 1991, Hachette owned 49% of N.M.P.P., the remaining 51% being owned by nine other newspaper and magazine publishers. Meanwhile, and after World War II, Hachette’s 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 reader’s 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 Proust—at the author’s own expense—of 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 Frangaise— a subsidiary of Hachette created in 1922—and 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 FFr l.5 billion, not including N.M.P.P. The publishing division accounted for FFr700 million. Of the total sales figure, FFr200 million came from Hachette’s 36 subsidiaries and branch offices scattered around the whole world.

Between 1964 and 1980, the date of Matra’s takeover of Hachette, the Librairie grew under the leadership of Robert Meunier de Houssoy, and after 1976 under that of Jacques Marchandise. The company’s growth included a number of significant events. The break—made final in 1970—between Hachette and Gallimard, whereby Hachette lost the right to distribute Gallimard’s books, was a blow to business. Five years later Hachette brought out the Encyclopédic Générale 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 group’s name from the slightly old-fashioned Librairie 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. Hachette’s 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 d’Estaing’s government supported Matra, its principal arms supplier. After a takeover bid by the head of Matra, Jean-Luc Lagardére, Matra became the controlling owner of Hachette stock; by means of holding companies, Matra took control of the capital without holding a majority stake. In 1991 it owned 44% of Hachette. 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 d’Estaing.

Lagardère began restructuring, 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 would from then onward be a state-owned company, Hachette would remain in the private sector. Meanwhile the restructuring continued. Immediately after the takeover of the publisher Jean-Claude Lattés, Lattés 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% 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 Hachette’s most promising divisions. In 1988, in its expansion in the United States, Hachette launched a takeover bid for the publisher Grolier, one of the top-ten U.S. publishing companies specializing in encyclopedias and information publishing. At the beginning of 1989, Hachette set its sights on Spain and bought Salvat, Spain’s fifth-largest publisher of encyclopedias and dictionaries. Gradually the book division’s 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 Opéra 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% 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 acquisition of Diamandis Communications Inc., the seventh largest U.S. press group, in 1988. Finally, after the arrival of Lagardère, the magazine Elle extended its distribution worldwide and now appears in 17 editions, including a Japanese edition.

Since 1980, the beginning of the Lagardère era, Hachette has undergone a definite change of direction. Today’s Hachette group is scarcely comparable in terms of size and quality to the Hachette of the mid-20th century, and even less so, to the company at its foundation in 1826. A traditional expansion based on a middle-class family business-style management backed by a united editorial policy and with a narrow range, which ensured its coherence, was succeeded by years of upheaval, by Hachette’s transformation into a multimedia, multinational company, a corporate giant, comparable to that of Rupert Murdoch. If Hachette remains the leader in French publishing, the book division is unlikely to continue to receive the full attention of the company’s leaders. Since the takeover, in 1986, of one of France’s largest radio stations, Europe I, Lagardère has indicated clearly where his ambitions lie—in television. In 1988 he suffered a defeat in his attempt to take over TFI, the leading French television network. In 1990 he acquired a 22% stake in La Cinq and thus became its largest shareholder. Hachette is now involved in publishing and television, controls a French and international press empire, produces films through Hachette Première, and distributes newspapers, magazines and books.