Vivendi SE
PAR:VIV
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Vivendi SE
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Good evening, ladies and gentlemen. Welcome, and thank you for joining Vivendi's Third Quarter 2018 Revenues Conference Call. This call is webcast on vivendi.com. Today's call is hosted by Arnaud de Puyfontaine, Chairman of the Management Board and Chief Executive Officer; and Mr. Hervé Philippe, a member of the Management Board and the Chief Financial Officer.As a reminder, this program is being recorded. I would now like to hand the conference over to Mr. Arnaud de Puyfontaine. Please go ahead, sir. Your line is open.
Welcome, everyone, and thank you for your pronunciation. Thank you for joining us today, and I would like to start by briefly reviewing some key achievements of Q3. I will then hand over to Hervé Philippe to comment on our financial results. I'm happy to say that Vivendi delivered a strong performance for the third quarter and over the first 9 months of 2018. On the like-for-like basis, Vivendi's revenues increased by 5.6% compared to the third quarter of 2017, and by 4.6% compared to the first 9 months of 2017. These good results were fueled by our 3 main businesses. In music, Universal Music Group maintained strong momentum, thanks to increased subscription and streaming revenues. Last week, UMG announced an agreement with Boomplay, the most popular music streaming service in Africa. Universal is the first major to license its content to this service. At the same time, UMG artist keep topping the charts. For the last week of September, UMG had 9 out of 10 -- top 10 albums on the Billboard 200 chart in the U.S.This is the first time in nearly 5 years that a music group has achieved this performance since 2013, when it was achieved by UMG. On the TV side, we have had a lot of very positive news over the last few weeks. Canal+ Group won the exclusive rights to broadcast the English Premier League for the 2019, 2023 period in France and Poland. It also announced the renewal of its agreements with French cinema authorities. The movie Sink or Swim or Le Grand Bain in French, and the series Le Bureau des Légendes are performing very well and are highly acclaimed by critics. While recovering steadily in France, Canal+ Group has pursued its dynamic international growth with an outstanding increase in the individual subscriber base of plus 726,000 year-on-year. In communications, Havas significantly improved its organic growth in Q3 compared to the first half of the year. This upturn is illustrated by the win of prestigious accounts, both on the local and global level. Moreover, the creativity of some Havas group agencies such as BETC or Rosapark was rewarded at major international festivals during the third -- sorry, during the third quarter of 2018. One year after joining forces, the integration of Havas into Vivendi has proven very successful and has translated into many joint projects with the group's entities. Q3 has also confirmed that the process for opening up UMG's share capital is on track. As announced in July, Vivendi has now preselected over 15 banks to help identify one or several strategic partners for UMG. We will hold a working session with all of them before the end of the year, and we will retain 6 or 7 banks that will be charged with finding the most suitable partners for UMG. UMG's 2018 annual results, which will be published in February 2019, would serve as a basis for the discussions with potential partners. The cash from this sale could be used for significant share repurchase program and for potential acquisitions.I am glad to announce that we signed today a share purchase agreement with Grupo Planeta for the acquisition of Editis. Earlier this month, the project obtained favorable opinion from works councils, and we are now waiting for green light from the French Competition Authority. We expect to close by the end of this year or early 2019. As you know, this operation would represent another important milestones in Vivendi's strategy to build an integrated media content and communications group. It makes complete sense to gain a foothold in a market complementing our existing businesses and to enrich our content value chain with publishing IPs. Last but not least, Vivendi has continued to create value through some dynamic portfolio management. As planned, the sale process of our interest in Ubisoft is underway and will be completed by March 2019. You may think I'm ignoring the Italian situation. I do feel, however, that enough has been said and written about Telecom Italia and the current very serious issues, and this is not the appropriate forum. To sum up, the first 9 months of 2018 have confirmed Vivendi's positive momentum. They are testament to the fact that we are on the right path and moving in the right direction. Thank you for listening, and I will now hand over to my friend, Hervé. Hervé, over to you.
