Vivendi Earnings Up on Strength of CanalPlus Group

StudioCanal and Universal Music Group parent company Vivendi nearly doubled its income in the third quarter, to $494.7 million (€395 million), despite a less than one percent dip in revenues, in results released late Friday. The boost was due to the sale of telecom assets, as the company led by CEO Jean-Francois Dubos, repositions itself as a media and content leader.

In the third quarter, CanalPlus accounted for two thirds of the company’s EBITA, with the pay-TV company’s sales climbing 3.4 percent to $1.6 billion (€1.3 billion), while Universal Music Group revenues slowed 5.9 percent to $1.4 billion (€1.09 billion).

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Disney’s Frozen soundtrack, and best-selling releases from Sam Smith, Ariana Grande and 5 Seconds Of Summer, as well as carryover sales from Katy Perry and Lorde’s last releases, boosted the bottom line at UMG.

Though the company cited the continued strength of UMG, revenues were down 5.8 percent to $3.88 billion (€3.1 billion), with adjusted operating profit up 11.3 percent to $343 million (€274 million). The company said revenues were down “due to the rapid transformation of the recorded music industry” and attributed the growth to a restructuring and savings plan.

It said that digital music sales were flat compared to the first nine months of 2013, as significant growth in subscription and streaming revenues offset the decline in digital download sales, and that there is a continuing decline in physical music sales.

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CanalPlus Group posted $4.97 billion (€3.97 billion) in earnings, and revenues were up 2.8 percent over the first nine months of 2013. For the third quarter, CanalPlus group sales climbed 3.4 percent, to $1.62 billion (€1.3 billion).

Though its adjusted operating profit was down because of increased taxes in France, that was offset by growth abroad, including subscriptions to its pay-TV packages in Africa and Vietnam. CanalPlus now boasts 14.8 million subscribers worldwide.

StudioCanal’s revenues also grew significantly, notably due to strong theatrical releases with long tails, leading to TV and SVOD sales. The integration of UK TV production company Red was also a growth area for the entertainment studio.

Vivendi also cited growth in CanalPlus’ French SVOD Netflix competitor CanalPlay, which has grown to 520,000 subscribers since its launch in 2011.

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The company is continuing to invest in overseas operations, including the launch of the pan-African channel A+  on Oct. 24, and the acquisition of a majority stake in African specialty distributor Thema.

The group’s net income jumped to $1.05 billion (€839 million) in the third quarter, against $470.74 million (€376 million) the same period last year, mostly because of the sale of assets.

The company, which has been repositioning itself as a media and content group, is finally offloading its last telecom holdings in its bit to become a media giant.

The completion of Maroc Telecom’s sale was finalized in May. The sale of SFR to Altice/Numericable Group should be finalized on Nov. 27, after receiving approval from the French competition authority in late October. The sale of its Brazilian phone and cable provider GVT to Telefonica is expected to finalize in the second quarter of 2015.