Vivendi Earnings: Anemic Top-Line Growth Meets Expectations as Odds of Lagardere Deal Closing Improve

Vivendi’s VIV first-quarter revenue met FactSet consensus expectations as the two largest segments, Canal+ and Havas, posted low-single-digit growth. The firm reports only revenue results for the first and third quarters. Management announced that the firm entered into a put option agreement that gives it the right to sell Editis to International Media Invest, a subsidiary of CMI, but financial terms were not disclosed. The deal would allow the firm to fulfil the remedies it proposed to the regulators about the Lagardere deal. Vivendi will exercise the put option if European regulators approve the merger. With the put option agreement in hand, we expect that deal will likely be approved. We are maintaining our no-moat rating and our fair value estimate of EUR 12.

Revenue for the first quarter came in at EUR 2.3 billion, up 3.3% year over year, but only up by 2% after taking into account currency fluctuations and acquisitions. Canal+ overall revenue grew by 1% organically as TV France’s rebound has switched to a more normal growth of up 1% versus last year. TV International was flat organically, as the growth was driven by acquisitions. StudioCanal generated 9% growth due to strong theatrical performances by John Wick 4 and Alibi.com 2 as well as demand for library content. Canal+ announced a multiyear deal to make Apple+ content available to linear subscribers for no additional charge in France, Switzerland, Czech Republic, and Slovakia as well to broadcast Apple+ original series like Morning Show.

Net revenue at Havas improved by 4% in total with 1% from organic growth, as the firm benefited from continued momentum and demand for new offerings. Three regions saw sequential improvement, with North America flat and Europe up only 1%. The highest growth was in two much-smaller regions, Asia-Pacific (up 4%) and Latin America (+27%), which only generate 14% of the top line for the advertising agency.