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French pay-TV losses hurt Vivendi's Q2 operating profit

French pay-TV losses hurt Vivendi's Q2 operating profit

Vivendi reported results for the second quarter below analysts’ expectations, posting a year-on-year drop in EBITA of 41.5 percent to EUR 174 million. This negative performance was mainly driven by the ongoing losses of its pay-TV unit Canal Plus in France, which the company intends to redress with a EUR 300 million cost reduction plan, aimed to reach breakeven in France in 2018. Vivendi’s Q2 adjusted net income dropped 3.1 percent to EUR 187 million on a comparable basis, while revenue declined to EUR 2.55 billion (-1.9% unadjusted or -0.5% at constant currency and perimeter).

Universal Music, Vivendi’s second largest business unit, saw its profitability measures improve in the second quarter, with EBITA up 10.8 percent year-on-year (compared to a 4 percent drop in Q1). Conversely, performance at Canal Plus Group deteriorated significantly, suffering a 46.8 percent drop in EBITA to EUR 119 million, as the positive trend in its international operations only partly offset increased losses in France. Pay-TV revenues and subscribers continued to decrease in mainland France, leading to an EBITA loss of EUR 106 million relating to Pay-TV channels in the six months to June (compared to a EUR 47 million loss in H1 2015).

Reviewing its interests in Italy, Vivendi said that Telecom Italia performed well in the second quarter, allowing it to upgrade its 2016 full year outlook. Regarding the lawsuit filed by Mediaset, the first procedural hearing is not expected before the end of February 2017, according to the information available to date.

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