MARCH LETTER 2016 TO OUR SHAREHOL DERS R D
S O T
O Acceleration of international expansion H P VINCENT ARNAUD BOLLORÉ DE PUYFONTAINE Development of original content production CHAIRMAN OF CHAIRMAN OF THE SUPERVISORY THE MANAGEMENT Need to stop losses of Canal+ channels BOARD BOARD in France n integrated media and content group, Vivendi games business represents a promising key segment of stepped up efforts in 2015 regarding original con - today’s content sector. Atent production and international growth. The 2015 results reflected the good operating perform - Canal+ has 5.5 million individual subscribers worldwide, ances of all businesses, apart from Canal+ (1) channels of which 2 million are located in Africa. Operating in in France. Facing a moribund economy and fierce com - more than 60 countries, Universal Music is the world petition, the channels have been seeing their subscriber leader in recorded music, holding a global market share base erode and losses accumulate since 2012. The exceeding 30%. Group can no longer support them. As a result, Vivendi The acquisition of Dailymo - held discussions with beIN sports with the aim of en - tion also allowed an accel - tering into an exclusive distribution agreement covering Confirmation eration of its international its channels. of expected returns to development. For Universal Music, Vivendi continues to see positive shareholders between The development of original momentum in the business, leading to a reasonable in - content production, which crease in results this year and enhanced results from 2015 and 2017 reduces Vivendi’s dependence 2017 onwards. on third-parties, is also one of the For Canal+, Vivendi needs to stop the losses at Canal+ Group’s major objectives. This is being channels (1) in France, which could lead to a significant achieved by the continuous investment in artists and decline in the operating results in 2016, by implementing original productions by the various companies compris - a transformation plan with the objective, for the Canal+ ing Canal+ and Universal Music. Vivendi also acquired channels (1) in France, of reaching breakeven in 2018 interests in Mars Films and the Banijay Group. With and of achieving a level of profitability similar to that these goals in mind, the Group also crossed the legal of the best European players in sector in the medium threshold of 15% and now holds a 15.66% stake in term. Ubisoft as of February 29. Moreover, Vivendi decided to Furthermore, Vivendi confirms the expected returns to launch a public tender offer for Gameloft. The video shareholders between 2015 and 2017. I
(1) Canal+, Canal+ Cinéma, Canal+ Sport, Canal+ Séries, Canal+ Family and Canal+ Décalé. R E S U L T S 2
2015 RESULTS IN LINE An 11.3%
rise in adjusted
R E
L WITH FORECAST D
I net income
S
D espite a difficult eco - Vivendi Village’s revenues were R
A in 2015
N nomic environment, €100 million, up 3.5% compared
R
E B the Group’s 2015 re - to 2014. Vivendi Village’s in- © sults are in line with come from operations was D (1) Hervé Philippe forecast. Apart from Canal+ positive by €10 million, thanks pean players in the sector in the Chief Financial channels in France, this year’s to the transformation plan medium term. Officer results reflected the good oper - implemented by Watchever in It will be proposed to the Annual ating performances of all busi - Germany. Shareholders’ Meeting to be nesses, with adjusted net held on April 21, 2016, that an income increased by 11.3%. POSITIVE MOMENTUM ordinary dividend of €3 per In 2015, Vivendi recorded More specifically, Universal OF UMG share be paid with respect to results in line with forecast. Music’s revenues were €5,108 For Universal Music Group, 2015. Two interim dividends of The Group confirms the million, up 12.1% compared to Vivendi continues to