Agence France-Presse Branch of the French National CGT Journalists' Union (SNJ-CGT)
The Choice Facing AFP in 2009: Resolute Strike Action or Creeping Privatisation?
The traditional New Year greetings were an especially touchy subject this year, thanks to the CEO’s determination to bring in radical changes to our statutes. The selfsame statutes which have made it possible for the company to join the select club of worldwide news agencies, alongside AP and Reuters.
The time for daydreams is over: AFP staff are going to be faced, in the first months of this year, with a brutal choice. To either let management get its way or to act decisively to stop the company being capitalised via a project which would be fatal for our editorial independence, for jobs, for our status and for all of us.
The "SOS-AFP.ORG" online petition is already a great success, with some 12,000 signatures as of late January and the potential to gain many more. We must do everything possible to take advantage of a project which allows people all over France and throughout the world to express their attachment to our Agency and its statutes.
At the same time there is no doubt whatsoever that AFP’s fate is going to depend, once again, on how its staff react. Either a strong mobilisation will oblige the CEO and the French government to change tack, or the opening-up of the company’s capital, the first step towards an inevitable privatisation, will go through.
Pierre Louette as AFP’s Saviour? We Beg to Differ
Over half a century after the act of parliament which founded AFP in its present form, thereby creating the only global news agency that is not part of the English-speaking world, what exactly is the company’s situation? According to the spin emanating from the board after it re-elected CEO Pierre Louette in early January, everything looks rosy. The whole world is being rocked by the storm, but AFP rides the waves, with a robust cash situation and a recovering balance-sheet.
All of which, we are invited to believe, can be chalked up to a highly competent CEO, who is therefore all the more qualified to initiate a debate on the future of the company he has so ably cured.
The CGT journalists’ union would hate to spoil the party; let us therefore hail the enormous progress made by our boss!
For indeed the situation did not at first look promising. It should be remembered that Mr. Louette arrived at the agency well before the start of his first mandate as CEO. He was with us well beforehand, and not exactly in a backstage capacity. He was here during the scandal over bonuses to top managers, during several abortive projects, including the predictable failure of the "pre-formated pages" for French newspapers. He was around while management twiddled its thumbs over the launch of a video service, and he supported the short-lived plan to spin off the Photo Service.
He came into his own when the French finance ministry only agreed to give his predecessor, Bertrand Eveno, a second mandate on condition that he appointed a manager as his number-two. The aim being notably to keep tabs on the first version of the Aims and Means Contract (COM-1). Pierre Louette thus became "Monsieur COM", setting the stage for Eveno to bow out, and for him to take over the top job.
Since he got there, has it really been M. Louette who has pulled AFP out of its crisis? The truth is a bit more complicated.
Firstly, our sales are once again on an upward trend. But the CEO seems to forget that with the exception of the Eveno period, AFP’s sales have always moved ahead. True, there have been periods of greater or lesser progress, but there has always been progress, particularly on the international front.
As a result the share of the French government’s inflation-indexed subscriptions in our overall sales has gone from around 70% in the 1970s to 40% now.
Under its 1957 statutes, AFP has therefore shown itself to be a formidable machine. There has just been one failing, wrote a French finance ministry specialist reporting in the 1960s: the company has "very good professionals, but no management."
In fact the recent, and extremely fragile improvement in our accounts can be explained by three factors: the selling-off of assets, an extremely favourable exchange rate and the famous Aims and Means Contract!
When he decided to sell off the AFX financial information subsidiary and Fileas, a satellite service provider, Pierre Louette presented the moves as being aimed at financing our growth. In fact the funds thus raised were swallowed up by repayments of part of the company’s debt. In 2006, the year in which AFX was sold, the CEO was thus able to boast of "the best figure since 1980." In fact, without the 12 million euros brought in by the one-off divestment, the result would have been a nine-million euro loss.
And now that all the family jewels have been sold off, management is planning to sell all or part of the farm!
The recovery in our operating margin is not the fruit of good management, but an automatic result of a particularly favourable exchange rate. AFP’s outlays in the dollar zone being considerably higher than its income, a weak dollar keeps our spending down much more than it weighs on our income.
For the present, management is continuing to live from day to day, taking advantage of favourable external factors and income from asset sales.
But now comes the hard part. We learn that the Aims and Means Contract with the state, so often denounced by the CGT, is supposed to have had a positive effect on our accounts.
Of that there is no doubt - the problem is that the improvement has been paid for by us, the company’s staff!
Aims and Means Contract: Destroying the Agency in Order to Save It.
The Aims and Means Contract, or COM, is built on two key parameters: expected growth on the one hand, and costs on the other. The results of the first COM (which ran for three years from 2005 to the end of 2007) provide a clear illustration of the principle.
On the income side, the document was based on improbably optimistic growth projections. For 2005, the last year before the sale of AFX, the contract was posited on sales of 269 million euros; in the event the figure was 255.4 million - a shortfall of no less than 13.6 million.
Like its predecessor, the COM plan which is just beginning is also built around projections that are far above recent trends. It posits average sales growth of 4.7% per year over the coming years, as against a mere 3.3% in the company’s much more cautious budget for 2009.
So what does our Monsieur COM do? He compensates on the cost side, by being considerably more efficient at making cuts in staff outlays than in increasing our sales!
The recipe is a classic: keeping purchasing power down below inflation, cutting freelance budgets, holding down local-status and short term contracts. It’s all known as "curbing staff costs", and our management has it down to a "T". Indeed they generally exceed their targets!
In 2005 for example, the first COM contract called for staff costs to be kept down to 183.6 million euros. In the event, the figure was 176 million euros, or a saving of 7.6 million euros, all at our expense. Management thereby clawed back more than half of the shortfall that occurred on the revenue side!
