'Paddington' Props Up Vivendi's Annual Earnings
The company also announced it has accepted an offer to sell its remaining stake in French phone company SFR as it transforms into a media company.
Vivendi — parent company of StudioCanal, CanalPlus and Universal Music Group (UMG) — announced it would accept an offer from Altice to sell the last of its stake in French telecom company SFR in a deal worth $4.36 billion (€3.9 billion).
The deal is the latest in a series of sales that have transformed the onetime telecom company into a cash-rich international media behemoth.
In its annual results, also released late Friday night, it reported sales of $11.2 billion (€10 billion) in 2014 with a net income of $700 million (€626 million), slightly lower than analyst expectations. Current operating profit declined 2 percent to $1.24 billion (€1.11 billion) due to lower revenues from UMG.
Despite having the top three records in the U.S. and France last year, including both Taylor Swift's and Sam Smith's smash hits, UMG's annual sales fell 5.6 percent to $5.1 billion (€4.56 billion). The decline was credited to the explosive growth of streaming services hitting the company's digital download and physical CD sales revenue.
"The speed of the transfer to streaming was not forecast at the beginning of the year," said CFO Herve Philippe. The company said it will move forward with a clear plan to monetize streaming from both ad-supported and subscription services.
CanalPlus Group's sales rose 2.7 percent to €5.46 billion, buoyed by the theatrical release and rights sales of StudioCanal's hits Non-Stop, starring Liam Neeson, and the family-friendly Paddington, both of which made over $200 million at the global box office, as well as the smaller success of Oscar-winner Imitation Game. The ramping up of the TV series production business with Red in Great Britain and Tandem in Germany also contributed to growth, the company said.
The delivery of the new show Versailles, as well as second seasons of The Tunnel and The Returned, also boosted the outlook of the CanalPlus' TV production unit.
Since shifting focus to media in 2013, the company has sold much of its stake in Santa Monica-based video game maker Activision Blizzard, its international telecoms holdings in France's SFR, Morocco's Maroc Telecom and Brazil's GVT. It also sold its stake in Beats.
The company now has deep pockets that analysts have speculated will be opened for media acquisitions, but in the conference call Friday night, Arnaud de Puyfontaine, chairman of the management board, remained elusive about any acquisition plans. "We have the resources to deploy capital," he said. "But I want to reiterate in the international med market we don't want to be led by the need to invest." He said the company will seek to build a track record as a savvy investor when opportunities arise and continue to build its content and media business organically.
He also highlighted organic growth in the company of media properties, including content plays such as the strategic partnership between UMG and advertising giant Havas to use big data to streaming use, ticket and merchandising sales, and its Vivendi content initiative to develop short video series and stream live events currently being pilot-tested in France.