INTERNATIONAL: THE GLOBAL PLAYERS; Machiavellian who needs to turn things around at Havas

Alasdair Reid explains how the fortunes of Havas are linked to Pierre

Dauzier’s policy making

‘The most important thing to understand about Pierre Dauzier is that he

is Machiavellian,’ one French source says. ‘It would not be wise to

underestimate him. Having said that, he might just have made one of the

biggest mistakes in his career.’

Dauzier is the chairman of Havas, one of the world’s biggest

communications companies. He’s been in the top job for almost a decade,

during which time he has steered the company, or more accurately its

subsidiary, Canal Plus, into a prominent position in European

broadcasting.

But he’s not had the best of Easters.

Recent manoeuvring, which was designed to strengthen the company’s

position, may have done just the opposite.

Alongside Germany’s Bertelsmann and the Luxembourg-based CLT, Havas is -

or was - part of a triumvirate of media owners preparing to take the

great leap into the digital age.

Havas was a founding shareholder in CLT (it now owns 20 per cent) and

the two companies have always seen themselves as strategic partners. In

turn, CLT has close links with Bertelsmann.

They joined forces to launch one of the first private commercial

channels, RTL, in Germany, when that market was deregulated in the mid-

80s. They have since launched many more channels together.

To complete the triangle, Canal Plus, which is a world leader in

subscription TV and has been preparing to introduce digital systems in

France, has been working in partnership with Bertelsmann to develop the

Media Box digital system in Germany.

This three-way axis already dominates European broadcasting. The control

of digital technology would guarantee their position well into the next

century. It all looked very cosy.

But their reckonings did not take account of Rupert Murdoch. Murdoch

knows a thing or two about pay-TV and has been demanding access to the

club. As a result, CLT and Bertelsmann recently came to the conclusion

that he would make a better friend than an enemy and proposed an

alliance.

Dauzier was the Havas representative at a CLT board meeting in March

when it was agreed that CLT, Havas and Bertelsmann should form a joint

venture company with BSkyB to develop digital systems.

Dauzier assented, but promptly returned to Paris and called the French

premier, Jacques Chirac. He persuaded Chirac to call the prime minister

of Luxembourg in a bid to force CLT to pull out. Dauzier’s argument was

that it would be disastrous to help Murdoch gain a foothold in Europe.

It would be contrary to the interests of Canal Plus and would undermine

the Havas-CLT relationship, he maintained.

Which made Dauzier’s next step completely baffling. He immediately

instigated separate talks with Bertelsmann and Murdoch, and proposed a

three-way agreement that would cut CLT out of the picture altogether.

Machiavellian to say the least.

However, CLT’s response was dramatic. Earlier this month, CLT and

Bertelsmann merged their broadcasting interests. As media deals go, it

is up there with Time-Warner/Turner and Disney/ ABC. Meanwhile, Murdoch

has forged closer links with Bertelsmann.

In short, it is Havas that could find itself out in the cold. Needless

to say, Dauzier has a lot of explaining to do.

Not that Havas is just a TV company. From an Anglo-Saxon perspective, it

has always seemed a perplexing entity. As well as TV, it has interests

in radio stations across the whole of Europe. Its Avenir division, which

owns Mills and Allen in the UK, is a major outdoor player across Europe.

It also owns a vast network of regional newspapers and business

magazines in France, and its IP Group is the biggest media sales network

in Europe.

That’s all very well, but we are not quite so happy about media

companies owning agencies - and in Euro RSCG Worldwide (although it is

kept very separate) Havas has one of the biggest.

Of more concern, in France and elsewhere, is the company’s political

heritage - it was an obstacle to it forming international links on the

ad agency side.

Until 1986, Havas was effectively the French government’s ministry of

communications. The state exercised control through a 45 per cent

shareholding and when a new government was elected, one of its

priorities was to hand the Havas chairmanship to a political ally.

Dauzier was the last person to benefit from this system of patronage

through his close friend, Chirac. The government’s stake in Havas was

subsequently sold off - but old habits die hard. Euro RSCG agencies take

60 per cent of government advertising in France and the state still

exerts a big influence on its thinking.

But privatisation did allow the agency side to flourish internationally.

In the 80s, it gained experience outside Europe through HDM, a three-way

joint venture with Young and Rubicam in the US and Dentsu in Japan. When

the partnership dissolved, Havas began folding its worldwide interests

into the Euro RSCG brand and expanded through acquisitions.

Maurice Levy, the chairman of the rival Publicis Group, says that the

move has forced rivals to rethink: ‘We all thought that Havas was so

focused on the media side that it would have to stop investing in

advertising and would eventually be forced to sell. I don’t think it

would have made this move if that were still the case. But who can say?

Strategically, things at Havas have been hectic. Who knows what Dauzier

will do next? The relationship with CLT was central to the company’s

long-term plans and that seems to have been abandoned overnight.’

The focus at Havas will undoubtedly remain, as it has been since

privatisation, on broadcasting. But, as the implications of the CLT-

Bertelsmann deal sink in, Havas is having to face up to the fact that

its long-term strategy is now in tatters.

There have been crises before and many will argue that Canal Plus is too

powerful to stand on the sidelines for long. But Dauzier needs to do

some quick thinking. Is his leadership irreparably damaged? Don’t bet on

it. He’s proved that he’s a survivor, and has powerful friends. And

maybe he has something more important in his favour. As one observer

puts it: ‘Havas is controlled by very powerful institutional investors.

Cynics here say that he’s still in the job because they’ve never been

able to agree on anyone else.’

Havas’s worldwide interests

Broadcasting

Canal Plus runs subscription TV channels in France, Spain, Poland and in

Africa, has shares in the Premiere and Vox TV channels in Germany, and

TV production facilities and technical development divisions. It is a

shareholder in CLT, which owns or has shares in RTL 9, M6 and

Multivision in France, RTL Television, RTL 2 and Super RLT in Germany,

RTL4 in the Netherlands and Club RTL and RTL TVI in Belgium. It also has

the radio stations, RTL Onde Longue and Fun Radio, in France, Atlantic

252 in the UK and 104.6 RTL in Germany. Through the IP Group, it is the

largest shareholder in the UK’s Capital Radio, with 19 per cent.

Media sales

The IP Group either owns or has a major stake in media sales operations

in France, the UK (IP-TSMS), Germany, Spain, Portugal, the Netherlands,

Belgium, Luxembourg, Switzerland, the Czech Republic, Slovakia, Hungary,

Ukraine, Belarus, Lithuania, Latvia and Estonia.

Print

It has the Comareg French newspaper group, CEP Communications book

publishing and trade press magazines, Groupe de la Cite book publishing,

Telestar and the magazine, Top Sante.

Outdoor

It has 100,000 sites, 49,000 of which are in France under the Avenir

brand (Mills and Allen in the UK), plus transport and airport

advertising, including Sky Sites.

Advertising

Havas Advertising has four divisions: Euro RSCG; Campus; media,

including Mediapolis, which is run as a joint venture with Young and

Rubicam; and Diversified Agencies, which groups its below-the-line

interests.

This article was first published on Campaign