French media and entertainment group Vivendi posted revenues of €16.09 billion in 2020, up 1.2% compared to 2019, thanks in part to good performances of Universal Music Group, books division Editis, and pay-TV unit Canal+ Group, offsetting declines in the company's advertising division Havas Group and Vivendi Village, both affected by the Covid-19 pandemic.
The company said that solid growth in the first quarter of 2020 (+4.4% at constant currency and perimeter) was followed by a decline in the second quarter (-7.9%), and recovery in the third (+0.7%) and fourth (+0.7%) quarters.
The group's EBITA rose 6.6% to €1.63bn, up 6.6% compared to 2019, while earnings before provision for income taxes increased to €2.18bn, up 47.7% compared to 2019.
"Although the COVID-19 pandemic is having a more significant impact on certain countries or businesses than others, in 2020, Vivendi has demonstrated resilience in adapting its activities to continue to best serve and entertain its customers, while reducing costs to preserve its margins," said the company in a statement.
> Universal Music Group posted revenues of €7.43bn, up 4.7% at constant currency and perimeter compared to 2019. Revenues from the sale of recorded music grew by 6.7% to €5.96bn, "thanks mainly to the growth in subscription and streaming revenues (+16.2%), which more than offset the 6.0% decline in physical sales compared to 2019, and the 19.0% decline in download sales," said the company.
Recorded music best sellers for 2020 included new releases from The Weeknd, Lil Baby, Pop Smoke, BTS, Justin Bieber, King & Prince, Taylor Swift and Juice WRLD, as well as continued sales from Billie Eilish and Post Malone.
Music publishing revenues increased 14.4% to €1.86bn from €1.05bn (at constant currency and perimeter compared to 2019), driven by increased subscription and streaming revenues, as well as the receipt of a digital royalty claim in the second quarter of 2020.
Merchandising and other revenues were down 39.6% to €292m against €489m (at constant currency and perimeter compared to 2019), due to the impact of the health pandemic on both touring and retail activity.
Driven by the growth in revenues, revenues mix and cost control, UMG’s EBITA amounted to €1.33bn, up 20.1% at constant currency and perimeter compared to 2019.
North America remained UMG's main market with revenues of €2.94bn in 2020, up 12% year-on-year, followed by Europe (up 3.6% to €1.78bn), Asia (up 3.5% to €801m), Latin America (up 15.5%% to €181m) and RoW (down 13.6% to €256m).
Under the paragraph "Cash flow from operations analysis" Vivendi disclosed that in 2020, UMG spent €2.54bn in "payments and catalogue acquisitions", with 1.02bn in recoupment of payments, leaving the group with a €1.51bn bill for advances as part of new artist contracts or renewed contracts, as well as catalogue acquisitions. In 2019, UMG spent €1.48bn in payments and catalog acquisitions, with €1.02bn in recoupment of payments, leaving a net expenditure of €465bn.
MBW surmised that "in the year before it goes public in Amsterdam, Universal splashed a whole lot of money locking in new deals with superstars, and buying up music catalogues."
> Canal+ Group posted revenues up 4.4% to €5.49bn, thanks to an increase in its total subscriber's portfolio (individual and collective) from 20.3 million in 2019 to 21.8 million in 2020, including 8.7 million in mainland France. Revenues from international operations increased sharply by 19.8%, due to a "significant" growth in the number of subscribers (+1.2 million year-on-year) across all geographical areas except Asia-Pacific. EBITA recorded a strong increase of 26.7%, reaching €435m, compared to €343m in 2019.
> Books division Editis suffered from "an extremely turbulent environment in 2020 with the closure, during some periods, of a large number of the points of sale in France," said Vivendi. The publishing market in France fell by -67% in April, -25% in May and -35% in November. In 2020, Editis’ revenues reached €725m, a slight decrease of 1.3% compared to 2019. Editis' EBITA was €38m, compared to €43m for the same period in 2019.
> Vivendi Village, which includes the group's live activities and venues, was affected by the lockdown measures gradually taken in Europe and Africa. Revenues were down from €141m in 2019 to €40m in 2020, down 71.4% year-on-year.
Vivendi said significant cost-cutting measures were implemented at the division, and the company experimented with new concert and show formats and different forms of monetisation, such as virtual festivals (Junction 2), and paid livestream concerts. "These initiatives could prove to be a natural and sustainable complement to live performance activities and an additional revenue source," said Vivendi.
Interestingly, the sale of 10% of UMG’s share capital in March 2020 to a Tencent-led consortium for €3bn does not appear in the company's accounts. Instead, Vivendi said it was recorded, in accordance with IFRS standards, as a sale of non-controlling interests. As a result, the capital gain on the sale of 10% of UMG’s share capital was directly recorded as an increase in equity attributable to Vivendi SE shareowners for €2.38bn.
