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Good afternoon, everyone, and welcome to Vivendi's First Quarter 2018 Revenues Conference Call. The conference call will be hosted by Mr. Arnaud de Puyfontaine, Chairman of the Management Board; and Mr. Hervé Philippe, a member of the management board and the Chief Financial Officer. As a reminder, this call is being recorded. I would now like to turn the call over to Mr. Arnaud de Puyfontaine. Please go ahead, sir. Your line is open.
Thank you very much, indeed, and good evening, all of you. Thank you for joining us today. Hervé Philippe will outline in a few moments the solid revenues for Vivendi and its main businesses during the first quarter of 2018. Compared to the first quarter of 2017, our Q1 revenues grew by 16%, mainly thanks to the consolidation of Havas. They increase by 3.3% at constant currency and perimeter. The last 2 weeks have been marked by a number of exciting new development at Vivendi. Vivendi's shareholder meeting took place last month, and all the resolutions were largely approved. Vivendi's Supervisory Board, which followed the shareholders' meeting, unanimously appointed Yannick Bolloré as its Chairman. This is excellent news for Vivendi. His media profile, his experience in digital transformation and his global experience of brands are key to supporting the group in its ambitious plan. We know each other very well. We have already done a lot together. I'm very enthusiastic about starting a new chapter with Yannick. About the first quarter, we also adopted a dynamic portfolio management of our investment in the listed companies. In video games, Vivendi reached an agreement to sell its interest in Ubisoft for EUR 2 billion, representing a capital gain of EUR 1.2 billion. The group which already owns Gameloft, a global leader in mobile video games, is currently working on additional ways of strengthening its position in video games. This sector perfectly fits Vivendi's strategy. In cultural goods, after acquiring in 2016 an 11% stake in the French Fnac Darty retailer, Vivendi has entered into a hedging transaction to protect the created value which could potentially represent close to EUR 300 million. To support our strategic vision, we keep deploying significant resources to strengthen our presence in related or adjacent markets. We recently acquired Paylogic, a ticketing and technology company, to create a ticketing network spanning Europe and the U.S. In Italy, Telecom Italia held its shareholders' meeting 2 weeks ago. Vivendi is pleased that the Board of Directors appointed Amos Genish, CEO of Telecom Italia. As a long-term shareholder, we totally support his 2018, 2020 industrial plan. We will pay careful attention to the fact that the plan is implemented in its entirety. However, the new governance is a concern to us. The risk of dismantling and a governance that would not take into account the shareholders' interest may cause Vivendi to consider, as permitted by law, to request the convening of a shareholders' meeting to propose to reorganize the Board of Directors. Last but not least, today, the Supervisory Board has greenlighted the Management Board's proposal to launch on the potential change in the shareholding structure of Universal Music Group. We will notably examine and carry out the necessary preliminary legal operations required for a potential change in the shareholding structure. We will then present the various options for search and evolution. In addition, the Supervisory Board also approved unanimously the renewal of the mandate of the whole Management Board for a 4-year term. To sum up, Q1 has demonstrated that Vivendi is moving forward and is building a unique entertainment company. The remaining months of 2018 are said to be just as eventful and exciting as the first ones. We are confident about the prospects of our main businesses for the rest of the year. Beyond 2018, we can rely on the long-term stability provided by our main shareholder, the Bolloré Group, which recently increased its stakes and now owns 24.8%. Thank you for listening. I will now hand over to Hervé Philippe. Hervé?
Thank you very much, Arnaud, and good evening to all of you. It's my pleasure to present to you our revenues for the first quarter of 2018. Onto Slide #4, you can see that the only significant change in the scope of consolidation was the consolidation of Havas in early July 2017. But regarding the main changes in currencies, as you can see, the euro strengthened a lot against the main currencies as from the third quarter of 2017. The negative impact from changes in currency values are expected to continue into the second quarter of 2018, assuming rates remain at their current levels. Regarding IFRS 15, the change had no material impact on Vivendi's financial statements. The group's Q1 2017 and full year 2017 revenues were restated in the net amounts of EUR 17 million and EUR 22 million, respectively. These restatements related to Gameloft and certain Canal+ Group contracts. You will find some details on these restatements in the appendix at the end of the slides. The application of IFRS 15 had no material impact on UMG or Havas because revenue recognition for these 2 businesses was already compliant with the new standard. In accordance with IFRS, Vivendi has restated the 2017 figures. Therefore, the data presented in the following slides and related to Q1 2017 and Q1 2018 is comparable. Going to Page 5, which has revenue by business units. In Q1 2018, the group's revenues reached EUR 3,109,000,000, up 3.3% organically, mainly due to the solid growth at UMG, plus 4.5%; and to the good performance at Canal+, plus 2.5%. Havas contributed EUR 482 million to the group's revenues in the first quarter of 2018. ForEx negatively impacted revenues by EUR 166 million in Q1 2018, mainly at UMG. Let's come to the business unit now and begin with Universal Music on page -- on Slide 7. This slide illustrates the industry's rapid shift to subscription and streaming models. You can see that the streaming and subscription represented 57% of recorded music revenues in