updated 11/7/2007 2:10:21 AM ET 2007-11-07T07:10:21

Devotees of Les Echos, the leading French financial newspaper, are getting used to going without their usual read at breakfast time.

Its journalists have refused to put out a paper five times in five months in an attempt to dissuade Pearson, Les Echos' British parent company, from selling it to LVMH, the luxury goods maker controlled by Bernard Arnault. This week, only a Monday edition has made it to news kiosks.

The title's absence on Wednesday and Tuesday followed a decisive moment in the journalists' battle with management. On Monday, a court dismissed a claim that Pearson, which also owns the Financial Times, had not properly consulted staff over its disposal plan.

Backed by this victory, which came almost half a year after it entered exclusive sale talks with LVMH, Pearson said it had formally agreed to sell the title and associated assets to the French group for €240m ($349m). The sale is expected to close at the end of the year.

Les Echos journalists on Tuesday vented their anger at this decision by jeering David Bell - the chairman of Financial Times Group, Pearson's newspaper arm - when he visited their offices.

The journalists say LVMH and Mr Arnault's many business activities would create conflicts of interest for their newspaper, citing controversial moments from LVMH's 14-year stewardship of La Tribune, a lossmaking financial daily that LVMH now wants to jettison.

Mr Arnault is also one of several media moguls who are - or have been - close to President Nicolas Sarkozy, others being Martin Bouygues, Arnaud Lagardère and Vincent Bolloré.

On Tuesday, an adviser to Mr Sarkozy claimed that the sale agreement was "tremendous news" for the paper, although he conceded that conflicts of interest were possible.

LVMH says editorial independence will be protected by safeguards offered in July, including a journalists' right of veto over the appointment of a new editor. Nicolas Bazire, a member of LVMH's executive committee, claimed that these measures offered the strongest editorial protection of any paper in Europe.

"There is no shareholder that could have made them more independent than we have," he told the FT. However, a representative of Les Echos journalists claimed yesterday that the editorial independence safeguards needed to be stronger.

Pearson also defended its role, saying: "We've been communicating very actively about the proposal and the process throughout [and] we've had more than 10 formal meetings with the [Les Echos] works council."

Les Echos' journalists had lined up an alternative €245m offer from Fimalac, the owner of the Fitch credit rating agency. Fimalac declined to comment.

French law gives journalists the right to quit their paper with a pay-off for up to two years after it has changed hands. LVMH said it had no idea how many journalists would leave through the exercise of this "clause de cession".

Meanwhile, LVMH is on the brink of entering exclusive negotiations with a bidder for La Tribune. It is thought to be weighing up whether to proceed with one of two offers: one from Alain Weill, the head of NextRadioTV, which owns the BFM business news radio station; the other from Fabrice Larue, a former chief executive of LVMH's media arm, working with the Italian publishing group Class Editori.

There has been speculation that the successful bidder will enjoy some form of direct or indirect subsidy from LVMH. Company filings obtained by the FT show that LVMH injected €37m into the struggling paper earlier this year. Mr Bazire said another recapitalisation could take place.

La Tribune's employees remain anxious about their future, saying they have not been given enough concrete information to feel comfortable with any of the bidders. Yesterday, they voted to devote this morning's front page to their concerns.

Additional reporting by Andrew Edgecliffe-Johnson in London

Copyright The Financial Times Ltd. All rights reserved.


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