- Restructuring at Canal Plus TV unit to weigh down 2016 profit
- Company launches tender offer for game maker GameLoft SE
Vivendi SA reached a deal to become the exclusive distributor of sports channel BeIn in France as it seeks to revive its Canal Plus pay-TV business, and warned that restructuring at the unit will weigh down earnings this year.
The media company unveiled the agreement, which will require antitrust approval, as it reported fourth-quarter results that beat analysts’ estimates on Thursday. Vivendi’s pay-TV unit, which has posted losses for four years, will continue to lose money in France until 2018, the company forecast. Canal Plus, which operates in countries spanning from France to Africa, had a 12-million-euro ($13 million) loss from operations in the fourth quarter.
The shares fell 0.3 percent to 18.09 euros in Paris at 9:28 a.m.
Chairman Vincent Bollore is stepping up his investment in Canal Plus as he restructures the pay-TV business and vows to turn around the unit’s French TV channels. Canal Plus has lost subscribers since 2012, when BeIn snared important rights such as matches for the top-flight French soccer. The deal neutralizes that rivalry while helping Canal Plus stand out from competitors ranging from free-to-air channels to on-demand service Netflix Inc.
“Vivendi is on the right track, but we have one major issue to tackle today -- pay-TV in France,” Chief Executive Officer Arnaud de Puyfontaine said on a conference call with investors after the results. “Canal Plus has had to face new domestic and foreign players and had to invest more and more in both sports and fiction.”
Overall, Vivendi said fourth-quarter profit excluding some items rose 6.2 percent to 196 million euros on sales of 3.15 billion euros. Analysts had predicted adjusted net income of 174 million euros, and revenue of 3.1 billion euros.
Vivendi also launched a tender offer for Gameloft SE at 6 euros a share, after building a more than 30 percent stake in the mobile game-maker. That’s a 9.5 percent premium to the closing price of Gameloft on Thursday. The shares advanced 16 percent to 6.38 euros at 9:30 a.m. in Paris on Friday, a sign that traders expect Vivendi to have to raise the bid.
Gameloft said in a statement its board will convene next week and that a statement from the company will follow that meeting.
Representatives of Paris-based Gameloft didn’t respond to requests for comment late Thursday. Gameloft and Ubisoft Entertainment SA, both led by the Guillemot brothers, have resisted what the family calls “creeping takeover” by Vivendi.
Bollore has also been focused on strengthening digital distribution of music at Vivendi’s Universal Music Group unit, while investing in telecommunications and video-game companies.
Vivendi has built up a 15 percent stake in the larger Ubisoft -- the creator of Assassin’s Creed -- and separately has accumulated a 20 percent share in Telecom Italia SpA. In both cases Bollore is seeking to exert influence over strategy.
Canal Plus’s six French channels lost 264 million euros in 2015, in terms of earnings before interest, taxes, depreciation and amortization. A restructuring in the French business will weigh down the TV unit’s overall profit in 2016, the company said. Vivendi, which has been restructuring the French business since summer, said Thursday it can’t continue financing those losses. A deal with BeIn would benefit both companies, it said.
“There’s an urgent need to stop the losses and commit to a restructuring plan,” de Puyfontaine said. “We’re undertaking work that should’ve begun three years ago but wasn’t done.”