see posi- €1 each were paid on June 29, expected return to shareholders 2014, mainly driven by stream - tive momentum in the business, 2015 and February 3, 2016, and in 2016 and has committed to ing and subscription revenues driven by ongoing growth in the balance will be p aid on return an additional €1.3 billion (up 43.2% at constant currency streaming and subscription and April 28, 201 6 (coupon detach- to shareholders by mid-2017 and perimeter). Its income from tempered by declines in down- ment on A pril 26, 2016). In ad- at the latest. operations rose to €626 million, load and physical sales, leading dition to these distributions, the up 3.2% compared to 2014. to a reasonable increase in re- Group also repurchased shares Canal+ Group’s revenues sults this year and enhanced amounting to €1,386 million as amounted of €5,513 million, up results from 2017 onwards. of February 17, 2016. 1.1% compared to 2014. Its in - For Canal+ Group, Vivendi Vivendi has also committed to come from operations was €542 needs to stop the losses of returning an add itional €1.3 bil- million versus €618 million in Canal+ channels(1) in France lion to shar eholders by mid- 2014 due to increased invest - which could lead to a signifi- 2017 at the latest. This should ments in programs and non- cant decline in the operating re- take the form of an ordinary recurring items. The Canal+ sults in 2016, by implementing dividend of €1 per share or channels(1) in France recorded a transformation plan with the share repurchases depending a negative EBITA of €264 mil - objective, for the Canal+ chan- on the overall economic envi- lion, a €76 million loss increase nels(1) in France, of reaching ronment. I compared to 2014. breakeven in 2018 and of (1) Canal+, Canal+ Cinéma, Canal+ achieving a level of profitability Sport, Canal+ Séries, Canal+ Family and similar to that of the best Euro- Canal+ Décalé. 2015 Change at constant Change currency and RESULTS* 2015 year-on-year perimeter year-on-year
Revenue €10,762M +6.7 % +1.4 %
Income from operations €1,061M -4.3 % -5.9 %
Adjusted net income €697M +11.3 %
Net cash position +€6.4bn vs. +€4.6bn as of December 31, 2014
*The key figures presented above take account of the changes in scope of consolidation occurring or announced in 2014 and 2015, of which the accounting impacts, particularly compliance with IFRS 5, are described in the 2015 Financial Report and Consolidated Financial Statements. These documents are available at www.vivendi.com or upon request from the Vivendi Shareholder Department.
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STRENGTHENING ITS POSITION AT TELECOM ITALIA Vivendi, which held 23.80% of Telecom Italia’s ordinary shares as of February 29, Sharing 2016, has three members on the Italian telecom Vivendi’s operator’s Board of Directors and successfully proposed expertise the appointment of an independent member. distribution of its content. Vivendi, a long-term share - n June 24, 2015, Vivendi re - holder, successfully proposed Arnaud de Puyfontaine Stéphane Roussel Oceived 1.11 billion ordinary the appointment of four mem - shares (8.24%) of Telecom Italia, bers to th e It alian teleco m op - Italy’s largest landline and erator’s Bo ard of Directors (of
mobile phone operator, in ex - which one independent mem - O
change for a 4.5% interest in N ber): Arnaud de Puyfontaine A
C S
Telefonica Brasil. This opportu - I Chairman of the Management
H
C
nity arose during GVT’s sale to N Board of Vivendi; Hervé Philippe,
A
E J
Telefonica. The Group then member of the Management /
R E
acquired shares on the stock L Board and C hief F inancia l Offi -
D I
S
market to own 23.80% of the cer of Vivendi; Stéphane Rous -
D R
A sel, member of the Manag ement
operator’s ordinary shares as of N
R E
B Board and Chief Operations
February 29, 2016.
