Vivendi unit loses some of its fight

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The revival of Vivendi Universal’s video games division – publisher of the international hit, World of Warcraft – faltered at the end of 2005.

However, the media and telecommunications group’s fourth-quarter sales were able to weather this setback due to a sturdy performance from its French mobile telephone subsidiary, SFR.

Vivendi on Monday said that sales rose 7 per cent to €5.48bn ($6.62bn) in the final three months of 2005. This meant that sales for the full year rose 9 per cent to €19.48bn.

Buoyed by continued growth in subscriptions to third-generation mobile services, SFR improved its underlying sales by 5 per cent to €2.21bn in the fourth quarter, contributing to a 7 per cent gain for the year.

After months of sparkling growth fuelled by World of Warcraft, a subscription-based game played through the internet, the games division’s strong supercharged recovery stalled in the fourth quarter, with underlying sales dropping 11 per cent.

Vivendi said this reflected a tough comparison with the end of 2004, when World of Warcraft had just been released in North America. Even so, the division’s 2005 sales rose 35 per cent.

Universal Music, Vivendi’s recorded music arm, saw sales rise 2 per cent in a difficult environment for traditional record labels.

Its sales declined 5 per cent in the fourth quarter, reflecting a weaker line-up of releases that could not compete with the new albums put out by U2, Eminem and Gwen Stefani at the tail end of 2004.

Canal Plus, the pay-television arm, continued to benefit from subscribers attracted by its exclusive football coverage in France. Underlying sales rose 6 per cent in the fourth quarter and 3 per cent in 2005. Subscriptions were 5.06m, up 105,000 against 2004, with a churn rate of 11.4 per cent – the proportion of customers ending their contract.

In an interview with France’s La Tribune on Monday, Jean-Bernard Lévy, Vivendi chief executive, said it was looking to raise its stake in NBC Universal from 18.5 per cent to 20 per cent by buying out its Japanese co-investor, Matsushita.

He also said Vivendi would like to increase its 28 per cent stake in Neuf Cegetel, the fixed-line telephone and internet group.

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