Thank you very much Arnaud, and good evening. Good afternoon, or good morning to everybody. Let me just begin with Slide #7, with the main changes in the scope of consolidation and currencies. The main change in the scope of consolidation was obviously the consolidation of Havas since early July 2017. On the change in currencies, as you can see, the euro continued to strengthen against the main currencies compared to the first 9 months of 2017. The impact of these currency fluctuations are primarily concession related, mainly at the level of revenues. Before going through revenues, let me remind you that we applied IFRS 15 starting January 1, 2018. The change had no material impact on Vivendi's financial statements. The group's 9 months 2017 and full year 2017 revenues were restated in the net amounts of EUR 48 million and EUR 57 million, respectively.These restatements essentially gross up adjustments with new material impact on the net margins and related to Gameloft, certain Canal+ Group contracts from Havas. You will find some details on the restatements in the appendix at the end of the slides. The application of IFRS 15 had no impact on Universal Music Group because its revenue recognition was already compliant with the new standard. In accordance with IFRS 15, we already have restated to 2017 figures. Therefore, the data presented in the following slides are related to 9 months of Q3, 2017 and 2018 is comparable. Let's move to Slide 8, with the revenues by business unit. For the first 9 months of 2018, the group's revenues reached EUR 9,847,000,000, up 4.6% organically, mainly due to the steady growth at Universal Music plus 9.1%. Canal+ Group revenues amounted to EUR 3,822,000,000, that is 0.8% growth. Havas contributed EUR 1,587,000,000 to the group's revenues in the first 9 months of 2018. Revenues from the other businesses amounted to EUR 315 million. They include Gameloft, Vivendi Village and New Initiatives as well as in company elimination. Combined revenue grew 2.4% organically. Exchange rate fluctuations negatively impacted revenues by EUR 313 million in the first 9 months of 2018.Going to Slide 9, on the sequential changes in the organic revenue growth rate of our main businesses between H1 and Q3 2018. UMG growth accelerated in Q3 to plus 13.5% from 6.8% in H1, fueled by the development of streaming platforms and the increase in our market share, notably in the United States. In Q3, Canal+ Group activity was impacted by the seasonality of Studiocanal new movie release schedule and the stabilization of the French pay-TV recruitments of Havas, experienced a positive turnaround compared to H1. Organic net revenue growth excluding Arnold, turned positive in Q3 at plus 2.5%, fueled by good momentum in North America and growth in Europe, notably due to better performances in France and United Kingdom.I'll now comment our businesses' performances beginning with Universal Music Group. Slide 12 illustrates the music industry's rapid shift to subscription and streaming models. On the left-hand side of the slide, you can see that for the 9 months 2018, streaming and subscription revenues were presented 56% of recorded music revenues compared to 17% in 2014, demonstrating the rapid shift of the industry. This strong increase is accentuated by the decline in physical sales, minus 16.3% year-on-year, [ or ] in download and other digital sales, minus 24.5% year-on-year. In 9 months 2018, streaming and subscription increased 35.8% year-on-year with a continuous acceleration since the beginning of the year, plus 31.5% in Q1, plus 37% in Q2 and now 38.6% in Q3. This strong growth is driven by the increased penetration of streaming and subscription in major markets and the increase in Universal Music market share on streaming platforms, particularly in the U.S. UMG songs occupied the #1 spot of the Spotify global charts for 37 out of the first 39 weeks of 2018. Physical sales, as you see on the right of the slide, which still represent 17% of recorded music revenues, were down 10.1% in Q3 year-on-year. While they were quite stable in 2017, physical sales are expected to continue their downward trend, but may experience ups and downs from one quarter to the next.Going to Slide 13, Universal Music's Group revenues for the first 9 months. Total revenues were up 9.1% organically. Universal Music Group's revenues for the first 9 months of 2018 exceeded EUR 4 billion standing at EUR 4,123,000,000. This result was achieved thanks to the strong growth in recorded music, plus 10.2% and in music publishing, plus 10.6%. On recorded music revenues as seen earlier, the strong growth which continued to accelerate in Q3 was driven by continued growth in subscription and streaming coupled with a strong performance of UMG's artists. For the first 9 months of 2018, bestsellers were led by Drake, with his latest release Scorpion, Post Malone and Kendrick Lamar. Music publishing revenues were up 10.6% and benefited from the positive momentum of music consumption thanks to subscription and streaming and from improved revenues from live events and synchronization. Merchandising and other revenues, which make up a small portion of Universal Music's total revenues declined by 13.4% compared to 9 months 2017, due to lower touring activities and retail income.The next Slide, 14, illustrates the