Arnaud de Puyfontaine

The French company Vivendi has a storied past. Founded by imperial decree during the reign of Napoleon III, it started as a utility company, Companie Générale des Eaux (CGE), initially supplying water to cities in France and later to Venice, Constantinople and Porto. In subsequent decades it diversified into a number of businesses, including environmental services, energy, construction and eventually communications. In 1983, CGE partnered with the French publishing conglomerate Havas to set up the pay-TV company Canal+, which launched the following year.

After changing its name to Vivendi in 1998, the company embarked on a strategy to grow its entertainment holdings and acquired Seagram, which at the time owned Universal Studios and Universal Music Group. Although GE eventually bought Universal Studios, Vivendi remained committed to strengthening its position as a media company. In the last few years, it sold off its stakes in telecommunications companies. Today, under the leadership of CEO Arnaud de Puyfontaine, Vivendi has organized its businesses into four main units: Canal+ Group; Universal Music Group; Dailymotion, a leading video-sharing website; and Gameloft, a video-game developer and publisher.

The Canal+ Group includes the French pay-TV service Canal+, which has recently undergone a management overhaul and business restructuring, led by Vivendi board chairman Vincent Bolloré. Canal+ Group offers a bouquet of premium, special-interest and free-TV channels. Outside of France, Canal+ operates pay-TV businesses in French-speaking territories, notably in Africa, as well as in Poland and Vietnam. Also part of the group is STUDIOCANAL, one of Europe’s leading producers and distributors of feature films; in recent years it has been boosting its TV business with investments in companies such as Germany’s TANDEM Communications and the U.K.’s RED Production Company.

To further strengthen its content business, Vivendi has been acquiring stakes in a variety of companies such as Banijay Group (which includes Zodiak Media), Benedict Cumberbatch’s Sunny March TV and Spanish outfit Bambú Producciones.

Universal Music Group, which holds a 30-percent global market share of the music business, focuses on recorded music, music publishing and merchandising. It represents a broad range of artists and groups to satisfy all tastes, from contemporary artists like Katy Perry, Lady Gaga, Maroon 5 and Imagine Dragons to iconic performers such as Elton John, U2, Stevie Wonder, The Beatles and Frank Sinatra.

Vivendi continues to place a firm emphasis on its digital assets, with businesses such as digital radio, electronic ticket sales and film and TV SVOD platforms. It is also strengthening its position in the development of talent and live entertainment.

Given the fast pace and constant growth of the video-game business, Vivendi recently acquired Gameloft, a global publisher of digital and social games for smartphones and tablets.

De Puyfontaine spent much of his career in the publishing industry, holding positions at EMAP, Mondadori and Hearst. He talks to World Screen about solidly positioning Vivendi as a content company in today’s constantly evolving media world.

WS: Vivendi has spent the last year or so streamlining and selling off some assets. What are the current strengths of the company that you would like to build on?
DE PUYFONTAINE: Our strategy for Vivendi is to build a global leader in content and media that showcases its European identity. Between the big American and Asian groups, there is room for a major French and Latin-language player, and that player is Vivendi!

In 2015, we sold some of our assets that no longer fit with our strategy. I can even say we sold our remaining 20-percent interest in [French telecom and cable operator] Numericable-SFR very well, with a 20-percent premium over the closing price on the day the first part of the operation was finalized. In Brazil, where the economic and financial situation has worsened, we sold [telecom company] GVT for €7.5 billion ($8.5 billion) in May 2015.

Now refocused, our group consists of four solid pillars: Universal Music Group (UMG), Canal+ Group, Dailymotion and Gameloft. They are all leaders in their particular businesses: television, cinema, music, digital distribution and video games. Vivendi has leading positions in markets where talent has a central role. Discovering and nurturing all this talent feeds our activities.

WS: If you are considering acquisitions, what type of companies would fit into the group?
DE PUYFONTAINE: Our strategy is simple: to bolster our positions in production and distribution of content.

