PARIS — Franco-American conglom Vivendi Universal said sales fell 4% in the first quarter, hit by lower revenues from its music biz Universal Music Group amid an industry-wide slump. Company said that a weaker dollar was also a factor in the drop. The dollar has dropped 20% against the euro in the year ending March 31.
Overall sales fell to €6.23 billion ($7.13 billion) from $7.4 billion, a bigger-than-expected slide for Viv U, which has been frantically selling off assets since it posted the biggest loss in French history in 2002. Analysts’ forecasts for first-quarter sales had ranged between $7.16 billion and $7.76 billion.
Sales at UMG, the largest of the five music majors, slid 19% compared to 2002 to $1.26 billion, despite a strong debut by “Get Rich or Die Tryin'” from hip-hop talent 50 Cent, which Viv U said was the best-selling release by a company so far this year. UMG’s drop compares with a nearly 10% decline in overall U.S. recorded music sales, due in a large part to piracy. But Viv U said that its music group, which boasts a range of artists from Eminem to Pavarotti, increased its album market share 3.5% to 30.9%.
The fall in UMG revs, however, underscores the difficulty Viv U topper Jean-Rene Fourtou would have in trying to unload the asset for a decent price. Fourtou, who has sold $10.3 billion of assets since he took the helm from ousted exec Jean-Marie Messier, has reportedly been in talks with Apple’s Steve Jobs about selling the music arm, although the deal is considered unlikely.
Fourtou said at a shareholder’s meeting in April that he intends to sell the Viv U’s entertainment biz, which includes Universal Pictures, Universal Television and its theme parks, but that the music division was not necessarily up for grabs. While, oil billionaire and former 20th Century Fox owner Marvin Davis, backed by a consortium of investors, has bid something less than $20 billion for the whole of VUE, including UMG, Fourtou has said that “selling music today would amount to selling lower that its value.”
Besides Davis, MGM, Viacom, NBC parent General Electric and Liberty Media are said to be interested in Viv U’s entertainment assets.
Viv U said today that the sales at VUE had risen 5% to $1.67 billion, despite falling revs at its film business. Universal Pictures first quarter sales fell 8% in dollars and 23% in euros, due, the conglom said, to fewer theatrical releases during that period. Still, UP has six films coming out between Memorial Day and Aug. 1 — double the amount of any major studio during that period, and a move that could help beef up its market share.
The conglom said sales at its TV arm rose 12% in dollars, or 83% in euros. The overall rise in sales at VUE, including the Universal Television, is mainly attributed to its acquisition of USA Networks last May. Theme parks dropped 25% in euros.
At the company’s Gallic TV and film group, Canal Plus, sales were down 3% in the first quarter of 2003, bring its revs to $1.33 billion.
The group’s pay TV sales rose 3%, boosted by its satellite platform Canal Satellite. Film revenues dropped 24%, to $95 million, also due, the company said, to fewer theatrical releases. Over the past year, film arm StudioCanal has cut its ambitions to plug a hole in the group’s debt and to streamline operations that Viv U intends to hold on to.
Viv U’s game unit also contributed to the company’s overall drop in sales, dropping 15% in the first quarter to $121.4 million.
The group’s telecom holdings, which Fourtou plans to make Viv U’s driving force, saw sales rise 4% to $2.04 billion.