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Vivendi — Vivendi Universal — Merrill Lynch Investor Conference 2004
34 slides from Vivendi's conference presentation, Oct 7, 2004
Slide 1: Vivendi Universal Merrill Lynch Investor Conference
Vivendi Universal Merrill Lynch Investor Conference September 29th, 2004 IMPORTANT NOTICE: INVESTORS ARE STRONGLY URGED TO READ THE IMPORTANT LEGAL DISCLAIMER AT THE END OF THIS PRESENTATION
Slide 2: Universal Music Group
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Slide 3: Universal Music Group
Universal Music Group World's largest recording company World's third largest music publishing company Companies in 49 countries, represented in 71 About 10,000 employees
Slide 4: Market share comparison
Universal Music Group 1999 2000 2001 2002 2003 UMG 0.217 0.231 0.237 0.254 0.235 Sony 0.17 0.144 0.146 0.138 0.132 WMG 0.114 0.121 0.119 0.118 0.127 EMI 0.118 0.136 0.131 0.122 0.134 BMG 0.101 0.085 0.081 0.109 0.119 Source: International Federation of the Phonographic Industry (IFPI) Based on whole
Slide 5: Market share comparison 2003
Universal Music Group 2003 UMG 0.235 Sony/BMG 0.222 WMG 0.127 EMI 0.134 Source:UMG UMG calculation based on IFPI data and methodology Market share comparison
Slide 6: Latest YTD U.S. Retail Unit Market Share Data
Latest Y.T.D. U.S. Retail Unit Market Share Data 2004 YTD Market 0.087 UMG 0.105 Source: SoundScan (please see disclaimer on the last page of this presentation) CD Album Unit Growth UMG Current Album Market Share UMG accounted for 73% of sales of the Top 10 titles w/e 9/19/04
Slide 7: Universal Music Group
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Slide 8: The Industry is Turning the Corner
The Industry is Turning the Corner The promise of digitized music has become reality By July 2004, there were over 100 established online music sites with new sites being announced every week. Major US based services have been launched in Europe and elsewhere. Songs available on major services excee
Slide 9: Subscription services and mobile music growing
Subscription services growing - over 1 million subscribers Music to Mobile market has been steadily developing from ringtones to full audio and video delivery. Success in more developed markets in Asia and Europe bodes well for the U.S. and Chinese markets . Karaoke Greetings Videos Images Marketing
Slide 10: Anti-piracy initiatives are showing promise
Anti-piracy initiatives are showing promise Apr '02 Jun '02 Nov '02 Apr '03 Jan '04 Jun '04 600 500 900 1100 900 800 Unauthorized Music Files Available on the Internet Source: IFPI Internet Anti-Piracy Unit Research Millions The Industry is Turning the Corner
Slide 11: Physical sales declines are slowing
Physical sales declines are slowing - with markets growing in the US and the UK Source: SoundScan / IFPI / UMG 2003 Value Data: source IFPI based on retail sales value. 2004 Value Data: source UMG based on estimated wholesale sales value US SoundScan Units UK Japan * Music Market Growth * UK Music m
Slide 12: Continental Europe conditions remain difficult
.... but market conditions in continental Europe remain difficult France Spain Italy Germany Music Market Growth Source:IFPI / UMG 2003 Value Data: source IFPI based on retail sales value. 2004 Value Data: source UMG based on estimated wholesale sales value The Industry is Turning the Corner
Slide 13: UMG Revenue Breakdown by Location - 2003
UMG Revenue Breakdown by Location - 2003 North America Europe Asia ANZ/Africa Latin America 1965.8 2212.2 540.4 131.2 77.5
Slide 14: United States
United States #1 music market, with 37% of global sales in 2003 Retail music market value of $11.8 billion Domestic repertoire 93% Industry performance by retail value: (Local currency) 2001 -2.2% 2002 -8.2% 2003 -6.0% 2004 (1st Half UMG est.) +3.9% Universal Music 2003 sales: e1,770m Universal Musi
Slide 15: United Kingdom
United Kingdom #3 music market, with 10% of global sales in 2003 Retail music market value of GBP 2 billion Domestic repertoire 47% Industry performance by retail value: (Local currency) 2001 +7.4% 2002 -2.2% 2003 +0.1% 2004 (1st Half UMG est.) -0.2% Universal Music 2003 sales: e629m includes e110m
Slide 16: Japan
Japan #2 music market, with 15% of global sales in 2003 Retail music market value of JPY 569 billion Domestic repertoire 72% Industry performance by retail value: (Local currency) 2001 -0.5% 2002 -9.3% 2003 -9.2% 2004 (1st Half UMG est.) -0.3% Universal Music 2003 sales: e424m Universal Music 2003 m
Slide 17: France