Q1 2018 compared to 46% in Q1 2017. This strong increase is accentuated by the decline in physical, minus 26.2%; and downloads and other digital sales, minus 21.7%. Streaming and subscriptions increased 31.5% year-on-year, thanks to the good commercial trends and the deals signed in 2017, including the one with Facebook. The increase of the user base recently announced by the main streaming platforms continued to sustain the strong growth of streaming and subscription revenues in April. Physical sales still represent 16% in Q1 of recorded music revenue. While they were quite stable in 2017, physical sales are expected to continue to their downward trend but with possible ups and downs from one quarter to the next. Therefore, physical sales were down 26.2% during the first 3 months of the year due to slippage of some [ raises ] to Q2 in some geographies, notably in Japan as well as, of course, as a result of the market condition to streaming. Physical sales were particularly strong in the first quarter of last year, notably driven by some track releases for La La Land, Fifty Shades Darker and Moana. Going to Slide 8, UMG's total revenues. In Q1 2018, Universal Music Group revenues amounted to EUR 1,222,000,000, up 4.5% organically. The month of April was even better. At the end of April, the cumulative organic growth is 7.2%, mainly benefiting from the continued strong increase of the streaming platform user base and better performance of physical sales, notably in Japan. As seen earlier in Q1 2018, the sound growth of recorded music revenues was driven by the continued growth with subscription and streaming, which more than offset the decline in physical and other digital sales. Bestsellers for the first quarter of 2018 were led by the Black Panther soundtrack, a new release from Migos and carryover sales from Post Malone, Imagine Dragons and Kendrick Lamar. Music publishing revenues were up 3.9% and benefited from the positive momentum of music consumption, thanks to the subscription and streaming. Merchandising and other revenues, which represent a small portion of Universal Music's total revenues, declined by 18.7% due to lower touring activities in Q1 2017 and lower retail sales. Moving to Canal+ Group's overall subscriber base on Slide #10. As shown in this chart, total subscribers to Canal+ offers grew by 0.6 million to reach 15.3 million, benefiting from the strong momentum of international operations. In Africa, the subscriber bases continued to grow at a strong pace, and it remained stable in other countries. It is worth mentioning that in February, Canal+ Group further expanded its international footprint with the launch of a new offer in Myanmar. In France, the total subscriber base decreased slightly year-on-year, mainly during Q2 2017. The base has remained almost stable since June 2017. Moving to Slide 11. You can see the evolution of the retail subscriber base and the decrease in the churn in mainland France over the last 12 months. As we stated through 2017, Canal+ in mainland France is recovering with good commercial trends and improved churn. Looking especially at the right-hand side of the slide, you can see even more clearly the sequential improvement in retention, leading to a continuing decrease in the churn rate. Turning to Canal+ Group's 2017 revenues on Slide #12. In Q1 2018, Canal+ Group revenues amounted to EUR 1,298,000,000, up 2.5% organically. Regarding the operations in mainland France, revenues were almost stable year-over-year. Pay-TV revenues were stable, benefiting from good commercial trend and retention performances and from the revenues from the wholesale agreements signed with 3 of the 4 French telcos. But at the same time, free-to-air TV revenues declined. International TV revenues increased by 5.3%. Africa performed well with a robust growth in revenues of 12.3% despite an unfavorable comparable as Q1 2017 benefited from the African Cup of Nations in football. At the end of March, the number of subscribers in Africa stood at 3.2 million. Studiocanal's revenue grew by 19.2% organically, reflecting the carryover sales of Paddington 2 as well as the release of its DVD and VOD, notably in the U.K. Now turning to Slide 14. Havas, which is fully consolidated since July 3, 2017. As you see, the communication industry is rapidly evolving, notably towards greater and greater convergence between advertising and content. It is more and more difficult for brands to reach certain audiences, including young adults who do not consume traditional media. More and more, marketing is carried out through content such as advice given by influencers, and messages must be perceived as advices rather than as advertising. Clients, at the same time, are also asking for more transparency. Havas is now integrated into Vivendi and is fully aligned with this new paradigm. Havas activities are part of the group's strategy, and as such, it is in the heart of all of the Vivendi business as you see in the chart. Slide #15. Havas, thanks to its integration within Vivendi, Havas now has a unique value proposition, leveraging Vivendi's assets and brands as well as its relationships with artists. Other Vivendi activities benefit from Havas' expertise and creativity in consumer science, knowledge, data analytics and creativity in all media formats. Synergy initiatives within the group have multiplied and are being implemented through country-based committees. For example, the Annex agency was created in the United States. The Annex is a cultural epicenter focused on emerging consumers, including millennials. It is steered by creators, influencers and leaders who are the architects and instigators of what's cool and important. The Annex has already generated USD 30 million in revenues. Thanks to the collaboration between the teams, Havas Creative won new clients such as [ Linde ] and Carl's Jr. in the U.S. On the other side, Dailymotion and Gameloft signed a partnership with Facebook, which has been facilitated by Havas' relationship with Facebook. As mentioned last February, the acquisition of Havas was immediately accretive. On