When confronted with a sale rumor, standard corporate operating procedure is to ignore it, whether true or false. But some rumors simply need to be knocked down, like today's report in the New York Post that Lagardère, the Paris-based parent of Hachette Fillipacchi Media, is in talks to hand over Elle magazine to Hearst, publisher of Harper's Bazaar, Cosmopolitan, and other women's titles.
Hours after the report hit, Lagardère issued a notably unequivocal rebuttal.
"Following an article published today in the New York Post, Lagardère Active, HFM US parent company, formally denies being in negotiation with Hearst Corp Group," reads the statement. "There are no ongoing talks on a joint venture or licensing agreement with Hearst Corp Group regarding ELLE magazine in the US." I e-mailed the author of the Post story, Keith J. Kelly, to see if he stands by it, but haven't heard back.
Rather than sell Elle outright, Lagardère, Kelly wrote, would most likely turn over publishing responsibility for the title to Hearst via a joint venture or licensing deal. The two companies already co-publish Marie Claire through a similar arrangement.
Accurate or not, such a scenario is by no means far-fetched, according to one media M&A anaylst I spoke with, who believes that Lagardère is planning to exit the U.S. publishing market and is only waiting for the recession to ease, improving valuations. The analyst points to the decision to replace former CEO Jack Kliger, an executive with extensive experience of ad sales and operations, with Alain Lemarchand, whom the analyst describes as "a CFO-type person." "I'd hire a guy like that if I were planning to pull out of the market after a period of time," he adds.
Elle was for years strictly an also-ran in the fashion-magazine category, but its fortunes took a dramatic upswing beginning in 2004, thanks to its partnership with Project Runway. That connection helped Elle narrow the gap considerably with category leader Vogue -- the Condé Nast title, which passed up the chance to be Project Runway's partner. Today, Elle trails Vogue only by about 50 pages through the month of September (1,476 for Vogue, versus Elle's 1,428).
What Is Your Risk Tolerance?
Answer the question "What type of investor am I?".View Course »