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Journalists at Le Monde felt both relief and deep uncertainty when they learned by e-mail last week that editor in chief Edwy Plenel was resigning. Plenel said he wanted "to return to the simple joys of journalism and writing." But the reporters knew better, because in the French newspaper business these days there is little joy and nothing is simple — especially the story behind Plenel's departure.

Plenel's resignation came as no shock. It was just the latest sign of the utter disarray at France's most prestigious daily. Recent books and news reports have alleged gaping financial losses, shady journalism, declining circulation and staff chaos. "The values that made [Le Monde] a cathedral to free speech are gone," says Alain Rollat, a former member of the editorial board. "Now it's a ruin." That may be a tad too dire, but the rest of France's quality newspaper sector is undergoing no less cataclysmic changes.

Plenel, 52, was part of a troika that ran Le Monde with apparent success for a decade. He made his reputation as a hard-nosed reporter. Beginning in the mid-'90s, as an investigative editor, Plenel — along with managing director Jean-Marie Colombani and board chairman Alain Minc — sought to give an aggressive edge to France's most prestigious daily, founded in 1944 as a staid "newspaper of reference." Colombani and Minc brought in outside investors, in the process reducing the staff journalists' longstanding financial control of the paper from a majority to a blocking minority. Plenel led the editorial makeover, hunting for scoops and flexing the paper's political muscle. Le Monde broke the story of President François Mitterrand's long concealment of his prostate cancer, and it was all over Prime Minister Lionel Jospin's Trotskyite past.

With Plenel in the top editor's chair from 1996, the formula seemed to work. Circulation grew from 310,000 in 1994 to 361,000 in 2002. Meanwhile, Colombani went on a buying spree, purchasing provincial titles, the TV newsmagazine Télérama and a share in a printing plant.

But the success story began to unravel in Feb. 2003 with the publication of a bestselling book, The Hidden Face of Le Monde, by veteran journalists Pierre Péan and Philippe Cohen. Their allegations were sensational: a corrupt relationship with the head of the police union; gifts to Colombani for giving media training to a mayor; a pattern of blatantly favoring certain politicians (such as hapless 1995 presidential candidate Edouard Balladur). In June Le Monde agreed not to proceed with libel lawsuits against the authors, who in turn agreed not to republish their book, but the damage was done. The paper's finances may be in worse shape than its reputation. It is carrying debt of at least €110 million, has had losses over the last three years of some €50 million, and has seen circulation drop by 4.66% in the last year. Colombani's partisans say that Plenel's editorial leadership is largely to blame; Plenel's people blame Colombani's ill-timed expansions.

Such financial problems are not unique to Le Monde. France's national, general-interest dailies seem unable to make money. Despite generous subsidies on postage and a television advertising ban due to expire by 2007 for retailers and publishing houses, last year newspapers attracted only 15.7% in total advertising outlay in France, compared to 43.5% in Germany, 39.7% in Britain and 31.4% in the U.S. Finally, the papers are hampered by rigid and expensive union contracts; a proposal to switch the afternoon Le Monde to the morning failed in part because the printers' union didn't want to work nights. "France's daily press has reached the end of the subsidized economy," says Bertrand Pecquerie, director of the Paris-based World Editors Forum, an association of newsroom executives. "Now reality sets in, and the only possibility is to sell to big capitalists."

In March, French aviation firm Dassault bought an 82% share in conservative Le Figaro. Last week Libération, the feisty left-leaning tabloid daily, was getting the eye from Edouard de Rothschild, scion of the banking family. The real acid test will come, however, with Le Monde, which is seeking €50 million in new investment and is in talks with defense and media conglomerate Lagardère, as well as Madrid's daily El País. If it gets the new funds, Le Monde will have to pay for layoff packages for about 90 employees, work down its debt, and most importantly figure out a new direction. Colombani's aides say he wants to return Le Monde expertise." A noble goal — as long as it attracts readers.

• JAMES GRAFF | PARIS
• The editor of France's most prestigious daily exits, but the paper's woes aren't going away soon