Slide #16 about the organic growth by region for Havas. Revenues in North America increased 2.2% organically, excluding Arnold. Performance at Arnold's Boston agency was impacted by the loss of certain clients, including Liberty Mutual at the end of 2017 as well as the decision by CenturyLink to move its advertising in-house. The various European countries reported mixed performances, recording a slight decrease overall, notably due to the loss of the PSA media account last year, which affected several countries. Havas had also very good start to the year in Latin America and Asia-Pacific, both very dynamic and promising regions with strong development potentials for Havas. Going to Slide 17 and the breakdown of Havas revenues. In Q1 2018, Havas group revenues amounted to EUR 482 million. Excluding Arnold's contribution, revenues were stable organically. Europe was -- represented 51% of revenues in Q1 2018 compared to 48% in Q1 2017. Business in France was down 2.3% organically, although [indiscernible] and Fullsix/Ekino performed very well. Excluding PSA, the respective organic growth was plus 2%. Havas revenues in Q1 2018 were negatively impacted by the ForEx, minus 6.9%, which was slightly offset by the positive impact of acquisition, plus 1.5%. Organic growth, including Arnold, was down 1.7%. On Slide 18, you can see some of our key wins in Q1 2018. New business in the early part of 2018 proved dynamic with a number of wins both in the creative and in media businesses, including, as you see, ADP in the United States, Citroen in Italy and Australia, Kraft-Heinz in the United Kingdom and Société Générale in France and many others as you can see from the creative part of the business. For the media part, you can see Cherry Jaguar Land Rover in China, BKT in Italy, Bristol-Myers Squibb worldwide and also many others. The group created the China Desk offering based in Paris and aimed at supporting both clients seeking to expand their presence in China and Chinese brands looking to expand internationally. And finally, Havas Paris launched Blockchain, the first fully integrated communications offering designed to support Blockchain technology businesses and entrepreneurs. Now turning on Slide 20, you can see the Q1 2018 revenues from our other businesses. Gameloft revenues amounted to EUR 79 million, down 7.4% organically, notably due to the lack of new mobile games releases in the first quarter of 2018. On May 3, Gameloft launched Dungeon Hunter Champions, which is based on its highly successful Dungeon Hunter franchise. The first weeks are very encouraging. Vivendi Village revenues amounted to EUR 23 million compared to EUR 26 million for the first quarter of 2017, a decrease of 3.3%. In April, See Tickets acquired Paylogic, a ticketing and technology company based in Amsterdam. And finally, new initiatives, which mainly corresponds to Dailymotion and Group Vivendi Africa recorded revenues amounting to EUR 16 million compared to EUR 10 million in the first quarter 2017, an increase of 55.8%. Dailymotion benefited from the continuous improvement of its premium audience during the first quarter of 2018 and a favorable comparison against the first quarter of 2017. Dailymotion's new user experience is driving good momentum that is expected to continue in the coming quarters. To conclude on Slide 22, Vivendi is off to a good start in 2018. We are confident about the prospects of all our main businesses for the rest of the year. As you see, we'll also probably change our release schedule for H1. Instead of releasing at the end of August, we may release our half year results by the end of July. We will announce shortly the precise date. Thank you for your attention. And we'll now open the floor to your questions.
[Operator Instructions] We'll take our first question from Adrien de Saint Hilaire from Bank of America Merrill Lynch.
Yes. I've got 3 of them, please, 2 on music and 1 on your overall net cash or net debt position. Firstly, I'm just curious what is your preferred scenario around the UMG shareholding structure? And what is your own assessments of UMG's valuation compared to where the market is? That's the first question. Second question is I can see that all the other majors have sold their stake in Spotify, but you haven't. So can you tell us why and what's the plan? And lastly, I think you mentioned at your AGM you're about net cash or net debt breakeven. In the past, I think you have mentioned that you had appetite to be slightly geared. Can you tell us where you might deploy capital?
[Foreign Language] So on your 2 first questions as regard to preferred option for the capital, about the evolution, the potential evolution of the capital of Universal Music Group, we are completely agnostic. We are going to clearly see all the different options. Given its size, UMG's current legal structure and organization is elaborate in the context of the operational framework of the music industry and the number of countries in which UMG operates its business. And for historical reasons, there are several holdings in different countries. We need to have one single holding for all our music business and so on and so forth. But as regard to what should be the way forward, we will have a very open mind as regard to the different available options. As we said, we'll report back to the Supervisory Board, but I don't want to preempt what is going to be the most favored options post the work that we have started at the level of the Management Board. As regard to the Spotify stake, Universal Music Group and the team, led by Lucian Grainge, have been fantastic partner of Spotify from the very beginning. It's been a journey where there is a common interest to be able to be part of this new era for the music industry, and we have come to the decision to be able to remain a shareholder of Spotify because we think that there is potential in the future. And as a strategic partner, it is very important to walk the talk. So we have no other intention at this stage than to remain a Spotify shareholder. Now on your third question, I'm going to hand over to Hervé.
