Vivendi Q3 profit doubles, beats forecasts

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PARIS -- Media and telecommunications company Vivendi SA reported a third-quarter profit that more than doubled and surpassed analysts' forecasts.

Net income rose to €1.56 billion ($2 billion), compared with €646 million in the year-ago period. The latest profit included a one-time gain of €834 million on the sale of a stake in a non-core business.

 Excluding one-time gains and amortization of intangible assets, the company's bottom line rose 28% to €731 million.

Vivendi, owner of the world's largest record company Universal Music Group, also reported earnings before interest, tax and amortization of €1.3 billion ($1.7 billion), up 21% year-over-year.

As the conglomerate recently reported, revenue edged up 0.3% to €4.89 billion ($6.2 billion), below expectations.

Universal Music Group's EBITA of €138 million ($176.8 million) marked a year-over-year increase of 11.3% as higher margins and the settlement of the Napster litigation outweighed a slight revenue decline. The unit's one-off payment from Napster amounted to €36 million.

 In a meeting to discuss the results, Vivendi executives signalled a willingness to sell some assets to win regulatory approval of its recent agreement to acquire Bertelsmann AG's BMG music publishing unit for €1.63 million. "If a regulator obliges us to sell some assets, we bear the risk," said chief financial officer Jacques Espinasse in the meeting, which was Webcast. "The risk may also be an opportunity."

He added he expected a ruling from the European Commission on the deal on Dec. 8.

Core profit at Vivendi's pay TV unit Canal Plus was up €51 million ($65.3 million) to €148 million ($189.6 million) compared to the same period last year, due primarily to strong programming additions and increased revenue per subscriber.

 "This performance is due to growth in pay-TV operations in France, which mainly benefited from strong portfolio additions and increased revenue per subscriber," Vivendi said.

The Vivendi Games unit's 118.2% increase in EBITA to €24 million ($30.7 million) was driven by revenue growth from its profitable "World of Warcraft" online game, offset in part by start-up investments for its Sierra Online and Vivendi Games Mobile divisions.

Vivendi, run by CEO Jean-Bernard Levy, earlier this month confirmed a failed friendly takeover approach by private equity firm Kohlberg Kravis Roberts & Co.

On Thursday, it reaffirmed its target for a 2006 net adjusted profit of at least €2.6 billion ($3.3 billion) with a dividend distribution rate of a minimum of 50% of profit.

UBS analyst Ian Whittaker called the quarterly financial report "a good set of numbers" and said "main areas of out-performance were Canal Plus and music."

Georg Szalai in New York contributed to this report.
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