The company said that solid growth in the first quarter of 2020 (+4.4% at constant currency and perimeter) was followed by a decline in the second quarter (-7.9%), and recovery in the third (+0.7%) and fourth (+0.7%) quarters.
The group's EBITA rose 6.6% to €1.63bn, up 6.6% compared to 2019, while earnings before provision for income taxes increased to €2.18bn, up 47.7% compared to 2019.
Good resilience
"Although the COVID-19 pandemic is having a more significant impact on certain countries or businesses than others, in 2020, Vivendi has demonstrated resilience in adapting its activities to continue to best serve and entertain its customers, while reducing costs to preserve its margins," said the company in a statement.
"The business activities showed good resilience, in particular music and pay television. However, as previously mentioned, the other businesses such as Havas Group and Vivendi Village (in particular live entertainment) were affected by the pandemic’s effects. Editis has enjoyed a strong rebound in its businesses in France since June 2020."
> Universal Music Group posted revenues of €7.43bn, up 4.7% at constant currency and perimeter compared to 2019. Revenues from the sale of recorded music grew by 6.7% to €5.96bn, "thanks mainly to the growth in subscription and streaming revenues (+16.2%), which more than offset the 6.0% decline in physical sales compared to 2019, and the 19.0% decline in download sales," said the company.
Recorded music best sellers for 2020 included new releases from The Weeknd, Lil Baby, Pop Smoke, BTS, Justin Bieber, King & Prince, Taylor Swift and Juice WRLD, as well as continued sales from Billie Eilish and Post Malone.
Music publishing revenues increased 14.4% to €1.86bn from €1.05bn (at constant currency and perimeter compared to 2019), driven by increased subscription and streaming revenues, as well as the receipt of a digital royalty claim in the second quarter of 2020.
Growth in North America
Merchandising and other revenues were down 39.6% to €292m against €489m (at constant currency and perimeter compared to 2019), due to the impact of the health pandemic on both touring and retail activity.
Driven by the growth in revenues, revenues mix and cost control, UMG’s EBITA amounted to €1.33bn, up 20.1% at constant currency and perimeter compared to 2019.
North America remained UMG's main market with revenues of €2.94bn in 2020, up 12% year-on-year, followed by Europe (up 3.6% to €1.78bn), Asia (up 3.5% to €801m), Latin America (up 15.5%% to €181m) and RoW (down 13.6% to €256m).
Locking deals with superstars
Under the paragraph "Cash flow from operations analysis" Vivendi disclosed that in 2020, UMG spent €2.54bn in "payments and catalogue acquisitions", with 1.02bn in recoupment of payments, leaving the group with a €1.51bn bill for advances as part of new artist contracts or renewed contracts, as well as catalogue acquisitions. In 2019, UMG spent €1.48bn in payments and catalog acquisitions, with €1.02bn in recoupment of payments, leaving a net expenditure of €465bn.
MBW surmised that "in the year before it goes public in Amsterdam, Universal splashed a whole lot of money locking in new deals with superstars, and buying up music catalogues."
> Canal+ Group posted revenues up 4.4% to €5.49bn, thanks to an increase in its total subscriber's portfolio (individual and collective) from 20.3 million in 2019 to 21.8 million in 2020, including 8.7 million in mainland France. Revenues from international operations increased sharply by 19.8%, due to a "significant" growth in the number of subscribers (+1.2 million year-on-year) across all geographical areas except Asia-Pacific. EBITA recorded a strong increase of 26.7%, reaching €435m, compared to €343m in 2019.
A turbulent environment
> Books division Editis suffered from "an extremely turbulent environment in 2020 with the closure, during some periods, of a large number of the points of sale in France," said Vivendi. The publishing market in France fell by -67% in April, -25% in May and -35% in November. In 2020, Editis’ revenues reached €725m, a slight decrease of 1.3% compared to 2019. Editis' EBITA was €38m, compared to €43m for the same period in 2019.
> Vivendi Village, which includes the group's live activities and venues, was affected by the lockdown measures gradually taken in Europe and Africa. Revenues were down from €141m in 2019 to €40m in 2020, down 71.4% year-on-year.
Vivendi said significant cost-cutting measures were implemented at the division, and the company experimented with new concert and show formats and different forms of monetisation, such as virtual festivals (Junction 2), and paid livestream concerts. "These initiatives could prove to be a natural and sustainable complement to live performance activities and an additional revenue source," said Vivendi.
Interestingly, the sale of 10% of UMG’s share capital in March 2020 to a Tencent-led consortium for €3bn does not appear in the company's accounts. Instead, Vivendi said it was recorded, in accordance with IFRS standards, as a sale of non-controlling interests. As a result, the capital gain on the sale of 10% of UMG’s share capital was directly recorded as an increase in equity attributable to Vivendi SE shareowners for €2.38bn.
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