positive momentum of Universal Music's activities over the first 3 quarters of 2018. We can clearly see the acceleration of the streaming and subscription growth year-on-year, plus 31.5% in Q1, plus 37% in Q2 and plus 38.6% in Q3. There is also a deceleration of the downward trend of physical sales, minus 26.2% in Q1, minus 12.8% in Q2 and 10.1% in Q3. Some important releases such as Michel Polnareff's latest album and the Mamma Mia soundtrack have stabilized the decrease in the physical sales. In Q4, the -- A Star Is Born original soundtrack as well as the reissue of the Beatles' White Album should also help to maintain the level of physical sales, but we will have a tough comparison basis in Q4 this year due to a very high level of physical sales in Q4 2017. The organic growth rate of recorded music has been increasing significantly since the beginning of the year. It doubled between Q2 and Q3, reaching plus 16.2% in Q3 2018. The growth in Universal Music total revenues continued to accelerate with the 13.5% year-on-year increase in Q3 after 9% in Q2 and 4.5% in Q1. Moving to Canal+ Group, on Slide 16. As shown is this -- in this chart, total subscribers to Canal+ offers grew by 600,000 over the last 12 months, reaching 15.4 million, benefiting from the strong momentum of international operations from the stabilization of the subscriber base in France.Let's look in -- more in detail at the subscriber base evolution for the international operation on Slide 17. As shown in this chart, total subscribers to Canal+ offers outside of mainland France grew by 726,000 over the last 12 months, reaching almost 7 million. This growth was achieved thanks to the positive yet temporary impact of the 2018 FIFA World Cup in Africa and good progression on -- of overseas and Asian operations with the launch of the activity in Myanmar in the first quarter of 2018. Moving to the Canal+ subscriber base in mainland France on Slide 18. Excluding Canal+ SVOD service, the subscriber base in mainland France was down minus 99,000 over the last 12 months and stood at 7,708,000 subscribers to a Canal offer. In Q3, 2018, new subscribers are 20% more than in Q3 2016, and this is the best third quarter since 2011, except in 2017, with the arrivals of [ embate ] in Myanmar [ and pisogenmar ] which boosted subscription exceptionally. It is also worth mentioning the good traction of the Canal+ channel where the number of subscribers increased by 227,000 between the end of September 2017 and the end of September 2018.As for the retail subscriber base, the commercial strength is still satisfactory with a churn rate continuing to decrease, standing at 13.4% at the end of September 2018, representing a decrease of 4 points compared to the end of September 2017. This is a record low since the third quarter of 2012.Turning to Canal+ first 9 months figures on Slide 19. As mentioned before, total revenues were up in 9 months 2018, plus 0.8% organically. Regarding the TV operation in mainland France, revenues were down 3.3% year-over-year [ as seen ] Europe activity and mainland France activity is stabilizing and continues to benefit from good commercial and retention performances, as well as revenues from wholesale agreements signed with 3 out of the 4 French telcos. International TV revenues increased by 7.8%. This robust growth derived from our strategy of providing the best content to our subscribers. Studiocanal revenue grew by 10.3% organically, mainly due to a larger number of theatrical releases and very strong video sales, particularly of Paddington 2, yet revenues in Q3 were impacted by the seasonality of Studiocanal movie releases, minus 4.6% at constant currency and perimeter. This seasonality is expected to be unfavorable again in Q4, given that in Q4 2017 figures were very favorably impacted by the release of Paddington 2. Nonetheless, I note that Le Grand Bain, Sink or Swim in English, which was released on October 24 in France reached the 3 million tickets sold milestone 3 weeks after its release.Going to Slide 21, and to Havas net revenues. As a reminder, Havas has been fully consolidated since July 3, 2017. The data provided on this slide corresponds to the organic growth of net revenues excluding Arnold agency. We have previously announced in the H1 results presentation that we expected better organic growth in the second half of 2018, and these figures confirm this expectation. Havas organic net revenues growth in Q3 was plus 2.5% compared to minus 1.4% in H1 2018. This growth rate confirms a positive breakthrough in Q3. Including Arnold, Havas organic net revenue growth in Q3 was plus 0.3% and amounted to 0.5% in North America. This positive trend is also supported by our track record of accounts win that you can see in the Slide 22, showing the main wins in Q3. For example, we won Barnes & Noble, Leclerc and Ferrero on the creative side, and Carrefour, China Telecom, Blizzard Entertainment, De Beers and Papa John's pizza on the media side. In the healthcare segment, we won new bids at Novartis and Pfizer among others. And lastly, in October, we won notably Pernod at the global level on the media side and all the customer relationship management program of [ Angkel ] in France.Moving to the Slide 23 in the organic growth per region. As already mentioned, excluding the impact of Arnold, Havas