/
R
Hervé Philippe Félicité Herzog D Officer of Vivendi; and Félicité
LONG-TERM © Herzog, Senior Advisor at Ondra SHAREHOLDER an integral part of its strategy. opment by sharing V ivendi’s Partners. Ms. Herzog serves as Vivendi’s equity investment in The aim of this investment is to expertise. In return, Vivendi will an independent member of the the Italian telecom operator is support Telecom Italia’s devel- gain an o ppo rtunity to expand Telecom Italia board. I
PROPOSED PUBLIC TENDER OFFER FOR GAME LOFT * he video game s business rep - (video games are t he content tender offer for Gameloft’s Tresents a fundamental com - that “tr avels best”), the game shares. The proposed offer was
R E
L ponent of today’s content and market is a perfect fit for filed with the Autorité des D I
S media sector. Video games gen - Vivendi’s strategy. Marchés Financiers (AMF) the D R
A erated revenues of $83 billion in same day at a price of €6 per N R E
B 2014, outselling music and al - INVESTMENTS IN UBISOFT share. The offer was raised to
© most as impor - AND GAMELOFT €7.20 on February 29. These in - Frédéric Crépin tant as the As a result, the Group decided in vestments are part of a strategic Senior Executive Vice A 83 cinema. October 2015 to invest in Ubisoft, vision that involves operationally President & The mo - a publisher of video games for converging Vivendi’s content and Vivendi and Canal+Group million dollar bile seg - PCs and consoles, and Gameloft, distribution platforms, on the one General Counsel market ment a publisher of mobile video hand, and the two companies’ should expe - games, after the necessary sale products, on the other. If the plan Mobile games should rience the indus - of Activision Blizzard in 2013 to succeeds, the public tender offer experience the strongest try’s strongest growth; it already reduce Vivendi’s significant debt. will represent a new stage in the growth of the video games represents one-third of the global On February 18, 2016, the Super - development of a worldwide market and fully-fledged market and should achieve 40% visory Board authorized the Man - group and a French leader in the I content that round out market share by 2018. Global agement Board to file a public media and content sectors. Vivendi’s offering. *This article does not constitute an offer and should not be regarded as constituting any type of solicitation whatsoever for the purpose of pur - chasing or selling securities in the United States or any other country. The above-mentioned offer and the acceptance of such an offer may be subject to specific regulations in certain countries, and readers of this letter are required to comply with these regulations. 4
DISCUSSIONS BETWEEN CANAL+ AND BEIN SPORTS I
(1) P
he six Canal+ channels P
D
- D
have been losing money in U
T O
H C
France for the past four years. A
P
F
F E
In 2015, the channels recorded J a negative EBITA of €264 million © (a €76 million loss increase com- pared to 2014), due to a sub-
R scriber base that has been
D
© severely eroded since 2012. The Jean-Christophe Thiery arrival of new national and inter- Chairman of the national players in sports, drama Management Borad and comedy has driven up the of Canal+ Group price of content broadcasting COMPETITION HAS DRIVEN UP THE PRICE Transformation rights and increased the number OF BROADCASTING RIGHTS The losses of Canal+ of competing offers. plan of Canal+ in France have increased. agreements renewed in spring in France To break this deadlock, A RETURN TO BREAKEVEN 2015). Canal+ Group invests Canal+ Group and beIN IN 2018 globally close to €800 million per Sports have begun This situation threatens the year in this industry, both in 2018. This plan must ensure that discussions to establish entire Canal+ Group, which em- France and internationally. The the subscribers’ perceived value an exclusive distribution ploys 8,200 people and is a priority for the new manage - of the group’s offers is restored agreement with beIN Sports. major player in the financing and ment team is to implement a by increasing investments in development of the French major transformation plan that original conten t pro duction and movie industry (French cinema should restore the breakeven in premium conten t as well a s by improving significantly the user experience, all in an essential ACQUISITION OF RADIONOMY cost-efficient manner. In addi- tion, the plan will have to be de- Radio now has its place in Vivendi. On December 17, 2015, the Group
R veloped with rigorous attention
E announced the acquisition of 64.4% of interest in Radionomy, a major
L D
I to cost management. Vivendi S
global player in the digital radio industry. D
R does not have the resources to A Radionomy is a free audio platform that allows radio enthusiasts
N (1) R
E withstand the Canal+ channels’
B worldwide to create their own Internet stations, and FM radio stations
