Nov. 16 (Bloomberg) -- Vivendi SA, the owner of the world’s largest video-game and music companies, lowered its full-year profit forecast, citing new French tax rules that bolstered costs.
Full-year profit excluding one-time gains and costs will now be more than 2.85 billion euros ($3.8 billion), 5 percent less than an earlier projection, because of 350 million euros in additional taxes, the Paris-based company said in a statement today. Third-quarter adjusted profit slipped 0.4 percent to 685 million euros, topping the 555 million-euro average estimate of 13 analysts compiled by Bloomberg.
Chief Executive Officer Jean-Bernard Levy is orienting Vivendi more heavily toward the music and TV businesses, offsetting slowing growth at SFR, the Vivendi unit that’s France’s second-largest mobile-phone operator. Last week Vivendi’s Universal Music Group agreed to pay 1.2 billion pounds ($1.9 billion) to acquire the recorded-music assets of EMI Group, home to artists including Coldplay and Katy Perry. Its Canal Plus pay-TV unit agreed this month to buy a stake in Poland’s TVN network.
A cap on some deductions and changes to France’s consolidated global profit tax system increased Vivendi’s tax liabilities in the first nine months, the company said. Excluding taxes, Vivendi said it increased its forecast for 2011 adjusted net income by 200 million euros.
Third-quarter sales fell 1.6 percent to 6.78 billion euros, in line with analysts’ estimates.
SFR, which generated about 45 percent of Vivendi’s sales in the quarter, faces a new competitor next year when Iliad SA, the broadband provider founded by billionaire Xavier Niel, will become France’s fourth mobile-phone operator. Niel has pledged to drag down prices in France, where consumers pay more than those in other European countries for mobile service.
Vivendi yesterday announced the sale of part of its stake in Activision Blizzard, the maker of video games including “Call of Duty” and “Guitar Hero.” The sale, cutting Vivendi’s holding to 60 percent, raised about $427 million, according to people familiar with the situation.
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