Vivendi 3Q revenue unchanged

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PARIS -- French media and telecommunications giant Vivendi SA reported virtually unchanged third-quarter revenue Tuesday as solid results at Vivendi Games and Canal Plus Group helped offset a dip at Universal Music Group and mixed telecom revenue trends.

The company posted a 0.3% year-over-year rise in its third-quarter revenue to €4.89 billion ($6.30 billion), slightly below the average Wall Street expectation. As it generally does under French disclosure rules, Vivendi will report bottom-line figures later.

Universal Music Group's revenue dropped 2.1% to €1.1 billion ($1.4 billion), due to unfavorable exchange rates that counteracted the success of new releases from the Killers, Fergie, Scissor Sisters and Ludacris. Digital music sales, however, were up 88% versus last year, boasting strong growth in both online and mobile formats and accounting for 11.5% of total revenue.

Canal Plus Group, Vivendi's pay TV unit, saw a 4.6% increase in its third-quarter revenue thanks to an increase in digital subscriptions in addition to locking up the rights to broadcast France's top soccer matches and Europe's Champions League.

Vivendi Games' revenue gain of 15.2% compared to last year was attributed to the continued international success of "World of Warcraft" in addition to the North American launch of "Scarface." Revenue at the division amounted to €182 million ($232.9 million).

Vivendi's SFR telecom unit struggled with disappointing sales, as revenue at France's second-largest mobile phone company decreased 1.8%. The company blamed the drop on its cut of wholesale tariffs at the start of the year.

Vivendi over the weekend confirmed a recent takeover approach by private equity firm Kohlberg Kravis Roberts & Co., but emphasized that talks about a potential deal have ended (HR 11/6).

Merrill Lynch analyst Julien Roch on Tuesday downgraded shares of Vivendi from "buy" to "neutral," citing a 13% stock runup since Sept. 1. "While we still like the company fundamentals, we feel (7% upside to our price target) is not enough to warrant putting fresh money into the stock," the analyst said. "However, we think holders of the stock should keep their shares."

Georg Szalai in New York contributed to this report.
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