The World: Sacre bleu! Who will save France's print media?

Warning the print industry that it has to reform or die, Sarkozy kicked
off crisis consultations with the press in early October. The aim, the
French president told the 400 journalists and media representatives
assembled at the Elysee Palace for two months of talks, is to
restructure the ailing print market.

"The press has to be profitable," Sarkozy declared. "It's the best way
for it to be independent." It is also the best way for the newspaper
industry to reduce its heavy reliance on the state, which presently
pumps about EUR1.5 billion a year into direct and indirect
subsidies.

Over the past decade or so, French daily newspapers such as Le Monde and
Le Figaro have been hit by shrinking circulation and advertising
revenue. According to figures from ZenithOptimedia, ad expenditure
dropped from EUR1,936 million in 1996 to EUR1,536 million in 2007.

This is expected to fall even further to EUR1,447 million by 2010.
Circulation is also in freefall. The World Association of Newspapers
reveals that the number of paid dailies sold in France tumbled by 4.83
per cent between 2003 and 2007, taking total circulation down to eight
million.

Britain, by comparison, achieves almost double that figure. The left of
centre paper Le Monde has been particularly hard hit, with EUR150
million debts and readership plummeting from 398,000 in 2003 to 320,000
this year.

An outdated set of media laws and the vice-like grip of trade unions are
responsible for bringing the press to its knees. In 1947, the French
government passed the Bichet law to protect the freedom of the press. As
a result, newspaper vendors are obliged to sell every title they receive
from distributors. This can often amount to more than 2,000 titles, with
the majority regularly going unsold.

Coupled with an average EUR1,000-a-month salary for a 16-hour working
day, the restrictions are forcing many vendors to leave the business.
Where Paris had 430 of its trademark newspaper kiosks two decades ago,
it now has fewer than 300. Newspaper publishers, meanwhile, are finding
their own profits squeezed by trade unions.

What's more, the salary demands of the powerful printing union Le Livre
have made the cost of publishing a paper higher in France than elsewhere
in the European Union.

While these conditions have been detrimental to the paid newspaper
market, they have allowed free papers such as Metro International's
Metro and Schibsted's 20 Minutes to flourish. Both freesheets launched
in 2002 and have become popular reads, largely thanks to unfettered
distribution.

Metro is picked up by 2.4 million readers every weekday, while about 2.5
million opt for 20 Minutes. "They have opened up a gap in a very old
system," Sebastien Danet, the chief executive officer of ZenithOptimedia
in France, says. "Free dailies have a better economic model than the
paid papers and they do not have the same level of costs. They can also
be more creative in terms of formats and wraps and more aggressive in
terms of ad prices."

Sarkozy maintains that the market can embrace free and paid papers, but
he is nonetheless adamant that the paid print sector must change. Not
everyone agrees with him. Many are concerned that Sarkozy will change
laws to help his media magnates such as Bouyges, which owns TV channel
TF1. At present, French rules prevent a TV or radio station owner from
also controlling a newspaper. If these are changed, though, the rules
could see newspapers such as Le Monde swallowed up by huge multimedia
companies.

Raphael de Andreis, the co-president of BETC Euro RSCG in Paris, has no
such concerns. "It's difficult for a media tycoon to benefit from the
government when everyone knows you are Sarkozy's friend," he says.
"Sarkozy knows that and his friends know that. If he reforms the papers,
it's because he believes in it."

Although he also dismisses the idea that Sarkozy may want to bankroll
his media friends, Danet sees a more subtle agenda driving the present
crisis talks. "It's tactical," he says. "It may be a case of 'I will
defend you against the freesheets, but you need to be loyal to the
government.'"

Presidential agenda aside, it's clear that the newspaper market needs
reform. The key to change plainly lies in lifting restrictions on where
papers can be bought. "We are going to have to open up the retail
network to sell them in places such as supermarkets and petrol
stations," de Andreis says.

Just who makes it on to the shelves in this newly liberalised network
will no doubt be on everyone's minds during the ongoing crisis talks.
"Should newspaper stands sell everything available or just the
top-selling products?" Danet asks. "The restricted offer could obviously
be the most cost-efficient one."

This option will obviously result in some casualties as more than 2,000
titles are whittled down to just a handful of bankable papers and
magazines. "The big publishers are all for it, but the independents are
worried that vendors will not push everything to the public," de Andreis
says.

The traditional daily papers could do worse than follow the lead of the
country's freesheets. "Metro and 20 Minutes are now third and fourth
behind the most popular paid-for papers L'Equipe and Ouest France," Piet
Bakker, a free newspaper expert and associate professor at the
University of Amsterdam, says.

"In terms of revenues it is still a hard struggle for them, but they are
more innovative and target a general public, something the traditional
papers never did. They were always elitist in their approach."

The time for elitism, it seems, is over. With Sarkozy at the helm,
radical change could be just around the corner.