Canal+ reverses subs drops, eyes earnings gains

Canal+ subscriber additions outnumbered cancellations for the first time in many quarters in the three months to March, and the struggling pay TV outfit’s parent company Vivendi said it expected a reversal of the downward trend in earnings in the second half of this year.

In a call with investors, Vivendi’s CEO Arnaud de Puyfontaine said that the transformation strategy for Canal+ was “starting to bear fruit”, with the number of new pay TV subscriptions offsetting the number of cancellations in the quarter for thefirst time.

De Puyfontaine said that Vivendi now had a “sustainable business model for Canal+” that allows subscribers to pay “the right price” for what they want. He said that the group would “not pay silly money for rights”.

CFO Hervé Philippe said that ARPU for new subscribers was increasing since the launch of new offers last year. He said that churn is still high but that he expected it to decrease by the end of this year.

Canal+ still has some way to go to regain lost ground, however. Subscriber numbers in France remained flat in the quarter, and the pay TV outfit lost 401,000 subscribers in the course of last year, leaving it with 5.145 million customers in France, despite what the company described as a significant improvement in its performance following the launch of the new offerings last November.

Domestic pay TV revenues were down 7.8% in the three months to March compared with the first quarter of last year.

The domestic decline was again partially offset by international growth. The African subscriber base grew by 649,000 in the year to March, leaving the group as a whole with a base of 14.7 million, up 3.2 million year-on-year, including the 2.9 million Free and Orange customers gained as part of the new distribution agreements with the service providers that allow them to supply Canal+ service as part of their own bundled offerings.

International revenues grew by 8%. Overall Canal+ revenues for the quarter were €1.28 billion (US$1.4 billion), down 3.8%.

Production outfit StudioCanal’s revenues tumbled by 10.1% to €95 million for the quarter, due to lower video sales.

Canal+ Group operational income was €51 million, down from €164 million, while EBITA was €57 million, down from €169 million.