Vivendi Universal Posts 30% Jump in Cash Flow

Brushing off the bleak economy that has squeezed its peers, Vivendi Universal posted a 30% jump in cash flow in the third quarter.

Vivendi cited box-office successes from Universal Pictures hit movies “Jurassic Park III” and “American Pie 2,” solid results in the music division and the resiliency of its global businesses.

The Paris-based conglomerate posted operating earnings before interest, taxes, depreciation and amortization--a key measure of financial performance for media companies--of $1.3billion on revenue of $6.6billion, versus cash flow of $1billion on revenue of $6.1billion a year ago.

The results bettered analysts’ estimates for EBITDA of $1.26 billion and sales of $6.5 billion.

For comparison purposes, the figures were adjusted as if the merger of Vivendi, Seagram and Canal Plus, and other acquisitions, including Houghton Mifflin and MP3.com, occurred during the third quarter of 2000.

Cash flow in Vivendi’s TV and film division jumped 73% in the quarter, and the music division rose 6%, easily outperforming rivals Sony Corp., EMI Group and BMG in a down economy.

Vivendi said increased music licensing income and cuts in marketing expenses helped offset declines in major markets, including Germany and Latin America. Vivendi’s telecom business grew 31%.

Despite a slowdown at Universal’s theme parks in Hollywood and Orlando, management fees from a new theme park in Japan brought a 11% gain in earnings for the recreation group.

The results surprised analysts, who have been skeptical of Chairman Jean-Marie Messier’s ambitions to turn a 147-year-old water and energy utility into a global media and entertainment conglomerate.

“I thought they were surprisingly strong,” said UBS Warburg analyst Chris Dixon. “We anticipated they had very strong results from the film business, but the music business was better than we thought given how it’s been for everyone else.”

Vivendi’s rivals, especially Walt Disney Co. and Viacom Inc., have been harder hit because their heavy dependence on advertising and, in the case of Disney, theme parks, which account for a quarter of all revenue.

By contrast, 4% of Vivendi’s revenue comes from advertising and theme parks--two areas that have been hard hit by the economic slowdown and travel disruption after the terror attacks.

Vivendi derives most of its income from subscription services, such as Europe’s leading pay-TV firm, Canal Plus; educational publishing and environmental services (results for which are reported separately).

In a conference call with analysts, executives confirmed profit and sales targets for 2001.

The company officials also said they expected regulators to clear the $8.5-billion sale of Seagram’s liquor business by the end of the year.

Vivendi shares closed off 8 cents at $44.37 on the New York Stock Exchange. They rose as high as $45.47 early in the day, reacting to the earnings report. The stock is down 32% year to date.