Vivendi AGM approves buy-back

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Media giant Vivendi‘s AGM approved a buyback of stock resolution, and there’s potential for a special dividend to investors.

In essence the AGM approved a buy-back of 25 per cent of issued shares. The AGM was also issued with Q1 results which were helped by a 2 per cent higher than expected revenue stream from its UMG music division (UMG was up 18.8 per cent at constant currency).

The AGM also approved Cyrille Bolloré as a member of its supervisory board for a four-year term and has renewed the appointment of Dominique Delport for the same period. Cyrille Bolloré replaces his father Vincent, who has now stepped down. Bolloré senior had already stepped down as company chairman last year, to be replaced by another son, Yannick.

“This buyback is unrelated to the potential UMG proceeds from the stake sale, which Vivendi has previously stated would be returned to shareholders. Vivendi’s General Counsel, Frederic Crepin, stated at the AGM yesterday that the company could engage in an extraordinary dividend to return funds.

The board approved a 2018 dividend of €0.50 per share, up 11.1 per cent year-on-year.

Analysts at Deutsche Bank said that while some investors would argue that this benefit was mainly driven by volatile merchandising and a Q4 soundtrack boost to physical sales, this misses the progress on the Major music players breaking into touring rights.

“It also overlooks the reducing volatility of UMG revenue and cashflow trends, which should encourage potential financial bidders for UMG. Canal+ was weaker in revenue in Q1, but emphasis from management from MipTV is strong on continued cost-cutting, which is the main opportunity here. The company AGM is the other notable event today, which may provide more detail on the UMG sale, where there was little new news in the release.”

Canal Plus’ mainland French operations, where a subs loss of 90,000 was worse than expected loss and International subs also surprised negatively, with a 400,000 loss. “It should be noted that African subs do not make 12-month subscriptions, so after an exceptionally strong Q4’18, an uptick in absolute levels of loss in the seasonally negative Q1 should be expected. The CAF Africa Cup of Nations starts on 21 June, so Q2 should be materially stronger, but subs trend should continue to be monitored,” suggested Deutsche Bank.

Maxime Saada, CEO of Canal+ stated last week in an address at MipTV that Canal Plus will need to do some belt-tightening in order to be “fit to fight” and will need to do more “belt-tightening”. “

While unquantified, this emphasis on cost-cutting is welcome. C+ hit its cost-cutting target of €350 million last year and Saada has previously spoken about €350-€360 million by 2019 which was included in the company’s prior €500 million savings target for 2019. This €500 million target was withdrawn at Q4 results, with the company refusing to recommit and flagging StudioCanal was running behind schedule on turnaround. This gives hope the €500 million target could be hit. Our current estimate is below this level; €478 million and consensus is the same,” advised the bank report.


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