Havas SA

views updated

Havas SA

31, rue du Colisée
75383 Paris Cedex 08
France
Telephone: (33) 1 53 53 30 00
Fax: (33) 1 53 53 37 37
Web site: http://www.havas.fr

Wholly Owned Subsidiary of Vivendi SA
Incorporated: 1835 as Agence Havas
Employees: 18,600
Sales: FFr 18.9 billion ($2.74 billion) (1998)
NAIC: 51111 Newspaper Publishers; 51112 Periodical Publishers; 51113 Books Publishers; 54181 Advertising Agencies

Havas SA, a wholly owned subsidiary of utilities and telecommunications giant Vivendi SA, is the largest publishing firm in France and a global media and communications company. Through an extensive network of subsidiaries, Havas publishes professional, reference, education, and consumer books in France, Italy, Spain, Latin America, and the United Kingdom. Havas also produces about 80 press titles, including professional, business, and general interest works, in Europe. Eager to strengthen operations in multimedia and electronic publishing, the company established Havas Interactive, a leading developer of education, entertainment, and information software with headquarters in the United States. Havas also organizes trade fairs and expositions. Havas has a 20 percent stake in Havas Advertising, one of the largest advertising networks in the world. About a third of the company’s revenues are generated in France, but Havas plans to increase its international presence.

Roots in News Reporting: 1800s

The history of Havas may be 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 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 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, and 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, and 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 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 During this time, the publicity division of Havas made an agreement with the Compagnie Genérale de Publicitéétrangére, 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 Rénier, Havas found a natural leader who played a major role in establishing the company as a powerful and diversified news monopoly. Under Rénier, Havas and Paribas invested in telegraph communications linking France with northern Europe, the Antilles, and the United States. Rénier 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, Rénier 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.

Increasing Control Over the Media in the Early 1900s

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 19th 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 Périer 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.

Company Perspectives:

Our store of knowledge is growing every day. And at Havas we are committed to sharing it, giving people the keys they need for discovery, understanding, self-improvement and entertaining. We make knowledge available to an increasing number of people around the world, in every possible way, through all media–constantly striving to improve its quality. French author La Bruyére stated, “One writes only to be understood,” then added: “but in writing, you must be sure that what is understood is appealing.” The success of Havas is and will remain founded on the appeal that our group’s many talents create.

In January 1914, SociétéGenérale des Annonces, a joint stock publicity company, became part of Havas, which then came under the control of the Syndicat Central de Publicité, the sole purpose of which 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 Publicitéand Leon Rénier played major roles. With Rénier’s election as head of both Havas Information and SociétéGenérale 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 Mulhouse, 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. Although 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. Therefore, Havas 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, Rénier 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, it 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 controlled mostly 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. Rénier 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.

Difficult Times and Significant Changes in the Mid-1900s

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. In the postwar movement of nationalization, however, Havas and Rénier were seen as open participants in economic collaboration with the occupiers, as well as instigators of corruption under the Third Republic. Called a traitor, Rénier was replaced by Jean Schloesing, who set about reestablishing Havas’s reputation. In 1945 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.

Key Dates:

1835:: Charles Havas forms Agence Havas, an international news agency.
1851:: Havas establishes France’s first publicity agency.
1879:: Company sells stocks to the public.
1920:: Agence Havas merges with SociétéGenérale des Annonces.
1945:: Agence Havas is nationalized.
1987:: Company is privatized and renamed Havas SA.
1998:: Compagnie Genérale des Eaux acquires Havas SA, and Havas becomes a wholly owned subsidiary.

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, because of 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.

Renewed Growth in the Late 1900s

On November 4, 1984, Havas President Andre Rousselet launched Canal Plus, the first cable television station in France. Although 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. The channel continued in operation, however, 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, Séguéla, 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 because of 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. Although 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.

Major Changes in the Late 1990s

The flexibility and diversity that Havas exhibited in the second half of the 20th 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 in large part 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. In 1996 Havas’s sales reached $8.1 billion and profit was $248 million. Despite Havas’s strengths, however, industry analysts and investors accused the company of lacking a long-term business strategy. Analyst Pierre-Yves Gauthier of Cholet-Dupont, a Paris-based brokerage, told Advertising Age International, “In Havas, a lot of people see a holding [company] with relatively profitable diversity but not a great deal of big-picture strategy.”

In February 1997 Havas’s fate was irrevocably altered when Compagnie Genérale des Eaux (CGE), a French utilities company, became the controlling shareholder of Havas with a 30 percent interest. Although CGE had long been France’s national water utility, the firm began to diversify when a new chairman, Jean-Marie Messier, came on board in 1996. Messier hoped to turn CGE into a media conglomerate, and he expanded into telecommunications and media, while exiting from nonstrategic operations such as real estate and funeral services. With controlling interest Messier used his influence to redirect Havas’s focus to emphasize electronic media and multimedia. Havas began to sell off noncore businesses, beginning with the news magazines Le Point and L ’Express in October 1997. Havas chairman Pierre Dauzier stated in Advertising Age International, “Our aim is clear: to build an integrated multimedia group with the size and strength to meet the challenges ahead. We are now set to pool our know-how with Genérale des Eaux in network technology to create a full-fledged multimedia division.”