organic growth was plus 2.5% in the third quarter of 2018. Havas performance in North America is excellent, plus 7.3% thanks to continuing strong performances from Havas Health, Havas Edge, Havas Chicago and Abernathy, as well as from the media business with the contribution of the win of Sanofi account in 2017. Activities in Europe have also strongly improved compared to H1 2018. The organic growth rate in Q3 turned positive as 0.6%, and there has been noticeably good momentum, especially in France and the U.K. with a 10.5% organic growth rate for the U.K.On Slide 24, let me give you an update of the successful integration of Havas within Vivendi. Synergy initiative within the group have multiplied and are being implemented through country-based committees established now in 10 countries and big label brand committees. The organization is very fluid and allows increase of collaborative wins. For example, collaborative projects involve brands like Hyundai with Universal Music and the group Maroon 5 for ads in new cars, Tracfone with Gameloft with -- for intelligent ads in games, Carrefour with UMG in Spain with local young artists and also in France the National Rugby League with both UMG and Canal+.Regarding the Annex agency. It continues development with the creation of a subsidiary with Capitol Music Group, CMG, a label of Universal Music Group that signed artists such as Paul McCartney, Sam Smith, Katy Perry among many others. Located in Hollywood's iconic Capitol Records Tower, this agency Annex is a first alliance between an American agency and a record label. It will allow collaboration between brands and artists. This innovative partnership between 2 Vivendi entities will offer new revenue opportunities. To conclude, on Slide 26, Vivendi achieved very solid performances in the first 9 months of 2018. For full year 2018, Canal+ Group is close to achieving the objectives set. Television activities will achieve their goals. Studiocanal may end the year slightly behind, despite the success of Le Grand Bain. And as previously announced, Havas expects better organic net revenue growth for the second half of 2018, thanks to major accounts wins in the first half of the year. Thank you for your attention, and we're now ready to answer your questions.
[Operator Instructions].We'll take our first question from Charles Bedouelle, Exane.
I have 2 questions, I suppose. The first one is on Havas. You've been reporting Havas excluding Arnold for 2 quarters now. Should we understand that Arnold is for sale? Or could be for sale? That's the first question. The second question is on Editis. Can you explain us a little bit how do you think about the price paid and the return on investment, I mean, to be frank, 15x EBIT seems like a relatively high multiple and so -- maybe 17 is not the right earning base we should think of, or maybe there are obvious synergies, but that would be very helpful. And the last one is on music and you're in the business but you said you're in line with your objectives. Canal could be slightly below. Are you talking about the profit or the revenue objectives or both, and if it's the case, can you maybe share with us what your objectives were for music notably for the year? That would be helpful.
To answer the question, the first question on Arnold. No, Arnold is not for sale. In fact, Arnold, which is a very independent agency in fact, this is not included in the Havas worldwide network, and this is the reason why we consider that it is logical to disclose figures without Arnold, but in fact, this agency has lost some of its key accounts at the end of 2017 and at the end of -- the beginning of 2018, meaning that this agency has completely changed in 2018, and we have now a new CEO in Arnold, which is Kiran Smith, which arrived at the end of June, but we have also a new CFO and a new Chief Strategy Officer, so we have to wait for some time to see this new team benefiting of the announcing of Arnold, which is still a very great name and a very great agency in the U.S. So frankly, Arnold is not for sale today.To answer the question on the target, in fact, we haven't given specific targets on Universal Music. We see -- as you see that the fourth quarter is always very important in this music and we have good trend, but I have also said that the part of the physical sales which is always very important in the Q4 was specifically very high in Q4 2017. That being said, for Canal+, we have given some targets since the beginning of this year for a level of EUR 450 million of EBITDA before structuring, and this is about this target that we have given some comments, things that we're in line for the television activities, but we're probably a little bit behind for the Studiocanal part.
And maybe a very quick follow-up, if I may, on the UMG process. You've been very clear about the proceeds [ in your process ], so that's very helpful. I was just wondering does that exclude any part of the proceeds being paid in shares by some of the buyers, because that would be more difficult to do a tender or if there was -- if you have a share payment? Or does it not exclude anything?
Charles, I think that you moved into the second question a little bit faster than expected, and I thought that you wanted to get some clarification about the Editis transaction. Am I right?
Yes, as well.