Well, thank you, Arnaud. In fact, we have not specifically disclosed anything regarding the net cash position at the end of March because we are releasing figures concerning the revenues for the first quarter. I have given some details on the cash position during the general meeting of shareholders last April, last month, in fact, so it's nothing really new concerning the cash position of Vivendi to date.
Hervé, actually my question was, well, where would you like to deploy capital if you had to regear to about 1x EBITDA as you've mentioned in the past?
Well, we are looking to different opportunities, so there is no specific target today which is identified. And we could consider to make some operation and are very open minded in different areas concerning our current activities focusing in content indeed, so there is nothing very specific to say about that.
Our next question comes from Charles Bedouelle with Exane.
A couple of questions, I suppose. The first one is just to check that Havas is not in the organic growth. That's the first question. The second question is you said you are kind of agnostic and you will look at the best solution. But surely, if you think that music is a fantastic asset, which many people think, giving a share to new minorities is only worth it if you have good reasons to redeploy the -- good ways to redeploy the capital that is raised. So certainly, the way and your ambition in terms of M&A in the future will have an impact on the final choice. So can you maybe tell us if you think that Vivendi has a greater M&A ambition in general? And the last question is can you give us, or maybe I missed it, a split between the wholesale and the retail net ads within Canal+, please?
[Foreign Language] Well, obviously, you are making a statement which is very appealing, and I don't want again to preempt what would be the proceeds allocation if we were to be able to move ahead. So it's all about different scenario, and it's too early, just to be more precise. As regard to the Vivendi type of philosophy, from the very beginning, when we did start this new chapter at Vivendi in June 2014, we said very clearly that in terms of a rigorous financial investment, we will use efficiently the resources available to us in terms of M&A. M&A is absolutely on our agenda, but it's going to be when the M&A targets are going to be fit for purpose and totally aligned with our strategy to be an integrated media entertainment and content international group. And so it's a question of rigorous process, and we'll see where we will stand after we have made the decision on what is going to be the best way forward and that we will have been supported and backed by our Supervisory Board.
To answer the question on Havas and organic growth, Havas is not in the calculation of the organic growth for 2018 first quarter. We understand the Vivendi method, I would say. We only consider the acquisition in [ Ligue 1 ], I would say, and not restated the past. So you're right, Havas is not in the calculation of the organic growth for this part of the year. For the question regarding the subscriber base at Canal+, I would say you have the figures concerning the global figures of 8,011,000 customers of Canal+. And you have in the slide -- following slides the retail base of subscribers. So I think you have mainly all the possible ways to calculate the subscriber increase of customers at Canal+.
And we'll take our next question from Omar Sheikh with Morgan Stanley.
Just a couple of questions, if I could. First is on UMG. I wondered if you could just tell us whether you want to eventually retain control of Universal long term, whether you might consider potentially just spinning the shares to your shareholders. And in that context, I'm wondering whether you could just clarify, maybe for Hervé, what the tax basis is for Universal. I know the book value is about $8 billion but interested to know what tax basis might be. And then just secondly, I'm interested in the comment, I think, Hervé has said. You mentioned on the streaming revenue growth in the first quarter, there was an impact from the Facebook agreement. I wonder whether that was material in the quarter and whether there was also an impact from the agreement you signed in December with Tencent. That would also be very helpful.
So I will take the first one. And I think that 3 years ago, there was a question asked about if Vivendi would be a seller of Universal Music Group. And I think that the CEO of the company said that it would be over his dead body. So as part of the strategy of the group, clearly, Universal Music Group is the backbone of this strategy. This is a part of the company, which has, in our view, a great potential. To the point of getting a full disposal is, for the time being, not on the radar. We want to be, as I said previously, very organized in terms of the different options available of us as regard to the evolution of the capital, as I said previously. But the full disposal of the assets, from where we do stand, is not on the agenda. Hervé?
Well, it's difficult to answer to the question on tax basis because precisely one of the difficulties for Universal Music is that, today, we have several holdings in different [ jurisdictions ] in our business. Everybody knows UMG as an entity, but, in fact, this is a business unit. As you know, legally speaking, we have several holdings in different countries, and we need to organize that to have one single holding in one single country in order to be able to open the capital or to make the capital evolve at UMG. So that's precisely what the board greenlighted us to do in the very short term and to launch those strategies and to realize the operation in the coming weeks and months, I would say. But to answer the question regarding the specific contracts of Universal Music in the first quarter, I can say that concerning Facebook and YouTube deals in Q1, the financial terms of these deals were not disclosed, so we cannot give specific figures on this. But it's fair to say that the Facebook deal contributed to our streaming growth in Q1 2018. So the YouTube deal for itself is more about content control, and everyone begins to address the issue of differentiating what's available on YouTube's ad-supported tier and paid subscription tier and significantly increases the content of YouTube to have a better management of music content on its platform, and this will take some time to implement. To speak also on the Tencent deal, yes, we have begun this quarter to include streaming and subscription revenue as a piece of the Tencent revenue as that reflects the underlying operating activity in the Chinese market. The prior year quarter's revenue from China was also expected to move revenue from other digital into streaming and subscription, and we have now received more detailed reporting on that revenue. The Tencent deal started in second quarter of 2017, and the first quarter 2017 still included China revenues from nonexclusive deals, to be precise.
