Vivendi has launched a €300m cost-cutting plan at Canal Plus as part of efforts to turn round the lossmaking French channels of its pay-TV unit and return it to break-even by 2018.
The French media and content group controlled by billionaire Vincent Bolloré said the plan to target costs across the board, including broadcasting, distribution and production, would yield savings of between €60m and €80m this year alone.
The cost-cutting comes as Vivendi said on Thursday that increased losses at Canal Plus’s French channels had caused operating profit at the group level to fall 7.6 per cent in constant currency terms during the first six months of the year to €440m.
Group adjusted net profit during the three months to the end of June was €187m, 3.1 per cent lower than a year earlier and below the €193m that, on average, analysts had predicted.
Revenues during the second quarter were €2.55bn, 1.9 per cent lower than during the same period of 2015.
Mr Bolloré has taken a keen interest at Canal Plus, appointing himself chairman last year as part of a purge of top-level executives and becoming involved in every aspect of the business, from overarching strategy even to the content of specific programmes.
But he warned this year that Vivendi would not continue to “shell out indefinitely” for Canal Plus’s lossmaking television channels. At this year’s annual meeting, he reiterated threats to sell the channels if they could not be revived.
Under Mr Bolloré’s stewardship, Vivendi is seeking to become a southern European media and content provider able to compete with the big US and Asian groups.
More recently, however, disagreements have broken out with Italian broadcaster Mediaset over an agreement in April in which the two groups agreed to take a 3.5 per cent shareholding in the other group.
Vivendi, which was also planning to take full ownership of Mediaset’s pay-TV group as part of that agreement, now wants to change the terms of the deal, insisting that Mediaset’s growth predictions for the pay-TV business are over-optimistic.
Vivendi’s revenues in the second quarter, 1.9 per cent lower than during the same period of 2015
Mediaset, which is controlled by Italy’s Berlusconi family, has rejected Vivendi’s alternative proposals, and Fininvest, the Berlusconi family’s investment vehicle, last week began legal action in an attempt to force through the deal.
On Thursday, Vivendi said in a statement that the agreement could be void after September 30, by which date the European Commission has to give the green light to the deal.
“The commission would not accept a formal filing while the parties were discussing their differences,” the Paris-based company said. “In any event, it is possible that the commission’s clearance might not be obtained before September 30, on which date the contract would become void.”
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