Vivendi Universal's Strong 1st Qtr. Ahead of Targets

24 Apr, 2001 By: Hive News

Vivendi Universal has announced that, for first quarter of 2001, the company generated very strong EBITDA (earnings before interest, taxes, depreciation and amortization) growth with an increase of 112% over the first quarter of the prior year. Revenues for the same period represented a nearly 10% increase over 2000, or 13%, excluding the revenues of USG Filmed Entertainment.

"I am very pleased with Vivendi Universal's outstanding performance in our first quarter as a new company. All our results meet or exceed our key operating targets. We created significant momentum by delivering solid first quarter 2001 results in EBITDA, which more than doubled, and by generating double digit revenue growth," said Jean-Marie Messier, chairman and c.e.o. of Vivendi Universal.

"These results show the focus and dedication of all our management teams, in executing the unique promise of Vivendi Universal around its global strategy. This is a great beginning. With our momentum, our targets and the drive of our executive team, I am extremely confident that, for Media and Communications, we will reach our annual EBITDA and revenue growth targets of 35% and 10%, respectively in 2001 and 2002 and achieve superior returns for Vivendi Universal shareholders."

"Finally," Jean-Marie Messier added, "We are also ahead of targets for the synergies which indicate that the path of integration between our teams is great. My only focus is and remains execution of this compelling media merger."

Cost saving synergies implemented during the first quarter of 2001, savings in areas of procurement, logistics, headquarters and computer systems have positioned the company ahead of schedule in achieving an annual cost savings objective in 2001.

Identification of revenue synergies are well advanced and poised for delivery in 2002. Synergies identified cut across the Company's content and access business units and rely on new products and aggressive cross-marketing actions.

For each of the company's products - such as movies, music, CDs, books - the Vivendi Universal merger is an exceptional reservoir of supplementary growth, and will create new opportunities in the areas of dissemination and production. The company has already identified and is working on about 20 new revenue-generating projects.

At Universal Studios, EBITDA increased to 134 million euros in first quarter 2001 from 3 million euros in the first quarter of 2000 on a slight decline in revenues from the film business, partially offset by an increase in recreation revenues.

The significant improvement in EBITDA primarily reflects the solid performance of the motion picture business. The success of Hannibal in 2001 and several films released in 2000, including Meet The Parents, Gladiator, Bring It On, Family Man and Dr. Seuss' How The Grinch Stole Christmas, among others, resulted in improved earnings in first quarter 2001.

Additionally, the development of programs designed to manage production, marketing, participation and overhead and development costs also contributed to improved results.

On May 4, Universal Pictures will release The MummyReturns, the sequel to its 1999 worldwide blockbuster. (The Mummy, which was a record-breaking global success in 1999, has surpassed $400 million in worldwide box office gross.)

Coming this summer from Universal Pictures and Amblin Entertainment is Jurassic Park 3, which will continue the series begun in 1993 with Jurassic Parkand its 1997 sequel The Lost World: Jurassic Park - which togetherhave generated more than $1.5 billion in combined worldwide box office revenue.

In terms of executing strategies in the TV and film business, Universal Studios and DreamWorks announced a five-year extension of their distribution agreement. Also, in the TV and film business, Vivendi Universal will continue to amplify growth inthe DVD market, as well as prepare for the dissemination of online films in the face of the growth expected in broadband technologies.

Universal Music Group's (UMG) strong 2000 performance continued into first quarter 2001. In the quarter, UMG generated double-digit EBITDA growth of 15% to 180 million euros and revenue growth of 3%. The revenue growth was primarily due to strong sales in North America, where UMG increased its market share by 2 points, and Europe, particularly in the U.K. and France. EBITDAgrowth reflects strong performances in the U.K. and North America and by Music Publishing, combined with worldwide cost savings.

North America accounted for 42% of revenues, Europe accounted for 42%, Asia Pacific contributed 12% and Latin America accounted forthe remaining 4%.

Major album sales in the quarter included those by Shaggy, Limp Bizkit, Eminem, 2 Pac, O Brother Where Art Thou Original Soundtrack and U2, among others. Notable success was achieved in theU.K. and Germany with new releases from bands created in the "Popstars" TV show. Both Hear-Say in the U.K. and No Angels in Germany entered their respective singles and albums charts at No. 1.

Additionally, the strength of UMG's catalog was once againdemonstrated with ABBA selling over one million units in the period, driven by the re-promotion of their recordings in Japan.

In the U.S., according to SoundScan, Universal Music increased its current album market share to 28.3%, more than 11 percentage points above its closest competitor.

In terms of focused strategy in the music business, a high priority for the company is delivering music to consumers online. To that end, Duet, the online digital music subscription service jointly owned by UMG and Sony Music Entertainment, announced an alliance with Yahoo! to present and market - on a non-exclusive basis - the on-demand music subscription service on the Yahoo! network and Yahoo! Music. The Duet service is expected to launch late Summer 2001, first with streaming music and plans to add downloads shortly thereafter. The company will continue to forge alliances and enter into other agreements that will provide a leadership role in the online music market.

UMG also recently entered into a strategic distribution alliance with Univision, the leading Spanish-language television broadcast company in the U.S. and Disa, a leading independent Spanish-language label.

In first quarter 2001, EBITDA from the TV and film business more than doubled to 284 million euros on revenue growth of 3%. Revenues increased 13%, excluding the results of USG FilmedEntertainment, which, as anticipated, declined in the first quarter.

In the field of games, the company's Flipside-Uproar merger creates for Vivendi Universal the world's first online gaming site that should break even before year-end.