Vivendi: 'forecasts cut back'

Chris Forrester

We reported on Vivendi’s results earlier this week. The market’s verdict is now in, and that while overall the numbers were better than expected, the company’s music and TV divisions still struggle. “Vivendi, down 14%, is the worst performing stock in media and in telecoms this year to date,” say analysts at Morgan Stanley.

Vivendi is a widely diversified company with huge telco interests (SFR, Maroc Telecom) as well as media-related names like Canal Plus and games division Activision-Blizzard. Investment bankers Morgan Stanley made some useful comments on Canal Plus.

“Vivendi reiterated its guidance at Canal Plus, which is for slight revenue growth at constant currency and around a 10% increase in EBITA. The H1 figures continued the recent trend at Canal Plus, which is for the company to struggle to produce top line growth in France (revenues were unchanged actual, up 1.9% constant currency) but to continue to garner the integration benefits with TPS. 2009 should see Canal Plus see relief from €68m of transition costs and get the first time benefit of €100m of incremental cost savings,” said a note from the bank.

Total Canal France subscriptions remained marginally lower yoy at 10.436m (2008 10.445m) after a negative 103k subscriber adjustment derived from cleaning of the base post the TPS merger. Canal Plus has also experienced some trading down in packages (limiting outright churn which stands at an underlying 11.2%). ARPU is up 1.8% yoy as this spin down effect has been countered by price increases, take up of new services (Multiroom, HD, PVRs) and the acceleration of digitalisation.

Going forward, Canal Plus is concentrating on (i) transferring the remaining analogue customers to digital (there are about 0.5m to go), and (ii) the launch of two new low-end packages designed to broaden Canal Plus appeal (which we reported on earlier in the week). These are (a) Initial for Canal Sat (gives access to a limited bouquet of channels composed of some fifty pay-TV theme channels costing €9.99 per month), and (ii) ‘Pass week-end’ for Canal Plus offering Canal Plus programming from 7pm on Friday to 9pm on Sunday for €15 per month. Canal Plus will also be improving its line up of HD channels.