Oh, yes, so good. So I'm going to give you a few tips as regard to the Editis transaction. As regard to a rich price paid, I mean, time will tell and let's set up a [ holding win few years time ] and then we'll see if the price was paid a rich price or a good price. What I can tell you is a few things from where we do stand is that, it's a scarce asset, which is providing regular and steady results. With the caveat -- with a prerequisite, which is to compare like-for-like numbers. And as we said on the 30th of July, this is an industry which is highly connected in terms of cycles, by the cycles on education program. And if you take the numbers 2016 of Editis, which was a year of renewal of those education program, which are important for Editis because we've got two quite high exposed brand in the business, Nathan and Bordas, you would have a multiple of 9.6x EBIT. So the point I want to make is, it's a good business, it's absolutely fit for purpose as regard to our strategy agenda. It's a stable business, but obviously 2018 numbers are in a kind of low end of the cycle. It is expected to have new education program in 2019 and 2020, and we're expecting to be able to create the momentum in the results and financial KPIs of the asset, which is going to make this transaction a very good transaction. So not yet done. As I said, we're expecting to get final approval from the Competition Authority and very much looking forward to be able to share with you the progress we will make as soon as Editis is joining Vivendi. Now as regards to your question in -- as regard to Universal Music Group, we don't expect to get any share transaction in this potential transaction, so it's going to be on a cash-only basis.
The next question will come from Adrien de Saint Hilaire, Bank of America.
And a few questions, please, on my end. So Canal+ has made a few investments in content of late, Champions League with SFR, Premier League, distribution of TF1. Does the 2019 guidance still hold, of about EUR 500 million of EBIT [ arm ]? Secondly, just curious if there was any one-offs in UMG in Q3 or if we should expect any in Q4 given that there was a settlement signed between the labels and Sirius earlier in July. And thirdly, Arnaud, I think you've mentioned that you didn't intend to talk about TI too much, but since there's been so much noise around this, could you tell us if you have any intention of selling your stake in TI to someone like Orange?
Maybe I can take the 2 first questions.
Please do.
And in fact, for Canal+, as you see, we have given some color on the end of this year, especially on Studiocanal, so we -- we'll maybe probably update our guidance on 2019 figures next time, and we will have the final figures of 2018, let's say, at the beginning of 2019. And especially when we make our call for the full year 2018 on February 14, we'll update at that time our guidance on Canal+ for 2019. There is no specific reason to be very different that we have already said. But obviously we have some developments which can have some consequences for next year, so -- but we will be more precise beginning of next year. For the specific one-off on Universal Music, I can say that we have no material one-off in this quarter, no material one-off also expected in Q4 this year.
Thank you. Bonsoir, Adrien. So as we go to your question and these market rumors, the only thing I can say is that this is a rumor which is a sea snake since I've heard it for the first time in May 2015. So I can firmly say that this is completely and utterly wrong. Vivendi is a long-term shareholder in Telecom Italia, and we are going to stay as such. Thank you.
Okay. Well, that's very, very clear. If I could just squeeze in one more question around guidance. This time of year last year, you gave us some guidance around UMG growth for the full year. Can you give us a sense around the streaming performance that you expect in Q4? I mean, would it be reasonable to expect streaming to pick up as it has throughout this year?
Well, we have not given any specific guidance on the fourth quarter of this year. Everybody can calculate what you want regarding the growth in streaming and subscription since -- because the number of subscribers to platform services is public and known. What is important also is to have in mind that we have good ready schedule for these four quarters with some releases like Imagine Dragons, Gregory Porter and some others which are in the U.S. So we are optimistic, but we don't want to give precise figures for this Q4 for Universal Music.
Next up, we'll hear from Matthew Walker, Crédit Suisse.
I've just got 2 questions, please. The first is on, your deal with Spotify comes up, I think, in 2019. Just to get a sense of what you thought about their recent statements on -- and actions on direct deals with artists, the taking of the stake in DistroKid, et cetera. You saw they launched in MENA recently, but not yet in India. What is your sense, do you think their competition is shifting? And do you think the platforms are edging towards trying to be much more aggressive against the labels? So how do you see that playing out? And then to go back to Canal+, I think Hervé said, well, we're not giving guidance right now, we'll do it in February for Canal+. He -- but he also said there's not much reason to be different. Could you just clarify that a little bit? And also, could you actually let us know what the additional content costs for Premier League and Champions League actually are?
Thank you, Matthew, for your questions. I will take the first one on Universal and Spotify. Well, we said it very quite clearly and out loudly that Spotify is a partner of UMG. We are seeing what's happening. We are taking into account Daniel Ek's statement. And he always reiterated the point that he didn't want to create disintermediation in the value chain, but he wanted to think about potential licensing deal. The point that, it's the question is not about Universal Music Group versus Spotify or the levels versus the platform. But it's more about working together to accelerate growth in the market to benefit the entire music ecosystem of artist, songwriters, labels, publishers and digital platforms and, most importantly, fans. So in the growth and this amazing company led by Sir Lucian Grainge, I mean, it's absolutely clear that it's about creating winning collaborations with the platform, doing the right added value in the relationship with the singers, with the artist. And there is a very, very great alignments between the different incumbent within the value chain just to be able to think about the future not in terms of creating competition, but in terms of building together the recovery of an industry, which is pretty exciting. Hervé?