Over the last few months, we have acquired stakes in different production companies like Spain’s Bambú Producciones (33 percent) and the U.K.’s Urban Myth Films (20 percent), Sunny March TV (20 percent) and Guilty Party (25 percent). The group has also acquired a 26.2-percent interest in Banijay Group, one of the world’s largest independent producers and distributors of television programs, and 30 percent of Mars Films, which distributes feature-length films.

All these acquisitions made in Europe reinforce our leadership in TV and cinema, whatever the format, type and nationality of the content. We want to be a key player in European audiovisual creation. MIPCOM, where you can see Vivendi, Canal+, STUDIOCANAL and TANDEM Productions, for example, allows us to showcase our talent, innovation and expertise in audiovisual production.

We have also forged partnerships with telecom operators to better distribute our content. We have a 24.7-percent interest in Telecom Italia and a 0.95-percent interest in Telefónica.

Lastly, we recently acquired Gameloft, a leader in video games on mobile, a key and particularly dynamic sector of the entertainment and content market. The video-game market today is bigger than the film market and just behind music. It is crucial for Vivendi to be present in this key sector.

WS: Canal+ has lost subscribers in France. What has been the reason for this? What plans do you have for the company? What type of programming would help drive subscriptions?
DE PUYFONTAINE: Competition has been strong in the French pay-TV market since 2012. Financially powerful groups have entered the market, leading to a [proliferation] of offerings and sharp growth in broadcasting rights. Today, the competition is worldwide. Discovery Communications, for example, has acquired broadcasting rights for the Olympic Games from 2018 to 2024 in 50 European countries and territories for €1.3 billion ($1.5 billion).

Faced with this competition, we set up a transformation plan in the summer of 2015. The objective is to restore the perception of value for subscribers by investing in what counts for them: sports and television content, and the customer experience. We have placed subscribers back at the center of our strategy. For instance, Canal+ holds the best French football and rugby rights, and we are going to continue investing in sports. The Créations Originales [original productions] like Les Revenants or Tunnel, along with films, take pole position in our programming.

We have also improved the customer experience for our subscribers. We will launch a new set-top box with additional functions and a new interface. We have a superb OTT app, MyCanal, that gives subscribers access to all the channels, VOD, recommendations and versions in the original language.

Lastly, we have set up a loyalty program, Canal Premier Rang, which offers subscribers the opportunity to participate in exclusive events: the César Awards ceremony, Top 14 matches, previews of the Créations Originales, and encounters with presenters.

In parallel, we have rethought the Canal Galaxy of television channels. Today, Canal Galaxy is a set of four national pay and free channels with complementary models and clear editorial lines. At the center, the pay-TV channel Canal+ focuses on premium and exclusive programs.

All these initiatives will allow us to move back into growth of subscriptions in France. While the French market is highly competitive, international and, notably, African markets offer fantastic opportunities. Active in 30 countries on the African continent, we already have more than 2 million subscribers there.

WS: The French competition authority struck down a deal between Canal+ and beIN Sports. Why would that have been a good deal for Canal+? Are there plans to acquire sports on an ad-hoc basis?
DE PUYFONTAINE: Canal+ and beIN Sports entered into negotiations to establish an exclusive distribution agreement. All the beIN Sports channels in France were to be available as an exclusive in the Canal+ Group bouquet of channels. This agreement was to span five years. It would have enabled the two channels to offer their customers improved and exhaustive programming while also guaranteeing better sports promotion.

It is important to stress that this agreement was just one element in the Canal+ transformation plan, which, as I mentioned, aims to offer Canal+ subscribers more premium and exclusive content, a better customer experience and a loyalty program. It also provides new impetus to all our channels, now centered on the strong Canal brand.

WS: Tell us more about the recently announced Canal Galaxy bouquet. Why was that important?
DE PUYFONTAINE: We have re­thought Canal Galaxy. Today it is a set of one premium and three free-to-air national channels, with complementary models and clear editorial lines, organized around a common denominator: the Canal brand.