© to take advantage of new options for expanding their digital broad - losses in France indefinitely. Over Simon Gillham casts. Today, over 5 7,000 radio stations are using the platform. the last two fiscal years, it has al- Chairman of Radionomy encompasses not only the Radionomy platform, but also ready invested €1.5 billion, and Vivendi Village, the streaming technology SHOUTcast, the advertising network Tar - medium-term investments have Senior Executive getSpot, the digital radio station Hotmixradio and the audio player been substantial. Vice President, Winamp. All of these companies operate internationally but have a In this context, Canal+ Group Communications particularly strong presence in the United States, France, Spain and and beIN Sports have entered Germany. into discussions. This agree- Vivendi will provide Radionomy Group an impetus for its commercial ment, which would consist of ex- development, supported by the promising outlooks for the advertising and digital clusive distribution rights of beIN audio markets. Radionomy is also very well positioned to capitalize on the rise of the Sports, would enable beIN digital audio market towards targeted advertising, thanks to its technical tools and Sports to benefit from Canal+’s its partnerships. distribution strength and would With this investment expands the Group’s value chain that flows from talent discovery allow the customers of the two to content production and distribution. Collaboration between the digital audio plat - companies to enjoy a compre- form and the Vivendi businesses will be established and a number of innovative offers hensive offering. I will be developed. Radionomy also complements the talent support program which contributes to the Vivendi Group’s sustainable development. (1) Canal+, Canal+ Cinéma, Canal+ Sport, Canal+ Séries, Canal+ Family and Canal+ Décalé. 5
AFRICA: A MAJOR PART OF THE CANAL+ STRATEGY new step forward for the Achannel A+. Since February 9, 2016, this African channel be - came available in France. Since its creation in late 2014, A+ had previously been part of a lineup of 150 channels (65 of them African) that Canal+ offered in R D 30 French-speaking African © countries. Produced by and for Maxime Saada Africans, A+ offers programs Chief Executive Officer such as the Ghanaian serie of Canal+ Group African City , the culinary program Star Chef , the show Koiffure Ki - Africa is an ideal location toko , the financial news program
for expansion, for Vivendi, R D
Réussite and the show Africa OVER 2 MILLION INDIVIDUAL SUBSCRIBERS IN AFRICA SO FAR
and especially for Canal+, © Dance . which already has over The lineup now has over 2 million in 2015. Given the continent’s multipurpose spaces (for movie 2 million subscribers on individual subscribers. In addition age pyramid and outlook for screenings, music concerts and the continent. Several more to the lineup, Canal+ is prepar - economic growth, the potential other live performances) aim to CanalOlympia venues will ing to launch in is still very important. facilitate access to culture and open across Africa in th e some 20 cities Furthermore, in entertainment and to act as cat - coming months. Easy TV – a new, September 2015, alysts in talent development. “ more popular” CanalOlympia the foundations The CanalOlympia brand’s pay-DTT offering venues of the very first name was a natural choice. comprising some openings CanalOlympia Canal+ enjoys high brand 30 channels for venue in Africa were recognition in Africa and stands about €7.50 per month –. laid in Conakry, Guinea. for quality, creativity and a bold Afric a, which the Group has Other venues will follow soon in spirit, while Olympia is an iconic made one of its priorities an d Cotono u, Repu blic of Benin; Parisian concert hall that will where it has been operating for Brazzavil le, Republic of the play an advisory role and pro - 20 years, saw its base of indi - Cong o; Dakar, Senegal; and vide support for the set-up vidual subscribers grow 33.6 % Yaoundé, Cameroon. These of the CanalOlympia venues. I
UNIVERSAL MUSIC GR OUP ENTERS PARTNERSHIP W ITH SOUNDCLOU D
his is a new step forward This win-win partnership Publishing, and sets up ad - Tfor Universal Music Group crea tes many new creative, vertising and introduces sub - (UMG) in streaming and the business and promotional scription-based services for
R innovative services that are opportunities for both compa - several markets. D O
T currently key in the music sec - nies. It gives At the same time, the UMG O H P tor. In January 2016, Sound - and Universal Music Publish - Lucian Grainge UMG entered a part - Cloud ac - ing labels will have access Chairman and CEO nership with the The rise cess to SoundCloud’s promotional, of UMG young site Sound - to the analytic and data-management Cloud (created in of streaming music of tools to provide their artists Already a partner with many 2007), the world’s seasoned and songwriters with opportu - music-streaming s ites, UMG biggest community of artists, nities to strengthen ties with rounds out its distribution audio artists and mu - UMG’s young their fans, increase their in - partnerships by signing an sicians with 175 million listen - talents and songwriters who volvement on the platform and agreement with SoundCloud. ers every month. signed with Universal Music generate revenue. I
.