Well, on Canal+, just to give some clarity, I would say, I have said that we will give more precise guidance in February in next year. It will depend on the final figures for 2080 (sic) [ 2018 ], the indies, and also of what can be the new developments at Canal+ that can happen or so, so. That's why we don't want to be too precise on that today because -- but we are very confident on 2019 on targets which have been from -- which have been issued in the recent past. To complete my answer, we can add that for the new cost I would say on the -- what we have won in English Premier League, for example, Maxime Saada has said in an interview in [ Likeb ] that the amount which has been paid was reasonable and in line with our expectation and below what was previously paid by SFR. But clearly, the amount has not been disclosed, and we are satisfied with the price which has been paid.
And I would add on that, as we said from the previous calls and the situation when you see with the benefit of hindsight as regard to rights, Canal+ will do deals which are making sense in terms of maintaining the rationality of our cost base, being able to get a price that is going to create value obviously for the customer, but for the company, and we're not going to be led to making bids and paying price, which, in our view, are completely unsustainable and will then jeopardize the kind of momentum that we give to Canal+. So relating to the latest information and the specific situation of the English Premier League coming back to Canal+, it's clearly an information and a negotiation that has been led with this very strict discipline in mind and which has been applied.
From UBS, we'll hear from Richard Eary.
Most of my questions have been answered. Just 2 sort of follow-up questions. Just first of all, in terms of the EUR 450 million number for Canal+ this year, you said it's in line with TV, but it's slightly behind on Studiocanal. And you've not really given a huge amount of color on the profitability between TV and Studiocanal. Can you just sort of clarify whether that's a EUR 10 million, EUR 20 million, EUR 30 million, EUR 40 million impact in terms of Studiocanal, so we can just understand what the magnitude is? And second question is just to try and understand a little bit more about the acceleration in the streaming growth. How much of this is due to positive impacts flowing out of the Facebook and Tencent deals and Google deals that were actually signed in December last year and April last year for Tencent? So if we just get a bit more clarity on that, that would be helpful.
Next up, we'll hear from Omar Sheikh, Morgan Stanley.
Sorry, sorry, sorry. Hello, Omar. Sorry, excuse me, pardon. Just let Hervé answer the previous question, which has not yet been done. So Hervé, the floor is yours, and then after you've take -- we'll take your question, Omar. Thank you.
Well, to answer the question on Canal+, we had said previously in the year that the target was EUR 450 million before restructuring, which is a figure we have given. And the fact is, today, that we are confident in the path of the [ Tencent ] activities, but less on Studiocanal. And we have not given more specific magnitude of what could be the impact of the EUR 450 million target before restructuring, but this is not for large amount of [ footage ], as you know. What was the other -- the second question was relating to the new deals which have been signed in 2018. Obviously, it's very difficult to give precise consequences of those deals because the financial terms were not disclosed, so I cannot be precise on that. But it's fair to say that Facebook deal and YouTube deal -- YouTube which [ on the quickly ] launched its subscription service, they contributed -- they contribute to our streaming growth in the 9 months of 2018, but we cannot be precise on the amount of that.
Omar?
One moment, I'll open his line.
Great. Okay, right. I think I'm now able to ask the question. So Arnaud, I wanted to just ask a couple. First of all, on the timing of the sale process of UMG, last call, you highlighted your confidence in getting to completion by -- in 12 to 18 months, and that was from July. I'm just wondering whether you still have the same confidence, obviously thinking about the volatility we've had in the valuations of some of your benchmarks since you spoke in July. That's the first question. And then, Hervé, maybe a second one. Going back to the third quarter streaming revenue growth number, you mentioned YouTube has been one of the perhaps explanatory factors in the third quarter. I wondered whether you could say, quantify how much YouTube had. And presumably that was only for 1 month in the quarter, given it was coming -- there were -- I think it was coming off a free contract period. And so if that's the case, should we anticipate that the YouTube Music impact will be for 3 months in Q4?
Well, thank you for your question. We said mid -- end of July that we were to launch the process during autumn, which we are currently doing, and that we were expecting that the process could be leading to a 12 to 18 month deadline. We stick to the initial planning and we don't want to be under any pressure as regard to the possibility to lead the process and organize the process in the most efficient way according to our objective. So we stick to what we did announce end of July this year. Hervé?
Okay. But I have no position on the -- on your question to be given on the third quarter the impact on the fourth. We can say that the growth recorded in the third quarter was largely due to the number of subscribers to the main platforms is absolutely what explain largely the growth of the subscription and streaming. So [ as we said ] you have the growth of this number of subscribers, which is perfectly known on the market, so I cannot give more comment than that.
