Vivendi issues warning on Canal+ future as losses mount

Vivendi has stated that it “cannot on a long term basis continue to finance the losses of Canal+ channels in France” following four years of losses. Posting its financial results for 2015, Vivendi said that the pay TV outfit posted negative EBITA of €264 million last year, an increase in its losses of €76 million year-on-year.

Vivendi said that “this situation threatens the entire Canal+ Group, which employs 8,200 people and is a major player in the financing and development of the movie industry”, in which it invests “close to €800 million” in France and internationally.

The media giant said that it has set making the group break even by 2018 a priority for its new management team, which will involve increasing investment in original content  and premium contente and improving the user experience. It added that this would be done in an “essential cost-efficient manner”.

Vivendi said that it had already invested €1.5 billion in Canal+ and that its investments would remain substantial in the medium term.

As part of the drive to stem losses at the pay TV group, Canal+ has confirmed an exclusive distribution deal with rival pay TV outfit beIN Sports, whereby it will become the exclusive distributor of beIN Sports channels in France for the next five years (see separate story).

Canal+ posted revenues of €5.51 billion, up 1.1% or 0.2% at constant currency, for the year. Revenue from its French pay TV operation was down 2.1%, while international pay TV revenues were up 7.2%. Operating income was €542 million, down from €618 million.

The group had 15.7 million subscriptions globally at the end of 2.15, up 400,000 year-on-year, driven by international sales. Individual subscribers numbered 11.2 million, driven by its performance in Africa. Vivendi said that Canal+ now had over two million subscribers across 30 African countries. The group added 25 channels to its offering in Africa last year, following the launch of flagship African entertainment channel A+ in October 2014.

Separately, Vivendi said its acquisition of a 26.2% stake in Banijay Zodiak, the new enlarged production company arising from the combination of Banijay Group and Zodiak Media, would be finalised shortly.

Vivendi’s production outfit Studiocanal posted a 5.7% incrase in revenues, or 2.3% at constant currency, thanks to the sale of film rights of titles including Paddington, Imitation Game and Shaun the Sheep

Vivendi has also announced a public tender offer for the shares of French video games company Gameloft that it does not already own. Vivendi, which passed the 30% threshold of ownership of Gameloft that triggered the move, is offering €6 a share for the company, a premium of 50.4% on its share price before Vivendi’s initially entry in October last year. Gameloft’s management remain strongly opposed to the offer.

Vivendi posted revenues of €10.76 billion for the year, up 6.7% or 1.4% at constant currency, with the difference in part due to a positive impact of the appreciation of the dollar and the pound on Universal Music Group’s results.

Vivendi’s operating income declined by 4.3% to €1.11 billion, thanks to Canal+’s losses and losses from new initiatives, partly offset by the improved performance of OTT service Watchever, which reached breakeven following the implementation of a transformation plan in the second half of 2014.