Vivendi (VIVEF) Q2 2016 Results

Arnaud de Puyfontaine – CEO

A first for global music market in 25 years

“…For the first time since 1990s, the global music market bounced back in 2015, up 3.2%, driven by streaming, which is the fastest growing revenue source. In 2015, streaming revenues increased by 45% and accounted for 43% of total digital sales.”

Subscription services rapidly gaining tract

“I would like to emphasize the rapid development of subscription services, which were chosen by 68 million subscribers worldwide in 2015 compared to 41 million in 2014. 30% of Spotify’s 100 million customers have already switched to subscription streaming. Apple Music, launched last year, now has 13 million paying subscribers.”

More consumption of creative content via smartphones with shorter length of videos

“One trend is particularly striking. Cultural creative content is increasingly been consumed on smartphones, the number of which is expected to rise from 2.6 billion today to 6 billion by 2020. This growth in mobile devices has the effect of cutting viewing times, 85% of videos consumed today are already less than six minutes long. ”

A growing mobile game industry in Asia

“Mobile games content embraces a new type of consumption usages, short sessions on mobile with worldwide appeal…APAC {Asia Pacific} is now the largest market for gaming and the Chinese market is as big as the U.S., maybe it will be the same for music one day.”

Do more and better but at lower costs

“…we have also implemented a roadmap at Canal+ in France to optimize costs by €300 million. All cost lines have been reviewed with our subscribers’ interests in mind. How do more and better with less? Let me give you an example. The Olympic Games in Rio were covered by the Canal+ channel with two-thirds of our editorial teams staying in Paris. The Rio coverage was a complete success and the audience increased by 50% compared to an August average.”

Herve Philippe – CFO

Limited currency effect expected after the Brexit

“…Q2 was negatively impacted by currency evolution. It is possible this trend could worsen in second part of 2016… it is quite complex to evaluate what the impact of the U.K. — on the U.K. economy could be, on the global European economy in general. At this stage, we consider that it should have an impact limited to the currency effect of the potential weakness of the pound.”

Revenues: Streaming up, subscription down

“In the first six months, streaming and subscription revenues grew 62%, while download revenues were down 29%. Streaming and subscription is now the largest source of revenues and accounts for almost two-thirds of UMG’s digital revenues and more than one-third of UMG recorded revenues.”

Free-to-air brings in historic audiences

“…an increase of costs at free-to-air as part of our ambition to grow our audiences. For example, the broadcast of the Champions League final had a cost, but drove D8 audience to an historical record high 25.6% audience for 25 to 49 year old.”

Stock buybacks to continue in depressed markets

“…in the use of cash, as you have seen, we have bought back up to €1.6 billion of shares at Vivendi. Clearly, we have a completely opportunistic view on that. If we think that in depressed market — if consider that low, we can continue to buyback stocks.”