For 2006/2007 turnover comparisons are more difficult due to the sale of AFX. Without taking that divestment into account the overall figure was up by 3.6%, but in gross terms growth was flat. On the cost side however, it is clear that pressure on wages increased, with management already managing to actually shrink the company. With the exception of administrative white-collar staff, the number of employees was down in all categories, leading to a fall of a cool 519,000 euros in the wages bill.
Our CEO nevertheless reckons he has room for improvement. An examination of the points concerning the new COM plan, which he is supposed to have "negotiated" with the government, reveals that "growth in staff costs is to be kept to 2.84% per year."
And how exactly can that be achieved? According to management’s own external auditors, Cabinet Mazars, the natural growth in the overall wages bill, on a constant staffing level and taking account of inflation, promotions and the seniority bonus, should be 3.6% a year. The answer lies in the following points:
Thus does the cure prove worse than the ailment. How is one supposed to cut staff costs while developing a company which by its very nature is labour-intensive? Maybe the sacrosanct "margin" will recover, but in what state will AFP be if management goes on slashing away at our human infrastructure?
In fact, the aim of all this has nothing to do with developing AFP while ensuring the independence called for by its historic statutes.
The Sole Aim of Changing the Statutes is to Open up AFP’s Capital
It is currently fashionable to concede that the 1957 statutes need a bit of freshening up, and to proclaim that there should be no taboos preventing their modernisation. But the time for burying our heads in the sand is past: the real purpose behind the reform of our statutes is to break the legislative obstacle which prevents an opening-up of our capital to investors. When the statutes were drawn up by the French parliament in 1957 the aim was to give AFP economic independence as the essential foundation of its editorial freedom.
In the present period, is it realistic to believe that the desire of various interests to control the media via market intervention is any less than it was in 1957? Somehow we doubt it.
The 1957 statutes mean that AFP belongs to nobody; in fact, it is its own owner. That is clearly what sticks in the throats of those who want the statutes abolished.
As things stand now, nobody, be they a well-meaning "patron of the arts", a would-be trustee or some other type of Trojan horse, can take a chunk of AFP’s capital without a vote in the French parliament.
If the law is changed to allow the entry of institutional investors, "trustees" or other such investors, there will be absolutely nothing to hold back all the other forms of capitalistic intervention. Whatever well-meaning assurances may be given now, whatever arrangements are made for golden shares or hard core investors, they will have no validity further down the line. History is littered with examples of companies which are opened up in a similar way, only to find themselves at the mercy of all the vicissitudes of the market.
This is a mortal risk for AFP. For a time it was presented as a necessary evil in order to find the means to develop the company. Now the sole aim is to raise the funds which will compensate for the French government’s decision to disengage from AFP.
The French Government’s Real Aim: A Politically-Motivated Gift to "Market Forces"
The CEO has acknowledged that the French government aims to "debudgetise" AFP. We have frequently stressed the key role played by the state in founding and supporting the agency.
The representatives of the current government are therefore seeking to reverse the political decision whereby France was provided with a worldwide news agency, a constant for more than half a century, and to withdraw at least partially.
And just how much does the state intend to claw back via "debudgetisation"? During a previous attempt to privatise the company, under CEO Eric Giuily, it was stated that the "surcharge" on the wire service subscriptions that the French government finds indispensable came to approximately 25%. If that figure is retained, we could be looking at a cut of between 25 and 30 million euros in the sums paid by the state for our services each year.
And what would be the point for anyone else to enter AFP’s capital and pick up the shortfall caused by such a reduction, given that there would be no guarantee of any return on their investment?
Not much, unless of course the real aim was not financial but political: to gain control of a prominent media company with a respected name. Needless to say, the process would be accompanied by a host of pious declarations of respect for the independence called for in the second article of our statutes !
It is also worth recalling that our current management is also endangering respect for Article 2 via a range of highly questionable projects, such as the US subsidiary "Newzwag" (at a cost of at least 500,000 euros), which we would very much like to know more about. Not forgetting the so-called "Citizenside" web site, or the decision to create a "leisure wire" in the midst of an economic crisis, via a partnership with Relaxnews, a company with high questionable labour relations and links to a project involving the former Paris bureau of Associated Press.
AFP’s Fate Once Again in the Hands of Its Staff
There’s nothing left to sell: the headquarters building has gone, the subsidiaries have gone - only the historic company, with its invaluable statutory guarantee vested in French law, remains to go under the hammer!
In each major crisis - under Henri Pigeat in 1986, and Eric Giuily in 1999 - the scenario is the same. Everything appears to be lost until AFP staff decide to mobilise, and impose a dialogue which allows us to save the Agency.
Everybody therefore has to play his or her part: there is no longer time for idle speculation about the imminence of the threat. Either we give ourselves the means to ensure that reason prevails, or the law will be changed and AFP will become just another company, subject to the vicissitudes of the market.
Ideally, the CEO ought to refuse to push through any type of "modernisation", in whatever form.
The CGT journalists’ union will take advantage of all possible forms of dialogue to convince him to do that. Via the Works Committee, and the legal possibilities it offers. Via the "SOS-AFP" petition, in the hopes that the number of signatures will help convince him, and those higher up the chain, that they should respect and conserve the statutes which have allowed AFP to grow into one of the three worldwide news agencies.
But if the plans to open up AFP’s capital should be maintained, we will seek the broadest possible unity among AFP staff to bring about a decisive mobilisation capable of saving the company.
SNJ-CGT-AFP - Paris, Thursday January 8, 2009