That's very clear. I just had one follow-up, if I may. Arnaud, do you have a sense of the time line for a consideration on UMG in mind?
No time line has been defined. We started the process with a fully backup of the Supervisory Board today, and we'll report back in due time. But no time line decided at this stage.
Our next question comes from Julien Roch from Barclays.
Yes. First question is on Universal, 4.5% organic in Q1, 7.2% at the end of April. If you assume equal weight for all 4 months, then UMG should be up 15% in April. So do you agree with that? And can you give us any color on streaming, physical and download or one-off because, obviously, 15% organic is a good performance. That's my first question. My second question is any one-off in music in Q1 because, in the past, you had a lot of one-off depending on the quarters. And my third question is you've changed the way you present cap [ per ] subscribers, so could we get the equivalent of the 4,950,000 that you reported in Q4 '17 for Q1 '18, please? [Foreign Language]
Well, first of all, to answer the question on the month of April, well, in fact, we decided to disclose something regarding April because we saw significant changes and trend considering ad quarters in comparison of the first quarter at all. So when you make the calculation and you take 4.5% for the first 3 months and 7.2% at the end of April, I think you are right in your calculation to find something like 15% of growth in April, [ history ] math. In fact, this growth is largely driven by subscription and streaming, which is the main reason for this big increase, thanks to the increase in the number of subscribers to the platforms. And you have seen very recently announcements made by both Apple, Amazon and Spotify and [ Deezer ] explaining that they have a significant increase in the number of paying subscribers. So this is due to the timing effect because of the first -- during the first month, as you know, they are trialist. And then after a couple of months, they pay full price. And we have this effect coming significantly in April, thanks to the great increase in the number of subscribers in the past month. This being said, there is something also of some slippage in physical sales during Q1 and Q2, especially in Japan, which explained that the figures for physical in the Q1 were quite low. You've seen a decrease of 26%. And probably in April, we have better figures for physical. We'll see what will be the figures for physical in the whole second quarter. But frankly, we have better sales in the second quarter, especially in Japan and. If you see on the 4, 5 better sales in recorded music in April for Universal Music, there are 3 coming from Japan. And also, this is an important thing to have in mind. To answer your question on the one-off, there is no specific one-offs in the Q1 2018 regarding the music. And concerning the question on the subscriber base at Canal+, can you -- will you -- I did not understand the question, in fact.
You've changed the way you're reporting subscribers for retail subscribers in Canal+. So you're not excluding CanalPlay, while in the past, you were including CanalPlay. So the numbers you've reported is not comparable to what we had before, so I was hoping you could give us the numbers on a comparable basis. So you reported EUR 4,950,000 in Q4. And today, you reported EUR 4,751,000.
Okay. You -- I understood the question. Well, you will find all the details regarding the subscriber base in the appendix of the slides.
[Operator Instructions] We'll move on to Laurie Davison from Deutsche Bank.
First question is just on the UMG options. Can you just outline exactly what options will be considered by the board and that you're actually exploring at the moment? Second question is just over the criteria by which you'll be assessing those options, what are those? And the third question is you've given EUR 500 million for Canal. You've given EUR 500 million EBITA guidance for 2019 pre exceptionals. If we see League One costs come in flat, where do you think that could be in 2020?
On your first question, different possibilities at this stage, which include either a partial IPO or a sale of a stake to a third party or taking on a partner. So again, those are the kind of the 3 main options available to us. As regard to the criteria, we are working on the different criteria. So we'll report back in due time.
I just can add one very important criteria will be the valuation of the music business. And obviously, this is a great concern for us and for all our shareholders to have the best possible valuation of our business in such operation and options, indeed. To come back to the more precise question on the guidances on Canal+, we have given at the beginning of the year guidance of EUR 450 million of EBITA pre restructuring at Canal+ current year 2018 and EUR 500 million EBITA pre restructuring for 2019. We have not yet given any guidance after that.
Okay. Just one follow-up. You mentioned valuation is very important. You've previously mentioned figures, I believe, of over EUR 40 million valuation. Do you still stand by those?
Well, the math is the best, I would say. So we'll see what -- when you see the valuation of Spotify in the market, it's interesting to see it. And we do believe that the value of UMG is largely above that, but we'll see what will be the different options.
There is no crystal ball. 4 years ago, the valuation was EUR 7 billion, but the market has changed. The spread, as we got to the valuation, is a huge spread. Some of your colleagues have made some assumptions, quite bearish, and others quite bullish. What we need is to really being able to set the criteria to give what we think is the right value of the business. We're working on that. But as you know, we always said and we maintained our optimistic view about the potential of the market.
And our next question comes from Lisa Yang from Goldman Sachs.
