Vivendi Profit Little Changed, Keeps Outlook

French media and telecommunications giant Vivendi said Monday that net profit in the second quarter was little changed as higher earnings at its Canal+ pay-TV operations were offset by a decline in profitability at its SFR mobile telecoms business.

Adjusted net income in the three months through June rose 0.3 percent to €757 million ($1.1 billion) from €755 million a year earlier, Vivendi said in a statement. The company did not provide a value for net profit, preferring to use a measure adjusted to exclude most nonrecurring and non-operating items.

Earnings improved at Canal+ with the inclusion of Television Par Satellite subscribers. Canal+ and TPS merged last year, and as of June 30, 80 percent of TPS subscribers had transferred to the CanalSat platform, Vivendi said.

Profitability at SFR, Vivendi's biggest money earner, declined due to customer acquisition costs linked to its takeover earlier this year of Neuf Cegetel, a rival French telecoms operator.

"Vivendi's performance during the second quarter 2008 reflects the quality and dynamism of our business units in a tighter economic environment," Jean-Bernard Levy, chairman and chief executive officer, said in a statement.

He said Vivendi's expectations for the full year are unchanged, and he is "expecting to deliver profit growth similar to 2007" excluding the activities of recently added Neuf Cegetel and Activision.

Shares fell 0.5 percent to €26.31 ($38.77) in Paris morning trade. Earnings before interest, tax and amortization -- an important gauge of core profitability known as EBITA -- rose 3.2 percent to €1.36 billion ($2 billion).

All Vivendi's business divisions reported growth in EBITA in the quarter except SFR, where it declined 0.7 percent, and Universal Music, where it dropped 9.2 percent. At Universal, whose artists include Amy Winehouse and Mariah Carey, the euro's strength weighed on sales. EBITA advanced 31.2 percent at Canal+ and 12.1 percent at Maroc Telecom.

Operating profit, or EBITA, more than doubled at Vivendi Games -- the maker of "World of Warcraft," the world's most popular online game. In July, Vivendi merged its games business with U.S. video games group Activision to form a new company, Activision Blizzard, which is controlled 54 percent by Vivendi.

The company reported last month that sales grew 15.1 percent to euro6 billion ($9.44 billion) in the second quarter, up from euro5.2 billion a year earlier.

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