By Najat Kantouar

Vivendi's biggest units, broadcaster Canal+ and advertising business Havas, expect diverging revenue trends this year and next, based on targets outlined by the group ahead of a four-way breakup planned for next month.

The French media group steered by the Bollore family is gearing up for a split under which it would separate three units--Canal+, Havas and Louis Hachette Group--from a slimmed-down Vivendi, which would be home to Gameloft videogame business and a range of investments such as a stake in Universal Music Group.

The move aims to address Vivendi's so-called conglomerate discount, or the gap between the group's valuation and that of the sum of its parts. The plan will be put to shareholders' vote on Dec. 9 and, if approved, the three spun off businesses would start trading as standalone companies on Dec. 16.

Vivendi said Monday that this year's revenue at Canal+--the biggest of the businesses to be spun off--is expected to be broadly in line with 2023, when the unit posted a 3.2% increase in reported terms and a 2.9% rise on an organic basis.

In 2025, organic revenue growth at Canal+ will be mitigated by the anticipated end of broadcasting of its French free-to-air channel C8 and of sublicensing contracts and third-party content deals in France, Vivendi said.

Canal+ projects cash flow from operations will fall this year due to an exceptional concentration of payments relating to contracts and tax adjustments. Cash flow from operations at Canal+ will return in 2025 to 2023 levels, Vivendi said.

Over the medium term, Canal+ expects the adjusted earnings before interest and taxes margin to continue to improve moderately as a result of cost optimization and an expected transition to profitability of newly-integrated assets, it added.

Analysts at UBS said in a research note they valued a standalone Canal+ at 3.1 billion euros ($3.27 billion).

Meanwhile, Havas expects organic net revenue to range from a 1% fall to a flat performance in 2024 compared with last year, its parent company said Monday. For the first nine months of the year, Havas reported a 0.8% decline in organic net revenue.

The company expects organic net revenue growth in excess of 2% in 2025, it added.

The unit's adjusted earnings before interest and taxes are expected to exceed 330 million euros this year, Vivendi said. In 2025, Havas anticipates an adjusted EBIT margin of between 12.5% and 13.5%.

Vivendi said Havas plans regular dividend payments, with a 2025 payout that is expected to amount to 40% of the unit's net profit for 2024.

Louis Hachette, which houses publishing assets including a majority stake in Lagardere, aims to distribute to its own shareholders in 2025 at least 85% of the dividends it receives from Lagardere and Prisma Media, Vivendi said.

Write to Najat Kantouar at najat.kantouar@wsj.com

(END) Dow Jones Newswires

November 18, 2024 06:07 ET (11:07 GMT)

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