My first question is on streaming. So based on your comments about a very strong April and we have the launch of YouTube Music coming in May and probably Tencent music again from strength to strength, would you expect Q2 and the full year to be much stronger than the 31.5% you reported in Q1? Secondly, you previously said you expected to gain market share this year, I mean, at the UMG level. Would you still maintain that view based on the current trends? And lastly, on pay-TV France, I think [ Frédéric ] recently mentioned that March was exceptional and transferred back to positive, but yet your lost customers and revenue would still be down. So just wondering, have you seen a bit of an inflection in March with the subscriber number, for instance, positive? And how should we think about April and May?
Well, for the -- we are not providing specific guidances for the music streaming and subscription business for all the year, but you see the trend is very good, and we have very good news concerning this part of our business. So we have said that we are confident in the prospects of our businesses, but we don't want to commit ourselves to very precise guidances for all the years. We'll see where it goes, but we are very satisfied with the current head of this business. For the market share of Universal Music, we also can say that it depends a lot on the different releases that are going on the market, and we are very satisfied with the pipeline that we have. And the market share of UMG, as we can see from external reports, a slightly increase in the recent months, I would say. So third question was concerning Havas, I think, on the current trend of the business. So you -- you have seen that we have very good wins in the first quarter of the year, and probably the market and advertising can improve a little bit during the coming months and quarters. So we are also confident in the development of the business in the coming months, I would say.
So my last question was actually referring to Canal+. I think much of what you said the trends were back to positive, so just wondering, is it basically March? And how do you think about April and May?
Well, you see we -- in the music business, we have given some precise figures in April precisely because the trend wasn't a bit different than it was in the first quarter. So if we would have had something very different in Canal+ of the trends in the first quarter, we probably would have disclosed something new regarding Apple, which is not the case.
Our next question comes from Richard Eary with UBS.
Yes. A couple of questions, please. Just first of all, just going back to the streaming growth in April. Just can you confirm that growth is actually above what it has in the fourth quarter? I mean, you said that April was driven by subscription but some phasing for physical in Japan, so that's the first question. The second question is that how much specifically was the slippage from Q1 into April from Japan, so we can just get an understanding of the magnitude of those releases? The third question comes through to the actual deals that were signed with the platforms, specifically Spotify last year, where obviously, we saw a change in the take rate. As I understand it, those come into effect from -- or came to effect from May last year. So does that headwind get removed from May this year? Or is it from June onwards? The fourth question is on Tencent. I don't know whether you can disclose what your position is in Tencent as part of an earlier agreement and what your plans are for that business. And just lastly, with regard to capital returns, you talked about proceeds for M&A. How do we think about capital returns, both from Ubisoft and also from a partial sale of UMG if that was to materialize?
Well, if I can answer to the beginning of your numerous questions, I would say, indeed there is a large part of the growth in April, which is linked to the streaming and subscription growth, but we don't want to enter in a month-by-month disclosure of the growth of streaming and subscription physical from -- on that. Just that we wanted to give you some flavor about what happening in this business in April. So slippage in the physical sales mainly occur in Japan during -- between Q1 and Q2. So you will see that we had a very big decline in the Q1, but the general trend in this business of physical sales is still to be declining from some lower decline some quarters. Sometimes we are just unstable, so you can imagine like what can be the magnitude of that. And the slippage doesn't explain, in itself, the increase of the sales in April in comparison to the first quarter. Clearly, the increase comes largely from the streaming and subscription businesses, which are already in big rate of growth of 31% in the first quarter, so we can imagine that is above that in the month of April. Well, I think that for the new deals that we have, given some information, it's very difficult to give more precise and to disclose more precise things regard -- regarding them. Then for the capital return, we have never -- we didn't have -- take any commitment regarding the dividend. You have seen that the last general shareholders' meeting, we have approved an increase in the dividend coming from EUR 0.40 to EUR 0.45, and that we have said -- explained that we have a return of something like 2% in comparison to the fewer setbacks. But we haven't yet said anything regarding the commitments for this year.
Can I just ask a sort of a follow-up confirmation question? If we're going back to -- I'm sorry to harp on about the streaming side. So if we just look through the first 4 months of the year without obviously having specifics month-on-month, have we seen an acceleration in streaming revenue growth through those 4 months?
We have already given many, many details on that. So you see that clearly in April, we have an acceleration. So it's -- which is -- and we disclose on the quarterly basis, which is already a good thing. I don't think that we will intend to go to month-by-month disclosure on that aspect. So the trend is good.
And we'll take our next question from Matthew Walker from Crédit Suisse.
Just 2 questions, please. The first question is on iTunes. So there have been some reports that iTunes may shut -- Apple may shut down iTunes, maybe at some point in 2019. There have also been reports saying that that's not true. Could you maybe give us an update to the best of your understanding? And if it did shut down, how would you -- what would be your strategy to cope with that? And then the second question is really on the music business. We discuss physical quite a lot. What about the downloads? Do you expect the sort of minus 20-ish number to continue through the rest of the year? Would that be a logical conclusion from the growth of the streaming side that the downloads would see a decline of 20% or maybe even slightly more than 20%?
