About Those Hachette Rumors ...

Q&A: CEO Lemarchand Wiggles Around Those Supposed Hearst Talks, Explains Why U.S. Mag Market Matters

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NEW YORK (AdAge.com) -- Hachette Filipacchi Media U.S., publisher of magazines including Elle and Woman's Day, recently distributed a "disclaimer" from its parent, the Lagardere Active division of Lagardere, attempting to smother the latest flare-up of a seriously distracting rumor. It holds that Lagardere wants to get Hearst to run Elle for it in the U.S., possibly so Lagardere can pull up stakes on its domestic magazine division entirely.

Alain Lemarchand
Alain Lemarchand
"There are no ongoing talks on a joint venture or licensing agreement with Hearst Corp. Group," the disclaimer read, "regarding Elle magazine in the U.S."

But you can see why the rumor keeps surfacing. Last fall Hachette got a new CEO, a numbers man named Alain Lemarchand who arrived without any U.S. publishing experience, just as the economy cracked apart. He swiftly went to work assessing operations, imposing cuts that included salary reductions, and eventually selling five magazines: American Photographer, Popular Photography, Sound & Vision, Boating and Flying.

So Advertising Age sat down with Mr. Lemarchand for an on-the-record lunch in an attempt to get the facts properly sorted. As it turned out, however, he would only answer questions about Elle's future by referring to the disclaimer, citing Lagardere's status as a public company and proper communications practices. One problem with that: The disclaimer only disavows "ongoing" talks with Hearst. It doesn't address the future, nor other potential partners.

When we followed up with Lagardere afterward, unfortunately, the company declined to comment. And Mr. Lemarchand declined to answer a follow-up question seeking a more definitive response on our question about any further magazine sales.

So much for stamping out the rumors. Here's how our conversation with Mr. Lemarchand, lightly edited, wound up.

Mediaworks: When Lagardere dispatched you to New York last fall, it said, "He's got a job to do, he's going to do it, and then he comes back home and we talk about it." What exactly is that job -- and when are you going home?

Mr. Lemarchand: I've been with Lagardere 20, 25 years in different positions. I started in the semiconductor business with Lagardere, in the space business, satellite as well, the automotive business.

Each time was I went where I was asked to, and just assessed the situation I was confronting without having any specific plans. It was just about understanding the situation, the business, the people, the organization, the competitive landscape, the products, and trying to do my best. So there is no specific plan, there is no mystery nor secret nor anything specific -- just managing the company as any other company.

Of course the situation very quickly changed dramatically. Then it got worse; then it got much worse. We adjusted at the same time, week after week in October and November, basically until January or February. We tried to get together a plan that would make sense from my perspective and make sense for the future.

Elle magazine

Mediaworks: Rumors have run wild since your arrival that Hachette would sell off most of its portfolio, strike a deal with Hearst to run Elle, and basically shut down magazine operations here. Isn't that your plan?

Mr. Lemarchand: There have been rumors, there will still be rumors. But Lagardere issued a very clear disclaimer that says the situation as it is.

Mediaworks: So you are not going to sell part or all of Elle, you are not going to strike a partnership to let someone else run Elle in the U.S.?

Mr. Lemarchand: I just refer you to the mother company's disclaimer, which said the information you seem to be looking for.

Mediaworks: How important is the U.S. edition of Elle to the global brand?

Mr. Lemarchand: I would say it is important in several respects. First this is the U.S. edition and the U.S. is also the biggest economy.

Second we are getting access to editorial that we couldn't get in Spain, the U.K., in China or wherever. So in this respect the U.S. is a healthy resource for articles, to get access to celebrities. And this is key. So the U.S. from an economic perspective is a very important country; from a strategic perspective as well.

Mediaworks: What percentage of global revenue does Elle's U.S. edition provide?

Mr. Lemarchand: I cannot give you any number for one very simple reason: Lagardere is a listed company. I'm not in charge of financial communication, so I cannot say.

Mediaworks: You sold five magazines -- will you sell more?

Mr. Lemarchand: We had a portfolio with very different forms, very different in certain respects -- in terms of leadership positions, especially. This sale that has been made was really to focus on secure titles which are leaders or enjoy a leadership position. The idea is to focus on magazines or titles that are leaders or have leadership positions. If we still want the opportunity to grow, we are better off focusing on assets which are leaders than the opposite.

Mediaworks: Is it true that Hachette's lease is up, but you're not looking for new quarters or a new lease?

Mr. Lemarchand: The present lease term is up in 2011. We've had a broker for almost a year now who is helping us in finding or identifying different locations. There are a lot of opportunities. But we still have some months to make a final decision.

Mediaworks: Are consumer magazines still a growth industry in the U.S.?

Mr. Lemarchand: The real question is about brands. Do the brands have an opportunity to grow? The answer is yes. Again we've been focusing on the strongest, the most powerful of the brands we have, because we have an opportunity to grow these brands.

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