Our next question is from Laurie Davis (sic) [ Laurie Davison ], Deutsche Bank.
First question just on the impact from CanalPlay on the mainland France sub base. What would the sub-additions been without this lag and how many CanalPlay subscribers [ have still will wash ] through the system? And second question is, what was the impact of free channels in the TV France division? And the third question is, on the publishing revenues within music, do you expect that third -- that fourth quarter, we're going to start to see lagged impact from third quarter sales? Because most of the third quarter strong releases were also publishing artists with you. And then into next year, we also get the CRB benefit. So are you expecting publishing to accelerate even if we face tough comps on the recorded side?
Well, to answer the first question on CanalPlay, you have the figure in the chart in Page, I would say, 18, where you see the number of subscribers of CanalPlay, which are at the end of 2018, 158,000, declining from 201,000 in September 2017. To answer the question on the free TV, we gave a global figure for all the television in mainland France for -- both for the pay-TV and free TV, which has declined by 3.3%. And we can say that free TV and pay TV are in line and there is no specific big difference between those. For the publishing in Q4, we know -- there is -- in fact for us, we believe that the publishing knows a similar dynamic that in recorded music where the growth in streaming and subscription. And we have also the sort of linked growth, I would say, in publishing. So performances are important in publishing, too, I would say.
Okay. And on the CRB impact, the rate -- the CRB rise from next year, do you expect that to add some publishing growth for next year?
Well, as regard to the CRB, we obviously are pleased that the CRB has been recognizing the value of music. But that being said, it's important to keep in mind that this new rate only applies to a small percentage of UMPG (sic) [ UMG ] and the publishing industry of their revenues. So as regard to the global impact, I'm going to hand over to Hervé.
Well, impact will depend of how much revenue Sirius earns in the coming months -- coming years, I would say, and how now much they are able to carve out of their music bucket. The new rate is, for the period is 15.5% of music revenue, it's a significant step-up for 11 in 2017. But the impact will depend on how much revenue Sirius earns in the coming years.
We'll take our next question today from Tom Singlehurst, Citi.
It's Tom here from Citigroup. Congratulations on a great quarter. The first question is just on the sort of trend rate. I know there's going to be volatility quarter by quarter depending on the release schedule and the phasing of the comps, but should we think about recorded music now as a consistent double-digit top line growth story? And then the second question was on the disposal process for UMG or the stake sale and you talk about one or several partners. Just wondering why you wouldn't consider sort of merging UMG with a third party, on the basis that you do talk about the importance of finding a strategic partner. And I'm just trying to find out, sort of gauge whether you'd get more sort of strategic bang for your buck if you actually actively merged the business with a third party rather than just simply sold a stake in the business.
,0 Honestly, honestly, their numbers are amazing.
Sorry? So obviously we have a different perspective as regard to the potential of UMG, Tom. And we say the reason why we did choose the strategic partner route end of 30th of July and such a merge is not on the agenda. So coming back to the initial comment, you will have the answer to your question on that path. Now on the first part.
On the first part of these questions, [ the relative idea with sales ], the growth in the different quarters from streaming and subscription we can [ depend on a certain ] number of subscribers. We can also have some ups and downs coming from the market share on -- Universal Music has very well performed in the 3 first quarter of 2018. So we'll see. The [ relatives of ] the fourth quarter is difficult to predict mainly due to the physical part of the sales of Universal Music.
That's fair. And have you got an idea of what the market grew at in the third quarter? Could you speculate what that might be?
Sorry, I haven't understood the question.
You were saying that you gained market share in the third quarter. Just wondering whether you have a rough idea of what the market grew at in the third quarter?
No, frankly, I have [ not ] the figure for the global market. But we know that in the -- in Spotify, first of all, we have gained some market share due to the big success, especially of Drake, in the third quarter. So it depends from one quarter to the other of the different releases which can happen.
[Operator Instructions] Next, we'll go to Julien Roch, Barclays.
My first question is, now that 2018 is almost over and we only have 6 weeks left, can you give us an indication of how much restructuring we should expect at Canal+ because your guidance is pre-restructuring, but most people look at numbers post-restructuring. That's my first question. My second question specifically for Hervé. Is EUR 30 million a large amount? And that's my second question. And then the third question is, on the Music Modernization Act, you will get more money for publishers, which means that recorded will have to pay more to publishing. So taking into account the weight within Universal Music, do you think that will lead to increase or decrease of Universal Music margin, because Billboard seems to think that it will be negative for the large players in the industry?
