Subscription Business Boosts Vivendi

Vivendi’s announcement that Q3 profit is up a better-than-expected 5.1 percent will please investors, but the figures show the recorded music business still in the doldrums.

The French company, Europe’s largest entertainment group, reported revenues up 8.3 percent to euro 19.5 billion ($29.2 billion), while its Universal Music Group – the world’s largest record company – saw revenues drop by 9 percent to euro 969 million ($1.4 billion).

Its pre-tax earnings fell 31.4 percent to euro 269 million ($402 million).

Digital sales were up 21 percent and there were better returns from publishing and merchandising, but it couldn’t make up for a falling demand for physical product and light release schedule.

The major sellers were new albums from U2, Eminem, Black Eyed Peas, Lady Gaga and Taylor Swift.

Vivendi’s SFR telecoms division and pay-TV Canal Plus units managed to offset a weak music business.

With 70 percent of revenue coming from phone, Internet, pay-TV and online video-games accesses, Vivendi’s subscription-based business model has continued to prove resilient in the face of an economic downturn.

SFR – France’s second-largest mobile telecoms service operator – had a 10.2 percent rise in gross profits, while pay-TV unit Canal Plus saw pre-tax profits rise 4.4 percent.