French media and communications heavyweight Vivendi Universal has surprised the analyst community by reporting net profits of EUR131 million for the third quarter of 2003, on the back of decreased costs from asset sales and a 60% reduction in its debt pile. Under the stewardship of chief executive officer Jean-Rene Fourtou the company sold a series of shareholdings deemed ‘non-core’ in the year to 30 September 2003, many of which were acquired at inflated prices by Fourtou’s predecessor Jean-Marie Messier during the telecoms boom at the turn of the century.
Fourtou has made it clear that the company’s future focus will be centred on three main units – French pay-TV operator Canal Plus, mobile operator Société Française du Radiotéléphone (SFR) and record company Universal Music. Vivendi’s overall revenues for the third quarter fell by 7% to just over EUR5.9 billion, which it attributed to the fall in global music sales and a weaker dollar against the euro. Quarterly sales at Universal Music fell by 16% to EUR1.11 billion, although this was partly offset by an 8% rise in sales at SFR’s parent Cegetel to EUR1.94 billion. Canal Plus’s revenues fell 17% to EUR969 million, although the pay-TV unit’s quarterly operating profit rose from EUR40 million to EUR133 million.
Vivendi’s third quarter 2003 income included gains of EUR144 million from the disposal of a number of minor shareholdings, including shares in Spanish pay-TV company Sogecable, whilst in contrast its 3Q 2002 losses included EUR1.2 billion of costs related to the divestment of Vivendi’s stakes in the Italian pay-TV sector and the sale of publishing firm Houghton Mifflin. It is currently in the throes of selling its US media assets to General Electric’s NBC in a deal valued at approximately USD14 billion. The agreement will see NBC acquire Universal Studios in Hollywood as well as three cable TV networks – Trio, USA and the Sci-Fi Channel. Total net debt was reduced from EUR32 billion to EUR12.8 billion during 2003, a figure Vivendi expects to decrease to EUR5 billion by the end of 2004. Vivendi’s share price has risen by more than a quarter this year to around EUR19.7, a clear sign that the investment community approves of the path along which Fourtou is leading the company.