. What is Vivendi’s strategy in terms of talents? . Vivendi aims to make its talents, and particularly the discovery of new talents, central to its
O strategy. We need to find them and then help them develop their careers, give them the resources they need to create music and shine, and also increase their exposure to all types T
of audience. Vivendi already has extensive experience in discovering and supporting new R D S
talents, but we would like to step up the pace since our talents are the starting point for all the © original content we produce.
N Christelle Simon Graillot Gillham What roadmap Vivendi’s Management Board gave you? O Vice President
I The team is lucky enough to have management’s trust. That means a lot to me, and I’m grateful of Talent to them. Discovering talents, assisting them and watching them grow is not always so T Management straightforward; it depends on people on both sides having the right instincts. It’s based on trust, S meeting the right people and sometimes going through extraordinary experiences. At Canal+,
E the discovery of artists such as Guillaume Gallienne, Charlotte Le Bon, Alex Lutz and Stéphane De Groodt has allowed me to better understand the different artistic domains and learn how U to reconcile creative and operational demands. Q
What happens on a typical day?
3 One workday (or night) is never the same as another, and that’s what makes it great. We juggle meetings with actors, comedians and artists from all genres as well as journalists and commentators. Our team is also regularly called upon to work with different shows for the company’s channels, which are always looking out for new talents. To work as closely with them as possible and provide them with all the support they need, we meet with them and attend their performances with a view to building a lasting relationship. That’s one of the golden rules of this business: stick to the human scale!
’ I PROGRAM FOR THE COMING MONTHS Y S Vivendi organizes numerous events for its Shareholders’ Club. To participate, you must hold at least R R one share. Events include visits, shows, topical meetings and more! Discover our program and sign up! E
A You will find this program of events on our website: www.vivendi.com (click on the “Individual
I shareholders” tab and then on “Shareholders’ Club” ). D L D I CO NTACT US
O For further information on Vivendi, please contact our Shareholders Information Department (IAI) by mail: Vivendi, Shareholders Information Department, 42 avenue de Friedland, Paris 75008 France. H By e-mail: [email protected]. E
R And by telephone: (Numero vert) toll-free from a fixed line phone if you are calling from NNUMEROUMERO VVERTERT Appel gratuit depuis un poste fixe
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S event of important news). You receive this “Letter to our Shareholders” under the terms of the French Data Protection Act of January 6, 1978, pursuant to which you may exercise your right to access, correct or contest personal data by sending an e-mail to [email protected], or by writing us at Vivendi – Shareholders To keep up to date Information Department – 42 avenue de Friedland – 75008 Paris, France. Should you wish to unsub - with recent developments scribe and cease receiving these newsletters, please contact us at the same address. at Vivendi, visit the website Important disclaimer: Forward-looking statements. This letter to our shareholders contains forward-looking statements concerning Vivendi’s financial condition, www.vivendi.com results of transactions, businesses, strategy and prospects, including issues regarding the impact ofcertain transactions and the payment of dividends and distributions, as well as share repurchase programs. Although Vivendi believes that such statements are based on reasonable assumptions, they do not constitute guarantees and click on “Individual of future performance by the company. Actual results may differ materially from forward-looking statements because of a number of risks and uncertainties, many of which are beyond our control, in particular risks related to obtaining the consent of competition authorities and other regulatory authorities, as well as all other Shareholders” and then on authorizations that may be required in conjunction with certain transactions and the risks described in the documents Vivendi has filed with the Autorité des Marchés Financiers. Also available in English on our website (www.vivendi.com). Investors and securities holders may obtain free copies of the documents filed by Vivendi from “Press releases” or the Autorité des Marchés Financiers (www.amf-france.org) or directly from Vivendi. This letter to our shareholders contains forward-looking statements that can be assessed only as of the date of its dissemination. Vivendi makes no commitment to supplement, update or alter these forward-looking statements as a result of new in - “Audio news” formation, future events or any other reason. Unsponsored ADRs. Vivendi does not sponsor American Depositary Receipt (ADR) programs for its shares. Any currently existing . ADR program is “unsponsored” and has no connection of any kind with Vivendi. Vivendi disclaims all responsibility for such programs.