February 8 – February 15, 2007 Edition

Hachette Parent
Entity Lagardère
to Expand Digitally

PARIS/02/08/07–Lagardère, the parent company that owns Hachette Book Group USA (via its subsidiary Hachette Livre), is positioning itself to take a leading role in creating broad international digital content portfolios. The company also owns half of romance publisher Harlequin France, a subsidiary of Canada’s Harlequin Enterprises, Inc.

Lagardère unveiled its aims and objectives to investors January 25 in Paris, saying it will combine the Interdeco (HFM) magazine division with the newly formed Lagardère Active Media. While the announcement focuses on magazine operations of the global media company, the level of commitment to the digital world is likely soon to extend to its book publishing holdings.

“The future growth of the division will be largely dependent on digital content, and we intend to accelerate production of this type of content over the coming years,” said CEO Arnaud Lagardère. Interdeco, France’s top print advertising broker, manages international advertising for more than 200 magazines.

The company has formed a new division, Lagardère Active Media, whose mission will be to become a leading player in content generation (especially digital) and content aggregation in some 40 markets where it operates.

“Pulling together existing skills, resources and content will enable us to create broad international content portfolios, especially in digital. The future growth of the division will be largely dependent on digital content, and we intend to accelerate production of this type of content over the coming years,” said the CEO.

“In addition, in response to the changing needs of our advertiser clients, merging our advertising sales houses should enable us to provide a more comprehensive and innovative cross-media offering. Finally, the cost savings generated by combining the two entities should help us resist better the current slowdown in growth in the magazines sector.”

Lagardère will introduce a new management team and organizational structure for the division, and embed a new corporate culture geared more toward marketing and digital.

The company will implement an ambitious three-year digital strategy, combining organic growth and acquisitions. By the end of 2009 – again on a full-year basis – digital revenues are projected to represent between 5% and 10% of Lagardère Active Media revenues, depending on its ability to make acquisitions (against less than 1% in 2006, based on un-audited data).

The company’s divisions in 2005 included: books, press, distribution, active and media. Presumably it is combining press, active, and media units under the new plan.

By 2010, the new management team aims to have improved the profitability of the Active division; completed the digital transformation as regards content and sites and succeeded in developing a strong cross-media presence in 5 or 6 worldwide audience categories.

Effective January 1, 2007, the Lagardère Group will apply new accounting practices for jointly-controlled entities using an equity method instead of the proportionate consolidation method. The accounting change will affect the EADS; Société de distribution aéroportuaire (SDA) in the Distribution division; Version Femina, Psychologies Magazine, Hachette Marie Claire Italia, Elle Verlag, Disney Hachette Press in the press division; Jeunesse TV (Gulli) in the Lagardere Active unit and Harlequin in the Books division.