The following March CGE acquired full control of Havas for about FFr 40 billion, and Havas became a wholly owned subsidiary of CGE. Chairman Dauzier was replaced by Eric Licoys, an associate of CGE’s Messier. A month later, in April 1998, CGE changed its name to Vivendi, shedding a name that had been part of the company since 1853. Vivendi’s Messier told Times of London, “The name Vivendi is warm, full of life and it resembles what we do—local services which improve daily life.... It will give the group the international fame that it lacks today.”

With Vivendi in control of Havas, the strategy to concentrate on building multimedia and specialized publishing operations was quickened. Havas sold Havas Voyages SA, the travel division, to American Express Co. in June 1998 for more than FFr 1 billion. Havas also divested of its Gault-Millau restaurant guides division and sold Oda, which specialized in media representation for telephone directories, to France Telecom. Just as quickly as Havas sold off noncore businesses, however, the company acquired new companies. In April 1998 Havas bought Quotidien Santé, the largest medical publication business in France. A few months later the firm purchased Ediciones Doyma SA, the largest medical publishing company in Spain, and in November Havas acquired OVP-Vidal group from Cofip-Didot-Bottin, a pharmaceutical information publisher. The acquisitions significantly boosted Havas’s medical publishing operations, a division Havas intended to grow.

Havas also strengthened its educational offerings, acquiring Grupo Anaya, the second largest publisher of school and reference works in Spain, in late 1998. Havas also bought L’Etudiant, a media group specializing in information for high school and college students. L’Etudiant was involved not only in publishing and electronic information services but also in trade fairs. Havas launched Internet Ecoles, an online information site for teachers, students, and schools, with partner Cegetal in late 1998 as well.

Havas boosted its educational and electronic divisions significantly with the purchase of Cendant Software in November 1998. The U.S. company developed interactive products, including educational software and games. Cendant was the global sales leader in game software, the second largest in educational software, and the third largest company in lifestyle software. Cendant was renamed Havas Interactive, Inc.

In 1999 Havas continued to streamline operations and build its core businesses. In April the company sold its outdoor advertising business, which consisted of Avenir, HMC Transports, and Claude Publicité, to JCDecaux group for FFr 5.75 billion. Several months later Havas sold Havas Regies, a media representation business. Toward the end of the year Havas reduced its stake in Havas Advertising by selling nine percent of its interest. Despite the sale, Havas remained the principal shareholder of the subsidiary, with a 20.7 percent stake. Although industry analysts had speculated that Havas would divest itself of the advertising unit to focus on print and electronic media, Havas stated its intention to remain involved in advertising.

Among Havas’s acquisitions and partnerships in 1999 were a joint venture with Bertelsmann to form BOL France, an Internet bookseller, and a partnership with Bernard Fixot to establish an international publishing house. Havas in March announced a takeover bid for Barbour Index, a U.K. trade information business focused primarily on the building industry.

To grow internationally and expand its presence in Spanish-speaking regions, Havas acquired Aique, the third largest school-book publisher in Argentina, in April. In August the company announced a joint venture with Abril, the leading publisher of magazines in Latin America, to acquireática and Scipione, schoolbook publishers in Brazil. Havas’s Licoys said in a prepared statement, “Following the acquisitions of Anaya in Spain and Aique in Argentina, this investment further consolidates the international position of Havas, expanding its presence in school-book publishing in Latin America.... It is an outstanding opportunity for Havas... to move into Brazil, Latin America’s largest market with a population of 160 million including nearly 60 million aged under 15 and 45 million pupils.”

Continuing to expand its medical publishing unit, Havas acquired MediMedia in May 1999 for FFr 1.6 billion. Medi-Media was a leading international health care information provider, distributing its products in 20 languages to 100 countries. MediMedia published journals and provided drug information and consumer health care media. More than half of MediMedia’s revenues came from European sales, although sales in North America and Asia were on the rise. The acquisition succeeded in making Havas the fourth largest health care information specialist in the world and the world’s leader in drug information systems.

Though more than a century old, Havas had managed to modernize with the times. Under new guidance as a subsidiary of Vivendi, Havas was prepared to face new challenges and extend its global reach as it neared the turn of the century. The company planned to continue building its operations in education, leisure, and information and to carve out a leadership position in electronic media and publishing. Havas appeared finally to have adopted a long-term business strategy that it could follow for years to come.

Principal Subsidiaries

Havas MediMedia International Group; Havas Business Information; Havas Interactive, Inc.; Groupe Expansion; Groupe L’Etudiant; Groupe Express; Comareg-Delta Diffusion; Havas Numerique; Havas Education et Reference; Laffont; Plon-Per-rin; Les Presses-Solar-Belfond; Nouvelles Editions Havas; Hemma; Havas Poche; Sogedif; France Loisirs (50%); Bol France (50%); Havas Services; Havas Advertising (20.7%).