Vivendi (VIV.PA) Chairman Vincent Bollore’s cost savings drive and push into the digital business at the group’s music unit is starting to show benefits, even as he faces growing criticism on his strategy to turn around pay-TV operator Canal Plus.
The company reported a quarterly core operating profit that beat estimates on Wednesday, driven by the strong performance of Universal Music Group (UMG). The music unit went through a management reshuffle a year ago as part of Bollore’s strategy to increase revenue from streaming and subscriptions to offset the fall in disc sales.
The billionaire, who has built a conglomerate with activities spanning from logistics to electric batteries and advertising, is Vivendi’s biggest shareholder with a stake set to reach 29 percent by next April.
The French tycoon has pledged to transform the company from a financial holding into an integrated media powerhouse that would generate higher revenues through closer collaboration with telecom operators on the premise that Internet providers and content makers are made to work together in the digital age.
This strategy led to a frenzy of acquisitions, with the building up of a 24.7 percent stake in Telecom Italia (TLIT.MI), the buyout of French mobile video games maker Gameloft and an agreement in April to buy Italian broadcaster Mediaset’s pay-TV unit, before Vivendi decided to back off from the deal, triggering a legal war between the two companies.
Vivendi Chief Executive Officer Arnaud de Puyfontaine confirmed on Wednesday that the group intended to be a long-term investor in Telecom Italia.
Canal Plus, the group’s second-biggest division after UMG, also had to go through a turnaround in late 2015 under Bollore’s supervision.
He has faced criticism after the pay-TV operator replaced most of its top managers with managers less experienced in the sector. He also reduced costs to stem operating losses at the Canal Plus French channels, but the group forecasts losses will widen to 400 million euros (£351.30 million) in 2016 after a loss of 264 million last year.
The changes were defended by Bollore himself in June in front of French lawmakers, some of whom raised doubts about his involvement in the editorial line of Canal Plus’ channels, including accusations that he spiked a TV report on Credit Mutuel, a French bank with which his family-controlled group has regularly done business.
Bollore denied any intervention.
More recently, Bollore’s decision to appoint television host Jean-Marc Morandini on Canal Plus’ news channel i-Tele triggered a 24-day-long strike by journalists, who want him sacked.
Morandini is currently under formal investigation for “corruption of minors.” Morandini has denied any wrongdoing.
The dispute, which continues, prompted the French media regulator CSA to request that Canal Plus put an ethics committee in place.
Vivendi’s third-quarter earnings before interest, taxes and amortization rose 26.5 percent from a year ago to 277 million euros, compared with a Reuters poll of 174 million euros.