The first question was relating to the level of results at Canal+. So no, I have given what I can give today. I will not give any more comments or details on those figures. The second question was Music Modernization Act. Was that the question?
Well, the first question was on Canal+ restructuring, so you're not answering is -- if I understand correctly. And then the last question was indeed on the Music Modernization Act, where the publishers will be paid more, and therefore, recorded music will have to pay more to publishing, and because you're on both side of the equation, depending on the weight, the -- it either leads to higher or lower margin, and Billboard seems to believe it will lead to lower margin. So I wanted to know whether you had already modeled the potential impact of the Music Modernization Act on UMG overall?
Okay. Thank you. Well, it's just because we -- you are quite -- is from difficulties. So in fact, we do not anticipate that this MMA will have a meaningful direct financial impact on Universal Music. This legislation is very important for the benefit it brings to the ecosystem, especially for songwriters, the artists before '72, engineers, producers, creators and so. So our artists were already receiving payments but based on private payment every month where we were before '72. So it's too early with that to imagine and to calculate what could be this impact, and we do not anticipate it to be meaningful.
And I'd like to take the floor just to add a little bit more flesh on the first question on the Canal. The point is that there is a need to be able to keep the possibility to take right management decision as regard to Canal. So at the end of the presentation, you will see how we stand, and obviously, we've got the kind of the swinging factor of Studiocanal as regard to the objective, but we want to keep the path to take good decision, especially in the context of what we did over the past 4 years. And with the benefit of our insight, we always have taken the right business and management decision on Canal+ to be able to put the group on the right path. That we have done. So there is no need not to provide information, but there is a need in the global context, which has been an objective reiterated at the end of Hervé's presentation. We'll be keeping the room for taking good decision for the kind of long-term value of the business.
Next up, we'll hear from Conor O'Shea, Kepler Cheuvreux.
A couple of questions from my side as well. So first question on Canal+, just to flesh out a little bit more Studiocanal. And maybe, Hervé, you could tell us if Studiocanal generally has above or below average margins versus the overall Canal+ group. That would be helpful. And also, unless I'm mistaken, there was no churn -- no ARPU number for Canal+ France. In the slides usually, you give that number. You've done a very good job on reducing churn, despite SFR having Champions League rights coming onstream. Just wondering, is there any ARPU impact of that? Second question on Havas. You had a great organic growth number in the U.K., 10%, which lifted the overall average. I couldn't identify if that was due to one particular win or not or were there one-offs. Are you confident of repeating that performance in Q4? And then just the last question on UMG. I know this is a sales call, but you had an -- actually an excellent number on UMG in Q3, a very strong lineup and strong charting in the U.S., in particular in Q4, normally with heavy release schedule there are a lot of marketing costs related to that. Would you say that in the second half of this year, they are noticeably higher or likely to be noticeably higher than the second half of last year? Or is it a similar rhythm of releases overall?
Well, this is a call on the top line figures, so not specifically on margins, so that's why I cannot give any precise answer on the level of margins at Studiocanal. Are they above or average or below or Canal+? I will not give some comments. On certain, we have given some color or [ insight ] information on the guidance to be very clear and transparent on you, but I cannot give any more details on that. On the ARPU -- of the ARPU side, it's quite -- it's more difficult to give some ARPU figures, especially at the international level because of our different mix of countries and so. And in France also, we have some contracts with what we call the possibility to cancel the subscription, and so it made the calculation more difficult to be consistent with what given in the past. And to answer the question on -- and to give the precise example of the OTT offers, what can be the calculation of an ARPU with new subscriber on the OTT offers, which was a small price to entry and the freedom to leave their subscription 1 month after. So that's why it's more complicated towards the past to calculate an ARPU, which was very simple. And to answer the question on Havas, the question was referring to the United Kingdom. And on that too, that we had a very good third quarter in Havas. In the third quarter, it was negative in the first half but very largely positive in third quarter, thanks to some dynamism in the communication, especially in Elf with the agency Havas links but also in creative part with Havas London, which has recovered well and the media activity. So the main agencies in U.K. performed very well in the third quarter.
At this time, there are no further questions. I'll hand the conference back over to Mr. de Puyfontaine for any additional or closing remarks.
Well, the addition is to thank you for listening. Thank you for your questions, and have a great evening. And we see you again early next year. Thank you. Good evening. Bye-bye.
Good night to everybody. Thank you.
Ladies and gentlemen, that does conclude today's conference. Thank you all for your participation today. You may now disconnect.