Vivendi Earnings: Canal+ Continues to Post Anemic Growth as Lagardere Deal Appears Set To Close

Vivendi VIV posted mixed first-half results as revenue met and EBIT missed Factset consensus expectations. Growth at the largest segment, Canal+, remained lackluster with low-single digit organic growth. Management announced the Lagardere deal remains on course to be completed by October. The deal now hinges on two separate deals to sell Editis to International Media Invest, a subsidiary of CMI and to sell Gala magazine to Figaro Group. The sale of Editis will require regulatory approval of the IMI prior to closing. With the 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 half came in at EUR 4.7 billion, up 4% year over year, but only up 3% after taking into account currency fluctuations and acquisitions. Canal+ overall revenue grew by 2% organically as TV France’s rebound has switched to a more normal growth of 2% versus last year. TV International was up 1% organically due to continued subscriber growth. Studiocanal generated 16% growth due to strong theatrical performances by John Wick 4, Alibi.com 2, and All Your Faces. In Asia, the firm invested in Viu, taking a 26% stake with the option to increase up to 51%. Viu is available in seven markets in Southeast Asia, eight in the Middle East, and South Africa. Canal+ EBITDA was flat at EUR 337 million, but the margin fell 30 basis points to 11.7%.

Net revenue at Havas increased by 5% in total with 4% from organic growth, as the firm benefited from continued momentum. All four regions saw sequential improvement, with both North America and Europe up 3%. The highest growth was in two much smaller regions, Asia-Pacific (6%) and Latin America (29%), but the regions only generate 15% of the top line for the advertising firm. EBITDA margin was flat at 9.3%.