Sport, Internet to drive Lagardere growth

By Dominique Vidalon

PARIS (Reuters) - French media group Lagardere (LAGA.PA), the world's largest consumer magazine publisher, is banking on the Internet and sport to drive its growth in coming years, its chief financial officer said on Tuesday.

Lagardere plans small and mid-sized Internet acquisitions, targeting content-based Websites with high margin potential in countries where it already has strong positions, Dominique d'Hinnin told the Reuters Global Technology, Media and Telecoms Summit in Paris.

"Our main challenge today is growth. Where will this growth come from? Digital technologies ... and sport activity," he said. "We expect a two-digit growth rate for Sportfive. The sports market is growing 5-10 percent a year. We expect to do slightly better," he said.

Sportfive manages television and marketing rights contracts, notably for soccer, and is a key asset at a time when content is free on the Internet because it can attract subscribers to sites and gain revenue.

"Technology leads to audience fragmentation. Audiences are getting thinner and sport brings massive audience ... The value of these audiences increases as much as fragmentation increases," he said.

DIGITAL PUSH

Lagardere has been under pressure for years to find a new engine of growth after lifting its top line mainly through acquisitions.

In January, it unveiled a three-year plan aimed at boosting flagging margins at its magazines business and accelerating its digital development through organic growth and acquisitions.

Lagardere is looking to invest in content-based Websites that are "available for free to users and paid for by advertisers" and can achieve the same kind of profitability as the radio business -- 40-50 percent, he said.

This ruled out trying to buy big search engines which the group "cannot afford" and community websites such as MySpace, DailyMotion, YouTube or Skyblog that have a huge audience but no clear business model.

"Skyblog is the perfect example of a company we're not interested in," he said.

"We are probably going to look for acquisitions in women driven websites in France, the United States, or Spain

"We are looking for sites with a minimum audience, that break even or are close to break even, with at least one million unique visitors per month." he said, adding Lagardere would spend "probably less than 100 million euros" on acquiring each.

Asked about the outlook for the group's media division, D'Hinnin said that "for the time being I am right in the middle" of guidance for a 3-7 percent growth in Earnings Before Interest and Tax (EBIT) for the division in 2007.

Commenting on the future of Lagardere's minority holdings, he said the group may exit European aerospace group EADS (EAD.PA) over the next five years but there is no deadline.