Behind the corporate battle for French media company Lagardère, there’s a political tug-of-war involving the country’s richest man, a media magnate and President Emmanuel Macron.
At stake is control of one of France’s best-known private radio stations and its power to sway voters ahead of France’s presidential election in 2022, when Macron could face off once again with far-right leader Marine Le Pen.
Macron fears that if media tycoon Vincent Bolloré wins Lagardère, he could use its Europe 1 radio to inundate the airwaves with right-wing views and make the president’s re-election bid even tougher, two sources close to the matter said.
So when Bolloré’s Vivendi built a stake in Lagardère in April, Macron’s office relayed its concerns to Bernard Arnault, the billionaire founder of luxury goods empire LVMH and one of the president’s early supporters, the sources said.
“The situation is being followed closely from on high,” one of the two sources told Reuters.
Weeks later, Arnault stepped into the fight, backing Chief Executive Arnaud Lagardère’s holding company with funds and pledging his support to the son of the company’s late founder Jean-Luc, whom Arnault has said was his best friend.
Macron’s office and a spokesman for Bolloré declined to comment. LVMH did not respond to requests for comment on behalf of Arnault.
At the time, Arnault’s move was seen as an attempt to bolster its defences in tandem with Bolloré against the Amber Capital hedge fund in London, which has also built up a stake in Lagardère and campaigned to change the company’s management.
A source familiar with Arnault’s thinking said his attachment to Jean-Luc Lagardère was genuine, and had prompted him to act when his son sought help to fend off Amber Capital.
But the billionaire’s move puzzled French business rivals.
After a career built on a reputation for penny-pinching on deals such as LVMH’s renegotiated purchase of US jeweller Tiffany, they wondered whether Arnault may have had another motive for ploughing funds into Lagardère.
After his initial investment of €80 million, Arnault bought a direct stake of 7.75% in Lagardère, which is worth €209 million now.
Speculation has been growing in French media that there was a political angle to Arnault’s surprise move to invest in a company racking up losses and debts as the coronavirus pandemic battered its global network of airport retail outlets.
Macron’s inner circle was concerned that through Vivendi, now Lagardère’s biggest shareholder, Bolloré could consolidate his media assets and build a French version of US conservative media network “Fox News”, helped by Europe 1, the sources said.
Shortly after Arnault invested in Lagardère, a first pitch by Bolloré to buy Europe 1 in June for €250 million was turned down by Lagardère’s management, a third source said.
Vivendi declined to comment.
The company already owns France’s biggest pay-TV company Canal Plus, whose free-to-air news channel CNews has taken a conservative turn since Bolloré took control.
Anti-immigration and hardline law-and-order comments made by some of its talk show hosts regularly inflame social media and both its viewership and advertising revenues have jumped.
The network’s boss Serge Nedjar has acknowledged that some of its commentators are provocative but said in a recent interview that the priority of CNews was to host open debates on all topics and there was no political line.
Lagardère’s Europe 1 station has struggled with losses and falling audience numbers but has kept a following among urban, educated and more conservative-leaning listeners.
‘No moral barrier’
While Lagardère’s arcane ownership structure gives its chief executive the right to veto significant decisions despite holding only 7% of the company, analysts still expect its major investors to try to grab bits of the business.
Vivendi now holds a 27% stake and has teamed up with Amber on 20% to push for board changes. Even Qatar’s sovereign wealth fund, Lagardère’s long-silent third biggest investor with 13%, has called for fair representation for all shareholders.
The moves have put pressure on Lagardère’s management to deal with the situation, especially the billionaire dealmakers, while Amber Capital has maintained its campaign for an overhaul to drive a better share price performance.
Four sources close to the situation said discussions over how parts of Lagardère could be spun off had begun in recent weeks. One said that Arnault and Bolloré had met in person.
The two have never been direct business rivals, and are not especially close, but neither is interested in an all-out war over Lagardère, people who know them said.
Bolloré may be content to pick up parts of Lagardère’s publishing division, home to Hachette, or agree to cede some media assets even if he launched a full takeover, an option that could unblock the complex saga, people close to the talks said.
Such scenarios were still speculative, the people said.
Letting Arnault take Lagardère’s media outlets, which include the Paris Match weekly and Sunday newspaper Journal du Dimanche, however, could pose issues. The billionaire already controls financial daily Les Echos and newspaper Le Parisien.
Lagardère also owns a travel retail business, but the sector has been hit hard as the pandemic has pummelled the travel industry, and Arnault is experiencing similar problems within LVMH, which owns duty-free retail chain DFS.
But for those planning Macron’s re-election campaign, keeping Europe 1 away from Bolloré is a priority, especially given the growing popularity of CNews and its right-leaning commentators.
Its viewership doubled in October from last year and while it still trails France’s market leader BFM, it’s ahead of TF1’s LCI news channel – and its transformation is not just alarming those in the corridors of power.
“The general idea is: in the name of freedom of expression, any right-wing person is welcome. There’s no moral barrier,” said Sébastien Cochelin, a CFDT union representative for Canal Plus. “We’re playing with fire.”