Vivendi Profit Declines as French Pay-TV Operations Weigh

  • International operations gained subscribers in Africa
  • Recorded music revenue rises at Universal Music Group

Vivendi SA, the French media company led by billionaire Vincent Bollore, posted a 27 percent decline in adjusted first-quarter profit as its pay-TV unit Canal Plus continued to lose money in its domestic market while the international operations gained subscribers in Africa.

Adjusted net income fell to 99 million euros ($113 million), the company said Wednesday in a statement after the market close in Paris. Analysts had predicted income of 101 million euros, the average of five estimates. Excluding an unfavorable tax impact of 41 million euros, adjusted net income was 140 million euros, Vivendi said. The shares declined 0.1 percent to 16.45 euros in Paris at 9:27 a.m. on Thursday.

A good performance at Canal Plus’s international pay-TV operations was offset by increased losses suffered by the channels in France, Vivendi said.

“These channels are negatively impacted by a difficult economic environment, increased competition from national and international players, and the skyrocketing prices for certain broadcasting rights,” the company said.

Run by Chairman Bollore, who has an activist investor past, Vivendi is building a media group around Canal Plus, seeking combinations to expand in video, music and distribution in southern Europe. Bollore has led the company’s push to acquire stakes in Telecom Italia SpA, Italy’s biggest phone carrier, and French gamemakers Gameloft SE and Ubisoft Entertainment. Vivendi last month agreed to acquire the pay-TV unit of Italy’s Mediaset SpA as part of a broader alliance to challenge Rupert Murdoch’s Sky Plc on the continent.

Chief Executive Officer Arnaud de Puyfontaine said on a conference call that Mediaset’s pay-TV assets are a strategic fit and that he doesn’t yet have a date for the closing of the deal.

“We are in Italy now to build a media position in southern Europe and build a profit-making operation,” he said. “We want to make the new Vivendi a new solid player with a Latin profile.”

Canal Plus, which operates in countries spanning from France to Africa, made a profit from operations of 164 million euros in the quarter, while the French channels posted a loss of 59 million euros. Universal Music Group made an operating profit of 102 million euros. Total sales at Vivendi were 2.49 billion euros, compared with analysts’ average prediction of 2.53 billion euros.

At Vivendi’s April 21 shareholder meeting, Chief Operation Officer Stephane Roussel said Canal Plus may post an operating loss of more than 400 million euros this year in France after a deficit of 264 million euros in 2015.

Vivendi’s stock has declined 17 percent this year through Wednesday, giving the company a market value of 22.5 billion euros.

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