Well, thank you for your questions. The first one, it's concerning iTunes. And you're referring to some press article, so [ Rodolphe ], in fact, but we -- for our perspective, we have no specific information coming from Apple that they could close and -- their iTunes stores business. In fact, we see -- to the second question of your -- of you that there is a constant decline, I would say, of downloads from month after month, and this trend is very constant. So roughly 20% month after month. So we'll see what happened. Nobody believes that downloads could increase again. So the trend is very clear for the downloads up to the point in which there will be no downloads one day. So -- but the trend is clear.
And we'll take our next question from Stephane Beyazian from Raymond James.
New set of rules for SVOD and cinema financing have been decided at the European level and I think there is a -- also a section at the French level. I was just wondering whether year-over-year can anticipate any sort of impact. Either on financials for Canal+ or perhaps, the competitive environment and I was obviously thinking of Netflix there. Do you have any color you could add around these rules?
No, not really, no specific information on that. We are very -- we are looking precisely to the possible evolutions in the regulation to European level or French level. We hope to have better regulation for us, but we do not anticipate very specific -- in the very short term.
What we can add on top of that is that there is a meeting which is organized early June to be able to address with some key people in charge of this aspect of European regulation in Brazil. And we are obviously, absolutely keen to define a competitive environment where we are going to be able to compete at arm's length. And clearly, you're mentioning Netflix compared to Canal+. As you know, Canal+ is a key player in the financing of the movie industry in France. We are developing our business in AV regulated environment. We just want to acknowledge the point that consumer behavior is changing, that the economics of our business model are also changing. But we also know that when you got a competitor which doesn't think that the local so-called French rules are compliant with his vision of the world and that he can compete in your market not using the same rule of the game, it creates a differentiation in terms of competitive positioning. So hopefully, we'll be able just to nail that down. And the sooner it's going to be, the better. So we want and we develop resources to be able to - with national or at regulatory bodies, but also at European level, being able at last, to be able to create a competitive environment, which will enable us to compete even more -- at -- in a more regular way, should I say.
And if I may, just to follow-up. Last year, you also had some rules relaxed on Canal+. Are you also able already to -- have you put, sort of, in action some of the relaxed rules that you are now able to implement for Canal+? Is that -- I mean, do you have any sort of examples of how it makes the life of Canal+ already easier today?
Well, I mean, this is a question which could take a much greater type of discussion. But obviously, when you invest in IPs and you develop content, the possibility to use the content you have invested in, in different platforms, which is from myCanal, which is Canal+, which is our free-to-air business, which is the CanalPlay, our OTT service and so on and so forth is, one of the theme. When you see the kind of capacity as a broadcaster to be able to benefit from better environment as regards the relationship in your -- in our investment as producer with our broadcasting operation, it's better. So there is a whole list of -- and you're absolutely right, which are currently providing us with a fairer way of doing business, and it's been a kind of very pragmatic approach of the Competition Authority in France. As you know, it's been kind of a first step. There is a new rendezvous which is planned by 2019. But the world, as I said previously, is changing. And we need to get regulatory bodies, which are taking into account that we need to cope with the evolution of technology with the consequences of convergence with an economic environment and competitive environment, which is becoming more and more global. And I think that if we want European player to be able to compete at worldwide level, we need to create an environment which will provide them to be able to achieve that goals. And so this is something that, as Vivendi, we are very keen and very proactive in creating that environment. But as regards to what happened last year, obviously, there are a full list of consequences which have helped us in being able to be more competitive and more modern and more proactive in playing a great role and a key role on the -- all those changes.
And very last one. Any update on the Ligue 1 option?
Sorry, Stephane. You -- so there is a process that has been launched, and we are in the process.
Our next question comes from Louis Citroen from Arete Research.
Just one question for me, maybe more on the philosophical side. So Spotify has IPO-ed, saying that they want to take their gross margin up to 30%, 35%. I guess, how do you view this in terms of your future renegotiations with them? And how do you think that relationship evolves when your main distributor gives such objectives?
Thank you, Louis, for your questions. The journey with Spotify, with the benefit of hindsight, has been a journey where there has been a common objective, which was to create the very best relationship, economic relationship, definition of the [ world ] game. Just to be able to open a new chapter for the recovery of an industry which was in the doldrums. And the facts, when you see what happened in the different stages of that relationship over the past 4 years have proven that there is a kind of a common interest in building the momentum and building the right economics for the industry, point number one. Point number two, I have read through the more than 1,000 pages -- I mean, quite speed reading in some aspect of this paper. But defining the ambition and the strategy and the business plan Spotify, and obviously, they want to make money and we want them to make money, because we need some players and key strategic partners to be in a position to be profitable and we'll be very happy to get sustainability, provided by a high level of margins. But you've got quite a few means to be able to reach that goals. And it's not only based on the kind of relationship in terms of margins between a producer and the distributors. And there are many other aspects, which will provide Spotify to be able to reach that margin objective. One of them for instance is pricing. So I'm not going to dwell into that, but I do see the relationship with moment -- with Spotify to be an ongoing positive relationship. And let's not forget that the sustainability of the industries will be based on players incumbent and participant of the industry from the production, from the artistic side and from the distribution side, which will create a win-win-win type of relationship, and this is what we want to build. And last but not least, in terms of relative, competitive positioning in terms of the industry, it's one of our key partner, obviously. But let's not forget that Universal Music Group is working with currently more than 400 digital platform worldwide. And there is another one, which is pretty active, which is the Apple streaming music, which has also great momentum. So again, we have a very pragmatic approach, and we just wanted to be able to be at the leader of the market from the production side to play our role in shaping the industry in the interest of all the incumbents.
