Vivendi Fourth-Quarter Adjusted Profit Drops 18 Percent

LONDON - French media and telecom conglomerate Vivendi on Tuesday reported lower fourth-quarter earnings amid weaker results at pay TV arm Canal Plus, higher expenses and restructuring and impairment charges on acquired businesses.

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Full-year results met or slightly beat analysts' expectations amid growth in the company's Activision Blizzard video games business and a slight profit improvement at Universal Music Group, which offset lower results in most telecom units.

Excluding various items, Vivendi recorded quarterly adjusted earnings of $465 million (€356 million), down 17.8 percent. Revenue rose 5.9 percent to $10.73 billion (€8.24 billion) though.

For 2012, the company posted adjusted earnings of $3.78 billion, slightly ahead of its target. Including various items, Vivendi's full-year loss amounted to $7.89 billion, compared to a profit of $1.94 billion in 2011. "This change mainly reflected the recognition in 2012 of the reserve accrual regarding the Liberty Media Corp. litigation (€945 million), the impairment of our stake in [telecom firm] SFR (€5.875 billion), and the impairment of the Canal+ Group stake (€310 million)," the company said.

“Despite a challenging economic environment, all Vivendi subsidiaries reached their outlook in 2012," said CEO Jean-Francois Dubos. "Faced with new market conditions and intense competition, some subsidiaries also reorganized their operations and put in place cost reduction programs."

He didn't immediately provide an update on the company's review of its current assets, with observers having suggested a sale of Brazilian broadband unit GVT or Vivendi's 53 percent stake in Maroc Telecom could be the initial focus.

"Our ongoing strategic review will define precisely, and as and when appropriate, the right paths to increase the group’s overall value and to best serve shareholder interests," Dubos said. But he also once again emphasized "Vivendi’s desire to strengthen its positions in media and content where Vivendi has all the assets needed to assert itself as a European-born, global leader."

Vivendi on Tuesday also announced a dividend of $1.3 (€1) per share.

Activision's operating profit for the fourth quarter grew six-fold, leaving profit for the full year 2012 up 13.6 percent.

Universal Music reported 9.1 percent operating profit growth for the fourth quarter and a 3.6 percent gain for the full year, helped by cost reductions. Recorded music bestsellers included new releases from Taylor Swift, Justin Bieber, Maroon 5, Rihanna, Nicki Minaj, Lana Del Rey, Gotye and Carly Rae Jepsen. 

Canal Plus operating profit fell 92.4 percent in the fourth quarter and 5.4 percent for the year. It had 11.363 million subscribers as of the end of 2012, up 147,000 for the year. The growth came in international markets, while France saw a slight decrease "due to a difficult economic and competitive environment," Vivendi said.

Email: Georg.Szalai@thr.com

Twitter: @georgszalai