Page 10 - 2012 Annual Report

VIVENDI l 2012 l Annual Report 10
GROUP PROFILE – BUSINESSES – LITIGATION – RISK FACTORS 1
1
SECTION 1 - GROUP PROFILE
STRATEGY
1.3. STRATEGY
Despite delivering very satisfactory results in 2009, 2010 and especially
in 2011, Vivendi’s share price performance over this period was
disappointing. It was primarily for this reason that, in April 2012, the
Supervisory Board embarked on a strategic review of the Group’s assets.
The purpose of the review is to examine all options available for creating
more value for Vivendi’s shareholders. The review focuses on three facts:
✱ Vivendi’s share price has been impaired by a conglomerate discount,
which clearly raises questions about the Group’s scope;
✱ Vivendi has all of the necessary attributes to bolster its status as a
European, if not world, leader in content and media, a growth market
driven by the unprecedented boom in major global digital distribution
platforms; and
✱ telecoms activities are perceived as “mature,” with increased
competition and strong tax pressure forcing operators to adapt their
positioning and offerings.
Vivendi’s strategy consists, on the one hand, of strengthening its content
and media operations, and on the other, of repositioning its telecoms
activities and exploring opportunities to consolidate in that market.
The strategic review will set out the procedures and timetable for any
such operations.
1.3.2. Strengthening Vivendi’s Leadership Position in Content and Media
The new digital revolution has given rise to new global and local
distribution platforms, which have completely changed the content and
media industries. These platforms offer services that are transforming
consumption patterns to the benefit of users: everything is available,
anytime, anywhere and without restriction.
While these new platforms are not without risk (content devaluation and
piracy, for example), they nevertheless offer those operating in the sector
substantial opportunities for growth:
✱ their positioning opens up new distribution possibilities and access
to new markets at limited cost. High-quality local content, thus far
limited to a regional audience, can now be made available throughout
the world;
✱ they generate new creative and economic formats with attractive
development prospects. They stimulate creative processes by
facilitating discussion, thus fuelling innovation and growth;
✱ the fierce competition generated by these platforms can also work in
favor of those that operate them. All these platforms are in the same
markets and need attractive content to draw new consumers and gain
a competitive edge; and
✱ they are not, however, immune to technological breakthroughs or
changes in consumption patterns, which are more likely to destabilize
the platforms themselves rather than weaken the content and media
sector.
This new reality is an exceptional opportunity for Vivendi to leverage its
content portfolio. The Group is now Europe’s leading content and media
company. It is also the world leader in video games and music, and the
leading Pay-TV company in France, Poland, Vietnam and French-speaking
Africa.
CANAL+ GROUP
Canal+ Group is the number one Pay-TV company in France and the
number two in Europe. It has consolidated its position in free-to-air TV
with the acquisition in France of free channels Direct 8 (since renamed
D8 and already France’s sixth largest free channel) and Direct Star (since
renamed D17), and a partnership in Poland with ITI/TVN. Canal+ Group
now operates across the entire value chain: production, distribution,
Pay-TV, free-to-air TV, video-on-demand (purchase and subscription) for
films and TV programs.
In production and distribution, StudioCanal continues to expand with
the acquisition of Tandem studio in Germany and Hoyts Distribution
in Australia and New Zealand. It has also entered into an exclusive
agreement with Belgium’s nWave, Europe’s leading 3D production
company, thereby strengthening its position in the family and animated
film segment.
Canal+ Group has unrivalled expertise in the creation and publication of
TV content and a strong brand that extends beyond the countries in which
it operates. It therefore has the potential to expand globally and increase
its content portfolio.
1.3.1. Strategic Planning for all of Vivendi’s Businesses