Publishing with A French Accent

By Daniel Benjamin

Among the U.S. assets being ogled by foreign interests these days, publishing companies have been popular buys. Reason: such enterprises, notoriously risky if started from scratch, can be bought at a relative bargain price because of the dollar's decline over the past three years. Last week Hachette, France's largest publishing house, helped itself to two generous slices of the U.S. market in just four days. First Hachette agreed to pay $448.6 million to purchase Connecticut-based Grolier, the publisher of the Encyclopedia Americana. Then the French firm paid $712 million for Diamandis Communications, the owner of a dozen magazines, including Woman's Day (circ. 6 million), Car and Driver (919,000) and Stereo Review (532,000).

With its U.S. periodicals, Hachette expects to become the world's largest magazine publisher, controlling 74 titles with an estimated $1.9 billion in revenues this year. The Grolier purchase will make Hachette the world's third largest book publisher, after West Germany's Bertelsmann and the U.S.'s Simon & Schuster.

Hachette, under Chairman Jean-Luc Lagardere, entered the U.S. market quietly, launching two joint ventures with Rupert Murdoch. The first, a U.S. edition of France's Elle fashion magazine, which made its debut in 1985, was an almost instant success (current circ. 850,000). Premiere, a movie monthly, also got off to a strong start (circ. 300,000).

Aiming for a much larger U.S. position, Lagardere last November offered CBS $600 million for the 19 publications that constituted the company's magazine group. CBS spurned the offer in favor of a rival $680 million leveraged buyout led by the magazine division's head, Peter Diamandis. Since then, Diamandis has unloaded seven magazines for $243 million, but the sales in no way diminished Hachette's ardor for the remaining package. The company paid more than $700 million for the dozen magazines that had sold only a few months earlier for around $400 million.

Hachette joins a fast-growing list of foreign publishers operating in the U.S. Just last February, Britain's Pearson paid $283 million to take over Addison-Wesley, a Massachusetts-based textbook maker. As the buyouts continue, U.S. publishing may become increasingly like its European counterpart, an industry that is dominated by a few behemoths.

With reporting by Thomas McCarroll/New York and Adam Zagorin/Paris