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Vivendi SA/ADR  (NASDAQOTH:VIVHY)
Q3 2018 Earnings Conference Call
Nov. 15, 2018, 12:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

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. Herve 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.

Arnaud de Puyfontaine -- Chief Executive Officer

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 Herve 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 nine 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 nine months of 2017, these good results were fueled by our three 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 artists keep topping the charts. For the last week of September, UMG had nine out of 10 top 10 albums on the Billboard 200 chart in the US. This is the first time in nearly five years that the Music Group has achieved this performance since 2013, when it was achieved by UMG.

On the TV side, we have had lot of very positive news over the last few weeks. Canal+ Group won the exclusive rights to broadcast the English Premier League for the 2019-2020 free period in France and Poland. It also announced the renewal of its agreement with French cinema authorities. The movie Sink or Swim or Le Grand Bain in French and the series Le Bureau des Legendes 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 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 pre-selected over 15 banks to help identify one of several strategic partners for UMG. We will hold working session with all of them before the end of the year and we will retain six or seven 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 the 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 for work 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 milestone 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 under way 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 nine 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, Herve.

Herve, over to you.

Herve Philippe -- Chief Financial Officer

Thank you very much, Arnaud, and good evening, good afternoon or good morning to everybody. Let me just begin with Slide number 7 with the main changes in the scope of consolidation and currencies. The main change in the scope of consolidation was obviously is a consideration of Havas, since early July 2017. On the challenging currencies, as you can see, the euro continued to strengthen against the main currencies compared to the first nine months of 2017. The impact of these currency fluctuations are primarily conversion-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 nine months 2017 and full year 2017 revenues were restated in the net amounts of EUR48 million and EUR57 million, respectively. These restatements are essentially gross-up adjustments with no material impact on the net margins and related to Gameloft, certain Canal+ Group contracts and 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, Vivendi has restated the 2017 figures, therefore the data presented in the following slides related to nine months of Q3 2017 and 2018 is comparable.

Let's move to Slide 8, with the revenues by business unit. For the first nine months of 2018, the Group's revenues reached EUR9,847 million, up 4.6% organically, mainly due to the solid growth at Universal Music, plus 9.1%. Canal+ Group revenues amounted to EUR3,822 million, that is 0.8% growth. Havas contributed EUR1,587 million to the Group's revenues in the first nine months of 2018.

Revenues from the other businesses amounted to EUR315 million. They include Gameloft, Vivendi Village and the new initiatives as well as intercompany elimination. Combined revenue grew 2.4% organically. Exchange rate fluctuations negatively impacted revenues by EUR330 million in the first nine 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 a good momentum in North America and growth in Europe, notably due to better performances in France and United Kingdom.

I'll now comment on 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 nine months 2018, streaming and subscription revenues represented 56% of recorded music revenues compared to 17% in 2014, demonstrating the rapid shift of the industry. This strong increase is accelerated by the decline in physicals sales, minus 16.3% year-on-year; and in download and other digital sales, minus 24.5% year-on-year.

In nine 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 US. UMG songs occupied the number 1 spot of the Spotify Global Chart 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, are 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 Group revenues for the first nine months. Total revenues were up 9.1% organically. Universal Music Group's revenues for the first nine months of 2018 exceeded EUR4 billion standing at EUR4,123 million. 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, is a sound growth, which continued to accelerate in Q3, was driven by continued growth in subscription and streaming, coupled with the strong performance of UMG's artist. For the first nine months of 2018, best sellers 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 from 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 nine 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 three 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 or a 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 Paul McCartney's latest album and the Mamma Mia soundtrack has stabilize the decrease in the physical sales. In Q4, the 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 a 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 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 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 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 Canal offer. In Q3 2018, new subscribers are 20% more than in Q3 2016, and sees the best third quarter since 2011, except in 2017 with the arrivals of Mbappe, and Neymar at Paris Saint-Germain which boosted subscription exceptionally.

It is also worth mentioning the good traction of the Canal+ channel, while 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 trend is still satisfactory with the 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 nine months figures on Slide 19. As mentioned before, total revenues were up in nine months 2018 plus 0.8% organically. Regarding the TV operation in Mainland France, revenues were down 3.3% year-over-year. As seen earlier Pay-TV in Mainland France activity is stabilizing and continues to benefit from good commercial and retention performances, as well as revenues from wholesale agreements signed with three out of the four 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's 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 streaming on ticket sold milestone three weeks after its release.

Going to Slide 21 on 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. We had 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 grew -- 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; on Carrefour, China Telecom, Blizzard Entertainment, De Beers and Papa John's Pizza on the Media side. In the healthcare segment, we won new deals at Novartis and Pfizer among others. And lastly, in October we won notably Puma at a global level on the media side and all the customer relationship management program of Henkel in France.

Moving to the Slide 23 on 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, plus 0.6% and there has been noticeably good momentum especially in France and the UK with a 10.5% organic growth rate for the UK.

On Slide 24, let me give you an update of the successful integration of Havas within Vivendi. Synergy initiatives within the group have multiplied and are being implemented through country based committees established now in 10 countries and big global brand committees. The organization is very fluid and allows the 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 four intelligent ads and games; Carrefour with UMG in Spain with local younger artists and also in France the National Rugby League with both UMG and Canal+.

Regarding the Annex agency, it continues its development with the creation of a subsidiary with Capitol Music Group, CMG, a level 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 the first alliance between an American agency and a record label. It will allow collaboration between brands and artist. This innovative partnership between two Vivendi entities will offer new revenue opportunities.

To conclude, on Slide 26, Vivendi achieved very solid performances in the first nine months of 2018. For full year 2018, Canal+ Group is close to achieving the objectives set the division activities will achieve their goals. Canal+ Group is close to achieving the objectives set. Television activities will achieve their goals. Studiocanals may end the year slightly behind despite the success of Le Grand Bain.

