But Presstalis lacks the means to finance

This time, it's safe, it is a true "big bang" ahead for the distribution of the press in France. In the very next days, Bruno Mettling finance inspector will report to the Prime Minister on the ex-NMPP (News Courier Press Parisienne), renamed Presstalis last December. The challenge is immense, because the press through the most serious crisis in its history. But its distribution system, which dates from after the war, is itself bankrupt.

In this context, Bruno Mettling was commissioned to determine the conditions of an "exceptional support" of the State to Presstalis. The goal: find balanced operating conditions and putting in place a sustainable system. Therefore, some of the founding principles of the device that could be questioned. Not not the famous Act 1947 Bichet, which guarantees freedom of distribution of the newspapers in the France: press, one of the pillars of democracy, will be regarded as a product to share. But the governance of Presstalis and its cooperative operation, how to calculate the rates charged to publishers, or equalization, which involves the sharing of costs, may be seriously jostled.

An archaic system

The idea of reform is not new. It runs for years and Nicolas Sarkozy stressed its importance at the States General of the press, end of 2008: "the distribution is the first problem of the press paper ...." It is to take the measurement of the archaisms of our system and dramatic disadvantages resulting. "In reality, the question is not so much the cost of the system, as its distribution. The distribution of the press in France, which absorbs 34 of the price for the sale of newspapers, is less expensive than Germany and Britain. But the 30,000 sellers of newspapers (for the most part independent) are not enough paid: their commissions, which rise about 17 per cent of the price of sale of securities, should be noted to 20 on average. Avoiding, if possible, add the cost of distribution.

It was on the other floors of the pyramid savings: in Presstalis, on the one hand, and in press deposits, on the other hand. And at the same time where they are in a critical situation.

The system still worked very well until the end of the 1990s. Main e-mail of press with 80 of the market, Presstalis organizes the transfer of the press since the printers or the listings to the 162 regional depots. These deposits then ensure the distribution of securities in points of sale. The majority are independent, but larger (20 deposits of the SAD, 38 Soprocom and SPPS, dedicated to the distribution of daily newspapers in Paris) are managed by Presstalis or belong to him. A small number (17) are in the fold of the MLP (courier Lyonnaises press), the competitor of Presstalis, through majority or minority shareholdings.

Courier and deposits have long been very profitable. The grouping of flow generates savings. Above all, the rates charged to the publishers, the famous scales, are the result of very complex formulas but generally dependent on the sale price of newspapers: "Until newspapers sold well and inflation caused the increase in selling prices, the funding of the system was largely insured", confirms an editor.

But the situation has changed. The growth of the Internet has caused the decline in sales of newspapers. And the crisis of 2009 has accelerated degradation of the equation, resulting in all of the device at the edge of bankruptcy. Many deposits of press are now in great difficulty. "There were defects of payment", is a Publisher. For its part, Presstalis saw its revenues fall by more than 25 since 2004 (EUR 300 million in 2009). The Group has lost about 20 million euros last year (10 million in respect of the operation, as well as impairment losses of subsidiaries). These losses came to dig the hole of the funds, already negative 24 million end 2008, requiring a recapitalisation this year and, as a corollary, a reform of governance (see box). The Outlook for 2010 is much more positive with respect help. Presstalis may even have problems of cash during the summer: the prospect of a deposit balance was raised.

Consolidation of deposits

The upcoming reform would, first, pass a cluster of deposits. Nearly 3,000 years of the 1990s, their number has already been greatly reduced to 165 now. MHCP (Higher Council of the Courier Press), high authority of the sector, has been working since April last in a new plan to reduce, at 114. But this first restructuring will be a cost: it will not only finance restructuring and social plans possible, but also compensate the owners of small deposits, to encourage them to sell, because their value declined dramatically. The MHCP asked cabinet Ricol, Lasteyrie encrypt this cost would increase according to some sources at EUR 150 million.

Reform in Presstalis are more complex. Many held Union book CGT liable for the prohibitive costs of the system. The 600 workers of Presstalis or deposition of the SAD and SPPS are admittedly advantageous status: paid at least 3,000 to 3,500 euros net per month, they work 35 hours per week (or less), benefit from nine to eleven weeks of vacation per year. Status from history, linked to the difficult working conditions, including for the treatment of the dailies - night work, seven days a week, strained... flow-, that it will be difficult to put in question, as the strategic position of the workers of the book in the distribution chain gives them the power to paralyze the publication of newspapers.

It is difficult to evaluate the additional costs linked to this status today. The SPPS subsidiary, which includes the deposits dedicated to the distribution of daily newspapers in Paris and employs still about 300 workers, lost 25 to 30 million euros per year. These losses are related to payroll, but to the daily treatment costs also: volumes high, tours, etc. Similarly, it is estimated that the cost of deposits of the SAD is 50 higher than that of independent deposits.

Presstalis has already led to harsh restructuring, including closed last year the treatment centre Combs-la-Ville (350 deletions of posts) in the challenge 2010 plan initiated in 2007 by its Director General, Rémy Pflimlin. The current reform will pass no doubt by new concessions, in terms of employment, organisation of work or even status. Still need to convince Laurent Jourdas, delegate central of the Union of the book of Presstalis to accept.

But these efforts are not enough. How to calculate the rates charged to publishers, too, should be questioned. Now dependent on the price of sale (ad valorem), the scales should now take into account the actual cost of benefits, which may vary significantly depending on the weight, the periodicity or delivered quantities. "The ad valorem system allowed the launch at a lower cost of cheap magazines: likened to a highway without toll!", noted one observer. "But Presstalis lacks the means to finance."

The abandonment of the Equalization

The other revolution that should disrupt the system is the partial surrender of equalization. It was a fundamental principle which, thanks to the sharing of costs, allowed to establish solidarity between distributed titles. With the crisis, however, tensions have arisen between different families of press: the largest no more willing to finance smaller; especially, magazine publishers, which are less expensive to distribute, now reluctant to fill the gap in the distribution of newspapers. It is therefore issue to isolate, separate societies, the distribution of newspapers and magazines - in any case their operation accounts. "On a need for transparency of the accounts of each branch," it said in the entourage of Bruno Mettling. The press of political and general information (PIPG) could also be dealt with separately, to be one beneficiary of public support. "The State is not intended to finance the magazine press economy." "What is important to him, it's the defence of pluralism", continues our interlocutor. The State already attributed to Presstalis an annual subsidy of EUR 12 million to assist in the distribution of newspapers.

Some of these tracks are under consideration for months and are the subject of almost philosophical debates. One thing is certain: you will have to decide quickly, because the financial state of the system will not long dithering. So another question remains open: whether the press paper resist the decline of its sales began a few years ago...