May 11, 2010

By By Glenn Peoples, Nashville

Activision Blizzard and SFR, the second-largest mobile telecommunications operator in France, pushed Vivendi to strong first quarter numbers, the company announced on Tuesday. Revenues for the quarter ending March 31 hit ?6.9 billion ($8.7 billion), up 6% from the prior-year period, while earnings before interest, taxes and amortization expense (EBITA) rose 13.4% to ?736 million ($933 million).

Universal Music Group?s revenue dropped 13.4% to ?889 million ($1.1 billion) (-12.6% at constant currency) and EBITA fell 38.2% to ?68 million ($86 million) (-37.7% at constant currency). UMG blamed the sizable fall on especially weak recorded music sales in Europe and Asia. UMG?s digital revenue decreased 1.7%.

UMG?s first quarter revenue was lower than that of any quarter in 2008 or 2009. UMG reported a lower EBITA only once during that span ? ?68 million ($86 million) in Q3 2009.

In comparison, Warner Music Group?s revenue for the quarter ending March 31 was down only 1% from the prior year quarter (6% at constant currency) and its digital revenue was up 11% sequentially and up 12% from the prior year quarter.

During the Q&A portion of the earnings call, CFO Phillippe Capron recognized the challenges of the music division. ?Clearly the transformation will continue,? he said. ?This is going to be a tough, challenging industry for a few more years.? Capron said UMG would continue to address how its size and shift to digital address its cost base ? another way of saying a more digital-based company will need to be leaner. On a positive note, he singled out Vevo, a UMG joint venture, saying it has been ?a great success? and is ?by far and away above MySpace Music.?

Activision Blizzard revenues increased 29.3% to ?945 million ($1.2 billion) and EBITA rose 110% to ?377 million ($478 million). SFR?s revenue increased 1.9% to ?3,085 million ($3.9 billion) and EBITA rose 2.6% to ?985 million ($1.24 billion). Activision Blizzard was created by a 2008 merger of Vivendi Games and Activision. Vivendi owns 56% of SFR.

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