For the first time in the group’s history, the Canal channels are operating under a single and coherent brand, a symbol that they are members of the same family. At the heart of this entity, the Canal+ pay-TV channel focuses on pre­mium, with exclusive programs capable of encouraging subscriptions. Since the post-holiday period, subscribers were able to enjoy 150 hours of additional exclusive content, with more sports, more cinema, more Créations Originales, more culture and more entertainment. Canal’s unscrambled program has been largely re-dispatched on the three free-to-air channels: Canal8 (formerly D8), CanalStar (formerly D17) and CanalNews (formerly iTélé).

It is a clearer and more coherent model, refocused on pay TV and backed by a free-to-air TV offering that will be its showpiece. The aim is to create new synergies, bolster our offering and, most importantly, establish new bridges for talent.

WS: STUDIOCANAL is a leading acquisition, production and distribution entity, not only in feature films, but now, increasingly, in tele­vision as well. What are your plans for the studio? Do you envision it having a more important role as Vivendi transitions into a pure-play company?
DE PUYFONTAINE: Vivendi owns STUDIOCANAL, which is Europe’s largest studio. Our group is investing massively in the film industry, around €800 million ($906 million) a year. STUDIOCANAL is an essential asset for our group and is part of our strategy to be a European leader in media and content. There are huge opportunities, particularly with the other group entities. We recently acquired the Paddington Bear franchise, and a second Paddington Bear film is currently in preparation. We might also consider a Paddington Bear video game to be developed by Gameloft. This is just one example. We are working very hard on possible bridges between STUDIOCANAL (and let’s not forget its successful TV series subsidiary TANDEM), Canal+ Group, UMG, Gameloft, Dailymotion, etc.

WS: What are Vivendi’s plans for Telecom Italia?
DE PUYFONTAINE: Vivendi owns 24.7 percent of Telecom Italia. This capital investment in a major Italian company fits with the strategy developed by the group and gives us a foothold in a country that shares the same Latin culture and roots.

This investment represents an opportunity to be present and expand in a market with significant growth prospects and a very strong appetite for quality content such as Canal+ Group and UMG content.

We are very confident in the growth of Telecom Italia, and we intend to support it over the long term.

WS: What is your view of the music business? What future do you see for subscription models?
DE PUYFONTAINE: Music is everywhere. The market has undergone radical changes in the last few years, but it still has promising prospects. We moved from physical to downloading and then to streaming, based in particular on subscription.

Music’s future is in pay streaming. UMG’s streaming and subscription revenue rose 60 percent in the first half of 2016. It represented 61 percent of digital sales. Streaming will allow us to return to growth; move into new markets, particularly emerging markets; and curb piracy, which has been endangering music for many years.

WS: Looking ahead 12 to 24 months, in which areas do you see potential growth for Vivendi?
DE PUYFONTAINE: Vivendi is present over the whole value chain, from discovery of talent to creation, publishing and distribution of content. The group has leading positions [in all of these areas]. The different acquisitions we have made over the last few months have simply allowed us to strengthen them further.

Our ambition is to invest in talent by discovering and nurturing it, whether in music, television, film or video games.

We also want to internationalize our distribution network, which is why we have acquired stakes in telecom operators and bought Dailymotion. Active on all continents, Dailymotion is the second biggest video platform in the world, with 400 million monthly visitors, including 20 million in the U.S.

Last but not least, we want to be pioneers in developing new innovative formats like STUDIO+, the first offering of premium series for mobile screens. These series are composed of short 5- to 10-minute episodes, in every genre. They were filmed in five languages and are already attracting interest from big players like Telefónica, which will be broadcasting them in South America starting this fall. We are also launching an innovative premium audiovisual music service called WatchMusic that will be distributed with our telco partners in Latin America, in Italy and in other territories.

Talent, distribution and new formats—these are the cutting-edge weapons to achieve our ambitions in the medium term.