Canal+ faces €300m cost cuts, international subs surpass domestic

Arnaud de Puyfontaine

French pay TV operator Canal+ continued to lose domestic subscribers during the first half, with the total number of services sold declining by 272,000 to 8.187 million in June. The Vivendi-owned pay TV operator is to implement a programme of cost cutting in a bid to stem its losses.

Canal+ revenues for the first half of the year dropped by 3.5% to €2.639 billion. Operating income was €297 million, down from €368 million for the first half of last year, while EBITA fell from €388 million to €297 million.

Parent company Vivendi attributed the decline to the problems faced by the domestic French pay TV unit and to lower profitability at production outfit Studiocanal and the group’s free-to-air channels.

Canal+ is in the process of implementing a €300 million cost savings plan, cutting €100 million in costs associated with marketing, set-top management and other subscription-related costs as well as cutting €150 million from its programming budget. It said that about €60 million to €80 million in savings were expected to be realized this year.

Speaking on an analyst call following Vivendi’s results, CEO Arnaud de Puyfontaine said that the transformation plan had a “clear ambition to restore value proposition by clarifying our TV offer between pay and free TV” and that it was “totally right on track”.

Following the revamping of the Canal+ offering in June, De Puyfontaine said that subscribers would be able to view an additional 150 hours of original content from September, and affirmed that the free-to-air window would be reduced from a maximum of six hours a day to two, with the free-to-air channels renamed and strengthened to compensate.

He said the group would make a joint offering with Orange by the end of this year following its deal with the telco.

The group’s international pay TV base continued to grow, with additions of 615,000 in the year to June taking the international total for Africa to 2.2 million, and the addition of 139,000 subscribers in Vietnam taking the total in that country to 900,000.

De Puyfontaine said that international pay TV subscribers now outnumbered domestic customers for the first time, with 5.727 million international subs against 5.455 domestic customers.

Du Puyfontaine said that Canal+ would launch a new digital-terrestrial TV offering, EasyTV, in the neighbouring capitals of the Congo and Democratic Republic of the Congo, Brazzaville and Kinshasha, before the end of the year, as part of a wider African expansion that earlier this year saw the group partner with iROKO to launch a mobile SVOD service for Francophone Africa.

Overall, Canal+ ended the second quarter with 15.8 million subscriptions, a year-on-year increase of 558,000.

Vivendi’s revenues dropped by 1% to €5.044 billion. Revenues from growth in subscription and streaming revenues from Universal Music Group helped boost the figures along with Canal+’s overseas performance, which helped offset the decline in the domestic business. EBIT was up 3.4% to €1.062 billion.