Staff of Paris' Left-Wing 'Liberation' to Vote on Rothschild Deal

By: (AP) The fabulously wealthy Rothschild dynasty and Liberation, an iconic left-wing daily founded by philosopher Jean-Paul Sartre, might seem unlikely bedfellows.

But Liberation employees were voting today on whether to let a Rothschild heir displace their own SCPL staff holding as the newspaper's main shareholder in exchange for a much-needed 20 million euro ($26 million) cash injection.

The upheaval at Liberation -- and at two other influential French dailies -- underscores the difficulties facing newspapers in France and elsewhere in the world as the Internet and free papers take their toll on traditional media and their advertising revenues.

The Liberation vote could be close. Staff unions agree that the paper needs the investment after four straight years of losses but remain divided over whether they can really sell a 37 percent stake to Edouard de Rothschild without selling out.

Liberation's director Serge July, who co-founded Liberation with Sartre in 1973, has obtained assurances that the 47-year-old former financier will not intervene in the paper's editorial policies.

"We judge these [plans] indispensable to face up to the challenge of the media Big Bang," July said in an editorial penned last month.

Rothschild will sign Liberation's charter -- which gives staff sweeping powers including the vetting of senior editorial appointments -- and accept a 40 percent limit on his voting rights as part of the deal. July will stay on at least until 2012, and SCPL will retain its current veto on management decisions even after its stake is diluted to 19 percent by the capital increase, from its current 36 percent.

That veto means that a negative staff vote today would derail the Rothschild deal.

July argues that the fresh capital will enable the paper to improve pricing, distribution, editorial content, and online operations, and Rothschild has said he plans further acquisitions to build a new press group with Liberation at its core.

French papers aren't alone in being forced to weigh their independence against tough commercial realities. But sensitivities are running particularly high in France after Serge Dassault, a defense tycoon and senator, bought family-owned conservative daily Le Figaro and dozens of regional papers last year. Dassault's heavy-handed editorial interventions immediately angered journalists.

Le Monde, the respected left-of-center daily, is also reported to be in talks over a possible tie-up with Lagardere SCA, another defense group.

Despite appearances, however, Liberation's deal with Rothschild commands surprisingly strong support among the liberal paper's staff, whose board representatives endorsed the plan by 11 votes to 4 on Monday.

The SNJ journalists' union, which recently called the deal shocking "on a symbolic level," nonetheless urged a "vigilant yes" from its members Thursday.

Even the leftist CGT, which called for a 'no' vote Thursday, said it backed a deal with Rothschild in principle but wanted additional guarantees for non-editorial staff.

Such a nuanced stance toward Rothschild by the CGT -- a bastion of the French Communist Party -- is a sign of that Rothschild has had some success in persuading skeptics that his intentions are benign.

"He knows that the strength of Liberation is precisely its editorial independence," said Rothschild aide Nathalie Mercier.

"If he interfered with that identity he'd be altering the paper's fundamental appeal and its bond with its readers. The first sign of that would frighten readers away."

Rothschild, who left the family bank in 2003 to head racecourse operator France Galop, "hates being put in boxes," Mercier said. "As far as he's concerned, being a banker doesn't make you right-wing."

Asked about his widely reported friendship with conservative UMP party leader Nicolas Sarkozy, she said Rothschild is also close to left-wing politicians including Socialist Party leader Francois Hollande and former finance minister Dominique Strauss-Kahn.

Unlike Senator Dassault, she added, he "has never been involved in politics and never financed any campaign."

Despite the limit on voting rights and other assurances, however, the CGT and another leftist union, SUD, say they are concerned that Rothschild could end up taking a larger stake in the group.

Rothschild can increase his stake to 49 percent if the paper misses financial targets set out in the deal, which CGT official Fatima Brahmi called "rather ambitious." He could further increase his holding by buying investment fund 3i's 10 percent stake, which is expected to come up for sale.

"Even if he doesn't change a comma on the front page," Brahmi said, Rothschild's effective control of the paper would amount to "de facto intervention" from day one.

"The question is," she pondered, "Is there such thing as a good capitalist?"