We'll take our next question from Conor O'Shea from Kepler Cheuvreux.
Just a couple of questions as a follow up. Just on Universal, and sorry to go back on this, but given the dramatic pickup in growth by a factor of 4 between the first quarter and April, somewhat surprising given that streaming should normally make it less volatile month-on-month, the growth. I think you said that there were no litigation settlements in the first quarter. Were there any in April? Or any other factors beyond just the natural growth of the streaming base that were driving that acceleration? And also, can you give us perhaps an indication of the full year Forex headwind for UMG? Second question on Havas. You're disclosing the numbers, excluding Arnold's. I may have missed this, but -- so that you -- you're selling the U.K. business to the management? And I -- in a wider sense, what are your plans for Arnold? And why are you making that particular disclosure? And then the third question, just to follow up on the Ligue 1 tender, obviously, Ligue 1 has disclosed it's looking for an increase of 1/3 versus the previous contract or will otherwise push the tender out 2 years. We've seen some other markets like U.K. and Italy see a significant decrease in the case of U.K. and also a change in ownership in Italy. Just wondering, is there anything else that you can say going into this tender about your frame of mind with some of your competitors in disarray as well? Is this a big cost opportunity for you?
Well, let me first say concerning Universal, so that I can confirm that we have no onetime, at any time or no litigation settlement in the first quarter. And this is purely natural growth, relying on the different businesses, but especially for subscription and streaming, increasing number of clients and customers. I cannot provide more, a precise figure for the full year on UMG indeed. Concerning Havas, more specifically Arnold, I know Arnold quite well. It is a very good agency with a great history. And Arnold is mainly in Boston. This is a Bostonian agency of the group with a great history in it, and this is a company with a famous name in advertising in the U.S., so I am sure that after a very bad year at Arnold specifically linked to some losses of clients, some of those deciding to put advertising in house, this is not necessarily only question of competition. But Arnold will recover one day, so we have to reshape maybe Arnold. We have taken some decision in terms of management at Arnold, and we are very confident in the management and new management in Arnold in the U.S. This is a great story, a very great name in U.S. For the Ligue 1 football rights auctions, I just want to say, as a finance, CFO, that we don't want to [indiscernible].
And I could just reinforce the point made by the CFO.
And we'll take a question from Tom Singlehurst from Citi.
Tom here from Citigroup. So yes, I do appreciate you don't want to get into month-by-month commentary, but given you guys did bring up April, I've got to ask about it. Again, the advance payments and minimum guarantees, is there any lumpiness at all in that streaming number? Because as it kind of alludes to, I suppose the confusion comes from us thinking about this as a mechanical revenue stream and if there's such a big delta in April, it seems odd that it would -- suddenly the growth rate would come back down again. Second question, specifically on physical. I mean, obviously, you've mentioned the phasing from some of the Japanese titles slipping into April, which is fine. But you obviously had a very strong performance with a couple of key titles like the Black Panther official soundtrack and lower if we look back a year, the comp in terms of physical, sort of, growth was -- is relatively difficult in the second quarter, partly, I guess, because you were anniversarying the sort of rerelease of Sgt. Pepper's. I mean, can you just go through the anticipated phasing through the year for perhaps the physical? Because last year would suggest second quarter and fourth quarter would be the toughest periods. Those are my 2 questions.
Okay, thank you for your questions. On the first one regarding minimum guarantees. It's -- I would say that they are generally not disclosed. So it's very difficult to give precise information regarding the impact of minimum guarantees in our figures. In several contracts, we have minimum guarantees, but we cannot disclose anything regarding that. On the phasing of physical, it's very, very complicated to be precise. Depends completely on the schedule of releases. And very often how artist want to have very, very perfect records. So they prefer sometimes to wait for the launch of the records and to be specifically focused on the cutoff of the quarterly result of Universal Music. So this is why it's very difficult to give such, I would say, phasing or planning of physical, so yes. So the trend is clearly for physical to decline with ups and downs from one quarter to the other. But frankly, I cannot predict that much more precisely.
Well I think that we are now done. Thank you for your presence. Thank you for your questions. Thank you for your interest in Vivendi, and very much look forward to getting back to you at the end of July. I appreciate it. Have a good evening. Bye-bye.
Bye-bye.
Once again, ladies and gentlemen, that does conclude today's conference. We appreciate your participation today.