(Rewrites top of story, adds details)
By Mathieu Rosemain and Gwénaëlle Barzic
PARIS Feb 23 France's Vivendi said it
expects Canal Plus' turnaround efforts to bear fruit in 2017,
after the pay-TV unit's French channels lost thousands of
subscribers last year, resulting in a sharp fall in the media
Losses at Canal Plus' channels in France alone cut 399
million euros ($422 million) from the group's core operating
profit for 2016, as close to 500,000 individual subscribers in
France rescinded their contract, Vivendi said in a statement on
As a result, the Vivendi group's earnings before interest,
tax and amortisation (EBITA) fell by 23 percent to 724 million
euros, missing a Reuters poll average of 820 million.
The problems at Canal Plus have made some investors nervous
about the group's longer-term strategy.
This year, however, the media giant, led by billionaire
Vincent Bollore, said it targeted a 25 percent rebound in core
operating profit, as it bets that cost cutting measures, the
reshuffling of Canal Plus' commercial offers and new
distribution partnerships sealed in France with telecom
operators Orange and Iliad, will generate
more revenue and earnings. It expects group revenues to rise by
more than 5 percent, it said.
Universal Music Group (UMG), Vivendi's biggest business unit
by revenue, adjusted to new consumer habits in favour of
streaming and paid subscriptions, and saw its profitability grow
over the last year.
Bollore has pledged to transform Vivendi, which used to be
managed as a holding company, into a southern European
powerhouse able to compete with the likes of Time Warner
and Rupert Murdoch.
To achieve that aim, he launched a spree of acquisitions,
spending 3.4 billion euros in 2016 alone to buy stakes in
Italian broadcaster Mediaset and France's biggest video
games maker Ubisoft, while strengthening its position
in Telecom Italia as its biggest shareholder.
All did not go smoothly: Vivendi and Mediaset have been at
legal loggerheads since July, when the French group antagonised
the Berlusconi family, which controls the broadcaster, by
pulling out of a deal to take over Premium TV.
Rumours about a possible tie-up between Vivendi and
advertising group Havas, headed by Bollore's son
Yannick, have also surfaced, as Bollore repeatedly said the two
groups should work closer together.
Havas is 60 percent-controlled by the Bollore group and
Yannick Bollore joined the media group's board last year.
There are no formal plans being discussed by the two groups
"as we speak," Vivendi's Chief Executive Arnaud de Puyfontaine
said in analyst conference call on Thursday.
($1 = 0.9450 euros)
(Reporting by Mathieu Rosemain and Gwenaelle Barzic; Editing by
Andrew Callus and Susan Fenton)