A new entity to handle the task has been created within Havas, the formerly government-owned giant advertising agency and media group.
Through a massive share switching in February, Havas agreed to let the Compagnie Genreale des Eaux, France's largest cable operator, raise its holding in Havas to 10%. At the same time, the two companies pooled Havas' 24% and Generale des Eaux's 20% shares in the successful European pay-TV station Canal Plus to form a controlling stake in the channel. To complete the circle CLT, one of the continent's most successful cable and satellite networks, is also expected to take a 7% stake in Havas.
But the most vital link in creating the multimedia powerbase is France Telecom, the state-owned telephone company that has a monopoly until 1998. Havas exchanged a 5% stake in itself for a 50% share in a France Telecom yellow pages publishing affiliate. The exchange gives Havas an all-important connection with the country's phone lines, while giving the government back a stake in Havas.
France Telecom's phone lines, along with Havas' existing properties, give Havas the building blocks for a multimedia behemoth. Havas already owns a 45% stake in agency giant Euro RSCG and Europe's largest film studio through satellite TV station Canal Plus. Now, the share swapping gives it access to phone lines and an interest in France's two largest cable companies.
Although Havas said it hasn't plans yet for how to map the multimedia highway, it is likely to use technology learned from France Telecom's Minitel, which already offers 22,000 online services from news to weather to TV programs and real time chat lines. Through Minitel, consumers can make reservations for planes, trains, theater, movies and catalogs, and pay some bills.
By helping to engineer the union of the four groups, France keeps the multimedia development within the French family. European Union rules allowing France Telecom's monopoly on phone transmissions have blocked competition on interactive activities until 1998. But by then it is thought the Havas-led group will have succeeded in dominating the French multimedia market.
One reason for Havas' strategic position lies in its close links to the French government. Long the flagship of France's nationalized business, Havas was fully privatized in 1988-but not before the government first secured its loyalty by filling its board of directors with handpicked executives.
But the formation of a French multimedia power is not being universally hailed. Many insist that the politically engineered shareholding rearrangement is creating a multimedia champion that the market is not producing naturally.
While non-French companies have expressed interest in the market, most have been discouraged by both the government's interest in promoting a French initiative and the inacessability of phone lines.
Moreover, critics see the entry of France Telecom in Havas as a government-enforced counterbalance to the share increase by Generale des Eaux-not only France Telecom's major competitor in cable today, but also a contender for the cellular phone market after 1998.
"This is a conglomeration of communication activities," said one French media expert who requested anonymity, "but I see more potential conflicts than I do growing synergies."
Political priorities, the expert said, are partly to blame for the failure of France's ambitious cable program also, which in 12 years has only lured 1.3 million subscribers.
"National business interests and technological concerns were put before the commercial aspects required to make cable a success," he said. "Now you have the two largest cable operators [France Telecom Generale des Eaux]-and thus two companies which until now have failed to market cable-as the main partners in France's multimedia future."
But others are more upbeat.
"I think the association between cable and telecom companies, and other big businesses capable of participating and financing multimedia development, was inevitable," said Francois Mariet, head of media research for Euro RSCG, professor of media management and Paris business school at Dauphine University and author of a history of cable in America.
"We don't have players the size of Time Warner, Murdoch or even Bertlesmann," he said, "so they've had to find logical partners and get together."