France #4 music market, with 7% of global sales in 2003 Retail music market value of e 1.9 billion Domestic repertoire 60% Industry performance by retail value: (Local currency) 2001 +13.5% 2002 +4.1% 2003 -14.4% 2004 (1st Half UMG est.) -21.9% Universal Music 2003 sales: e547m includes e102m for DI
Slide 18: Germany
Germany #5 music market, with 6% of global sales in 2003 Retail music market value of e 1.8 billion Domestic repertoire 48% Industry performance by retail value: (Local currency) 2001 -8.4% 2002 -7.9% 2003 -17.9% 2004 (1st Half UMG est.) -5.2% Universal Music 2003 sales: e323m Universal Music 2003 m
Slide 19: Universal Music Publishing Group
Universal Music Publishing Group U2 Paul Simon Shania Twain Bon Jovi Ja Rule Mary J. Blige Anastacia 3 Doors Down The Corrs Chemical Brothers Blink-182 Gloria Estefan Prince Diana Krall Ice Cube DMX No Doubt 1st Half 1st Half 2003 2004 Revenues 178 176 Net Publishers Share 73 72 EBITDA 52 49 e,milli
Slide 20: Mobile Music Market
Mobile Music Market in 2004: $3.4 billion of which 93% is non-master products (Source OVUM/BCG) Market in 2008: $12 billion of which 50% will come from master products (Source OVUM/BCG) Key drivers: - Handset development Mobile penetration High consumer interest Willingness to pay for content
Slide 21: Mobile Music
Mobile Music UMG has a division, Universal Music Mobile, dedicated to producing, adapting, creating, delivering and animating content for mobile use. Universal Mobile in its first full year of operation had sales of e30 million and EBITDA of e5 million. Mobile sales in the US represent over 20% of e
Slide 22: DVD Music Video
DVD Music Video 2002 2003 Units 0.063 0.07 Value 0.055 0.063 DVD Music Video Share of Total DVD Market Source: IFPI/Screen Digest
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Slide 24: UMG Financial Summary
UMG Financial Summary Half Year ended June 30, Actual Constant Rate % Actual 2003 2004 Change 2004 Revenue 2,168 2,168 0% 2,069 EBITDA 116 223 +92% 217 Depreciation -67 -48 -47 Amortization -74 -109 -103 Restructuring Charges -19 -35 -34 Music Clubs Impairment - -18 -18 Other Income 2 - - Operating
Slide 25: UMG Cash Flow
UMG Cash Flow Half Year ended June 30, Actual Actual 2003 2004 EBITDA 116 217 Working Capital & Other 262 16 Capital Expenditure (18) (15) Restructuring (15) (48) Cash Flow from Operations 345 170 e,million
Slide 26: Cost Saving Initiatives
Cost Saving Initiatives Restructuring Initiatives Review resource allocation in key cost areas of all countries and businesses to align the cost base with market declines Actions Overhead savings ; about 1,500 headcount reduction in the past two years A&R investment reduced in unattractive risk/rewa
Slide 27: Cost Savings Expected in 2004
Cost Savings Expected in 2004 A&R Costs 40 Marketing 90 Overhead 130 Savings 260 Less Additional Marketing (35) 225 Restructuring costs were e80m in 2003 and are expected to be about e70m in 2004 e,million
Slide 28: Projections
Projections Worldwide revenue is projected to decline slightly. EBITDA margin above 11% Operating Income margin above 5% Cash flow from operations: Below 2003 level, largely due to working capital and restructuring charges impacting cash flow in 2004.
Slide 29: Universal Music Group
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Slide 30: Recent Developments in the US Music Market
Recent Developments in the US Music Market 'JAN 02 'APR 02 'JUL 02 'OCT 02 'JAN 03 'APR 03 'JUL 03 'OCT 03 'JAN 04 'APR 04 'JUL 04 -0.065 -0.115 -0.058 -0.132 -0.092 -0.121 -0.125 -0.13 -0.116 -0.092 -0.173 -0.083 -0.133 -0.057 -0.12 0.02 -0.116 -0.071 -0.115 -0.079 0.039 0.068 0.048 0.032 0.105 0.1
Slide 31: The US Market this year
The US Market this year 'JAN 04 'FEB 04 'MAR 04 'APR 04 'MAY 04 'JUN 04 'JUL 04 'AUG 04 'SEP 04 UMG 0.098 -0.042 0.053 -0.066 0.12 0.151 0.231 0.169 0.161 Total Market 0.105 0.107 0.06 0.027 0.077 0.03 0.102 0.056 0.031 Source: SoundScan SoundScan Monthly Y.O.Y. Growth (Album Units)
Slide 32: Upcoming Release Schedule
Upcoming Release Schedule 2004 Key Release 2005 Key Release Eminem 50 Cent U2 Black Eyed Peas Shania Twain Sheryl Crow Nelly Enrique Iglesias Elton John Ashlee Simpson Mariah Carey Bon Jovi Toby Keith 3 Doors Down Andrea Bocelli P Diddy George Strait Kanye West Gwen Stefani Mary J Blige Ludacris Lim
Slide 33: Important Disclaimer
Universal Music Group Important Disclaimer This presentation contains "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are not guarantees of future performance. Actual results may differ materially from the
Slide 34: Vivendi Universal Merrill Lynch Investor Conference
Vivendi Universal Merrill Lynch Investor Conference September 29th, 2004
Vivendi Universal — Merrill Lynch Investor Conference 2004 on 6ix