VIV commands a €12.44 billion market cap on EPA, the Euronext Paris exchange. While VIV may be down 54% since 2019, it is still paying dividends to long-suffering shareholders.
Factoring in the dividend, VIV provided a total shareholder return of 118% in the past twelve months. That Total Shareholder Return beats the five-year annual figure of 30% and the overall market, which averages around 11%.
The total return deserves as much consideration as share price return when determining the actual value of a long position. It can be a more accurate way to measure the worth of a stock than its share price—as it factors in other considerations like any strategic capital raises, the profit seen from any divestitures, and dividends.
As is the case with Vivendi, dividends can increase the total shareholder return to compensate for the loss of profits—or to boost gains—in a stock’s share price.
Vivendi Origins Are Napoleonic
The company that would become Vivendi was created by Napoleon III (nephew of the more famous man) in 1853 as the Compagnie Générale des Eaux, which functioned to supply water to the French public.
By 1997, it did considerably more. One-hundred-and-forty-four years later, CGE sold off its real estate and construction interests and changed the company name. Shortly after adopting the name Vivendi, the company launched a line-up of digital pay-TV channels in Scandinavia, Poland, Italy, Spain, Belgium, and the Netherlands.
The company grew, and mergers and acquisitions started early (including the 1999 merger with Pathé, a major producer and distributor of films across Europe). In 2001, Vivendi acquired the media assets of Seagram Company, LTD. That same year, Vivendi picked up what was left of Canal+.
Though both moves were noteworthy, the Seagram Company acquisition may have been the greater: Seagram owned Universal Studios. Vivendi absorbed it and briefly formed the subsidiary Vivendi Universal.
It didn’t go so well. Vivendi posted a €13.6 billion loss that year—the biggest in the economic history of France. The losses continued, and three short years later, in 2004, the cash-strapped Vivendi sold 80% of Vivendi Universal to General Electric, though it retained a 20% stake in what would become NBC Universal.
Vivendi: 8th Largest Media Conglomerate Globally
Though Vivendi’s long history has seen some downtimes, and they may have once been guilty of overextending, the company has turned itself around in the past two decades.
Vivendi was #69 on the Forbes list of Top 100 Digital Companies in 2019 and #319 on the Forbes Global 2000 list published last year and operates interests throughout France and Europe as well as the Americas, Asia, and Africa.
Vivendi is one of the biggest communication, entertainment, and media companies in Europe and the world. With a market cap of $37.3 billion and annual sales of over $18 billion, Vivendi is the biggest media conglomerate in France and the eighth-largest globally.
Though many are aware of Vivendi’s entertainment subsidiaries due to the Universal acquisition and subsequent losses, Vivendi also maintains significant interests in telecommunications and online gaming, among many others. Among the digital entertainment assets it owns are the French television and film giant Canal+, the video hosting service Dailymotion, video games company Gameloft, and book publisher Editis.
Vivendi Subsidiaries Stretch Far & Wide
Canal+ (more properly Groupe Canal+) owns a film library of over 5,000 titles, produces and distributes content, including television series, on both pay-TV and free channels.
It also produces and distributes movies on a global scale. Dailymotion, operated by Vivendi’s New Initiative segment, is not just a platform for video distribution but also maintains the high-speed internet service behind it.
Gameloft creates, publishes, and distributes online and downloadable video games for desktop computers and mobile phones, tablets, and smart TVs.
Editis, though not as sexy as video gaming, publishes primarily educational and reference books. Editis is run by the Havas Group segment of Vivendi, which also oversees subsidiaries, including Vivendi Village, which sells live music and festival tickets.
Spinning Out Universal Music Group
Vivendi spun out the Universal Music Group in 2021, which resulted in significant returns to shareholders in 2021—and the digital media titan still had over $3.6 billion at year’s end. It did post mixed second-half results for the year, mainly due to the spinout.
Other gains offset that turbulence. Due to the impact of the pandemic, Canal+ and Havas Group both posted significant organic growth last year.
As more people spent time at home, they consumed more media—now that is apparently easing and people are returning to workplaces and schools, demand is down—and the current share price reflects that.
One Segment Is 56% of Revenue
Canal+ is now the new “jewel in the crown” in the wake of the Universal Music Group spinout. The currently largest and most important segment is responsible for 56% of Vivendi’s total 2021 revenue (and 67% of its 2021 EBITDA). The now-favorite child posted 5% organic growth in the fourth quarter of last year alone.
Canal+ had 23.7 million subscribers in 2021, up 1.6 million from the previous year. While most growth is coming from international offerings, domestic French subscribers reached over 9 million, up over 370,000.
The company also saw good numbers coming out of Studiocanal, the film production and distribution company of Canal+, which saw gains both domestically in France and internationally.
Vivendi’s other segments also enjoyed net revenue gains—10% up for Havas Group and 18% for Editis, though Vivendi is currently in the process of acquiring Lagardère Group. The purchase of the Paris-Headquartered international media group and publisher of the famed Paris Match is forecast to boost Editis profitability with Lagardère’s increased scale and distribution capabilities.
Final Word: Why You Should Buy
Vivendi has posted solid numbers, partly due to the increased demand for much of their subsidiaries’ products during the height of the lockdown phase of the pandemic. These gains are also due to solid planning and continued acquisitions—now occurring at a sustainable pace. Vivendi leadership has learned from the company’s history and, with the addition of Lagardère Group, shows they continue to plan for the company’s growth.
Much of Vivendi’s growth is occurring in developing markets in Africa, Latin America, Asia, and Oceania, and this is forecast to continue at an increasing pace as digital infrastructure continues to improve in those regions.
Vivendi is poised for proper blue-chip performance, its current share price is arguably a steal compared to where it is forecast to be over the next decade.
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