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Vivendi: “Unsettling and unexpected”

November 12, 2015

Vivendi, the French media giant which controls Canal Plus, Universal Music Group and DailyMotion, has badly upset the investment community. First up, its core numbers are miserable, but that hasn’t been the problem. The grumble from equity analysts is that they collectively asked Vivendi’s senior management including CEO Vincent Bolloré, a series of questions during a November 10th conference call. Many European stock markets were closed on November 11th for the Armistice Day commemorations.

Charles Bedouelle, an equity analyst at investment bank Exane/BNP-Parisbas explained the dilemma: “Despite at least 4 explicit questions during Tuesday night’s earnings call on when they would start to buy back shares, management did not mention the plan at all, saying ‘There is no specific decision taken today on that considering the stock price’.”

Announcements made at the call were clearly unexpected and created a negative share price reaction. The timing of the earnings release, ahead of a Bank holiday in France and as most specialised investors were travelling abroad to a conference is also noticeable,” added Bedouelle, asking “Why [would] Vivendi put its buyback in effect and not even mention it to the investment community despite repeated questions. What does this say about Vivendi’s overall transparency toward minority investors?” demanded the bank’s blisteringly tough note.

Vivendi’s share price tumbled some 6 per cent over the past few days.

Indeed, looking at the specific answers given by Vivendi’s directors, it might easily be seen that they could be alleged to have been “economical with the truth”. Examples from Vivendi: “The management board will have to decide whether to buy back shares or not, it will depend on the market conditions at the time, it’s very difficult to say now.”

Or: “For the buyback its very simple, we have the authorisation to buy at 20 and it will depend on the general conditions in the market. If we have too much cash at the balance sheet we could consider to use it to buyback if the stock is low. There is no specific decision taken today on that considering the stock price (that was when price was at 21.5 obviously).”

The statements seem very straightforward, except that within a few hours – and during the French bank holiday – they were buying back stock.

The investment community is already decidedly nervous about Vivendi, and in particular its actions with Canal Plus. Vivendi’s Vincent Bolloré has swept through senior managers at Canal+, firing a slew of long-term staffers including Canal Plus CEO Rodolphe Belmer (who has found  a new job running Eutelsat from early 2016) chairman Bertrand Meheut. Also in the firing line was Nathalie Coset-Cerdan (head of cinema) as well as head of News and head of Sports.

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