Bank: “Vivendi to suffer deep declines”

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Media conglomerate Vivendi will report its Q2 numbers on July 30th, and a report from investment bank Jefferies says it is anticipating “deep declines across all 4 key Vivendi divisions”.

The bank says that year-on-year Vivendi’s revenues numbers could be down 9 per cent to €3.544 billion for the quarter-year.

As to Vivendi’s key divisions, the bank suggests the following:

  • Universal Music Group (UMG): “expect pockets of revenue pressure but robust margins”

  • Canal+ :profits likely to be protected by cancelled Ligue 1 payment. We forecast Canal+ revenues +2.3 per cent y-o-y to €1.295 billion (vs +9.4 per cent in 1Q20 at const FX). The September 2019 acquisition of M7 contributes ~€100 million to y-o-y revenue growth in both quarters. We understand that Canal+ withheld payments of ~€70 million from Ligue 1 in 2Q20 after the French Government cancelled the season with some games still not played. C+ customers in France who subscribe to football were offered alternative content (e.g. cinema, series) but were not offered rebates automatically. We forecast EBITA of €300 million in 1H20 (after restructuring costs of €30 million), against €233 million in 1H19 (after restructuring of €3 million).

  • Havas: “Havas pressures are severe but secular. We model Havas revenues -26 per cent y-o-y to €435 million in 2Q20 and understand this be consistent with guidance from industry peers. With a relatively fixed cost structure, we forecast EBITA -62 per cent y/y to €41 million in 1H20.

  • Editis: “lockdown closed bookshops and saw non-essential e-commerce shipments suspended. We model Editis rev -30 per cent y-o-y to €120 million in 2Q20. Lockdown restrictions in France (85 per cent of revenues) extended as far as prohibiting deliveries of books ordered online. We understand that demand recovered strongly from early-Jun. With a relatively fixed cost base (and Jan seasonally loss-making), we model a 1H20 EBITA loss of €(48) million (vs €4 million profit in 1H19).”

The bank also says it is uncertain as to the rationale behind the recent Vivendi investments in Lagardere (some €300 million) which has resulted in a 16.5 per cent stake. “Vivendi asserts that it does not want a board seat and is not aiming for control. This might turn out to be a purely financial investment (along the lines of Fnac and Ubisoft). Alternatively, domestic-focused Editis might be able to leverage overseas distribution of Lagardère-owned Hachette,” says the bank’s report.


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