French media and telecom group Vivendi's adjusted net income rose 8.3% in 2007 and will improve similarly in 2008, Vivendi chairman of the management board and CEO Jean-Bernard Levy announced today (Feb. 29) at a press conference in Paris.

Universal Music Group division reported revenues down 1.7% to €4.870 billion (up 3% at constant currency). EBITA was down 16.1% to €624 million, a result Vivendi explains by foreign exchange impact, restructuring costs related to the acquisitions of Bertelsmann Music Publishing and Sanctuary and legal settlements generating extraordinary recovery in cash in 2006. According to Levy, underlying 2007 EBITA performance was comparable to 2006.

UMG margin in 2007 was of 12.8%, down from 15% the previous year. Despite this fall, Levy qualified the margin as very high, saying, "It would not be very difficult to show that we earn more money than all our competitors together"

Digital sales were up 51% to almost €700 million, now representing 14% of total recorded revenues for the group (22% for North America). Vivendi CFO Philippe Capron outlined the €229 million raise on digital almost compensated the €283 million loss on physical sales.

Capron also stressed Universal music market share rose in each of the company's 20 main markets. Despite a "difficult market", he foresaw a slight growth for UMG in 2008, thanks to the full-year integration of BMG and Sanctuary.

When asked about new record label acquisitions -- further to Universal buying Univision Music Group -- Universal Music France, Middle East and Mediterranean-South America president Pascal Nègre said they would be looking at any interesting opportunity.

Nègre said he was seeing subscription models as a remarkable emerging trend for digital sales, be they linked with ISPs or mobile carriers offers, or with devices.

Regarding DRMs, he said 97% to 98% of the U.S. legal digital market was DRM-ized, although acknowledging UMG was still testing DRM-free sales. "We won't make strategic decision on DRM like EMI did," he said. "We don't have the feeling that the decision they made had a spectacular impact on their turnover."

Vivendi, which controls France's second mobile operator SFR, expects to fulfill the acquisition of France's second ISP Neuf Cegetel in 2008, to build "a competitor to France Telecom in all areas," Levy said.

Levy stressed SFR was already the first digital music platform in France in volume. Universal partnered with the mobile carrier in November on an all-you-can-eat permanent download service included in the "Illimythics" mobile subscription offers.

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