And as previously announced, Havas expects better organic net revenue growth versus second half of 2018, thanks to major account wins in the first half of the year.

Thank you for your attention and we're now ready to answer your questions.

Questions and Answers:

Operator

Thank you. (Operator Instructions) We'll take our first question from Charles Bedouelle, Exane.

Charles Bedouelle -- Exane BNP Paribas -- Analyst

Good morning, everyone. Thanks for taking the questions. A few questions I suppose. The first one is on Havas, you've been reporting Havas excluding Arnold for a few 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, 16 times EBIT seems like a -- a relatively high multiple, and so maybe 17 is not right earning base we should think of or maybe there are other synergies that would be very helpful.

And the last one is on Music (inaudible) 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's your objectives were for Music, notably for the year? That'd be helpful. Thank you.

Herve Philippe -- Chief Financial Officer

To answer the question -- the first question on Arnold, Arnold is not for sale. In fact, Arnold -- which is very independent agency in fact, which 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 -- in the beginning of 2018, meaning that this agency has completely change 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 launching of Arnold which is still a very great name and very good agency in the US. So frankly, Arnold is not for sale today.

And to answer the question on the targets, 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 for 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 EUR450 million of EBITDA before restructuring and this is about -- this targets that we have given some comments saying that we were in line for the television activities but we are probably a little bit behind for the Studiocanal part.

Charles Bedouelle -- Exane BNP Paribas -- Analyst

Thank you very much. And maybe a very quick follow-up if I may, on the UMG process, you've been very clear about the proceeds in your press release. So, that's very helpful. I was just wondering does that exclude any part of the proceed being paid in shares by some of the buyers, because that would be more difficult to do a tender offer with -- if you have a share payment, that will not exclude anything? Thank you.

Arnaud de Puyfontaine -- Chief Executive Officer

Bonjour. Arnaud de Puyfontaine, I think that you move 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?

Charles Bedouelle -- Exane BNP Paribas -- Analyst

Yes, as well.

Arnaud de Puyfontaine -- Chief Executive Officer

Yes. So good, so I'm going to give you a few tips as we got to the Editis transaction. As we got to reach price paid, I mean, time will tell, and let's set up a (inaudible) three 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 scale asset which is providing regular and steady results, with a caveat -- with a prerequisite which is to compare like-for-like numbers and as we said on 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 programs, which are important for Editis because we've got two quite a high expose brand in the business, Nathan and Bordas. You would have a multiple of 9.6 times EBIT. So the point I want to make is, it's a good business, it's absolutely fit for purpose, as regard to our strategic agenda, it's a stable business. But obviously 2018 numbers are in the kind of a 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 are 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 these potential transactions, it's going to be on a cash-only basis.

Charles Bedouelle -- Exane BNP Paribas -- Analyst

That's very helpful. Thank you.

Operator

Our next question will come from Adrien de Saint Hilaire, Bank of America.

Adrien de Saint Hilaire -- Bank of America Merrill Lynch -- Analyst

Yes hello. Good evening everyone, and a few questions please on my end. So Canal+ has made a few investments in content off late, Champions League with SFR, Premier League distribution of TF1. Does the 2019 guidance still hold of about EUR500 million of EBITDA?

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 series earlier in July.

And thirdly, I know -- 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? Thank you.

Herve Philippe -- Chief Financial Officer

Maybe, I can take the two first questions?

Arnaud de Puyfontaine -- Chief Executive Officer

Please do.

Herve Philippe -- Chief Financial Officer

And in fact for Canal+ you see we have given some color on -- on the end of this year especially on Studiocanal. So we'll be -- probably I'll 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 will make our call for the full-year 2018 on February 14, we'll update at that time of 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. But we will be more precise at the beginning of next year. For the specific one-off from 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.

Arnaud de Puyfontaine -- Chief Executive Officer

Thank you. Bonjour 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.

Adrien de Saint Hilaire -- Bank of America Merrill Lynch -- Analyst

Okay, well that's very, very clear. If I could just squeeze in one more question around guidance. At 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?

Herve Philippe -- Chief Financial Officer

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 release scheduled for this four quarters with some releases like Imagine Dragons, Gregory Porter and some others which are in the US. So we are optimistic, but we don't want to give precise figures for this Q4 for Universal Music.

Adrien de Saint Hilaire -- Bank of America Merrill Lynch -- Analyst

Very clear, thank you everyone.

Operator

Next up, we'll hear from Matthew Walker, Credit Suisse.

Matthew John Walker -- Crédit Suisse AG, Research Division -- Analyst

Thanks and good evening. I've just got two 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 died (ph) deals with artist, the taking of the stake in DistroKid et cetera. You saw they launched Ed Mena (ph) recently, but not yet in India. What is your sense, do you think that competition is shifting and do you think the platforms are edging toward trying to be much more aggressive against the labels? So how do you see that playing out?

And then to get back to Canal+, I think as a said, you know, while we're not giving guidance right now, we'll do it in February for Canal+. But you also said there is 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 cost for Premier League and Champions League actually are? Thank you.

Arnaud de Puyfontaine -- Chief Executive Officer

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 statement, and he always reiterated the points that he didn't want to create disintermediation in the value chain, but he wanted to think about potential licensing deal.

The points 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 artists, songwriters, labels, publishers and digital platforms, and most importantly fans.

So in the Group 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 artists, and there is a very, very great alignment 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. Herve?

Herve Philippe -- Chief Financial Officer

Well, on Canal+ to give some clarity, I would say -- I have said that we will give more precise guidance in February next year. It will depend on the final figures for 2018 indeed and also of what can these new developments at Canal+ that can happen also. So that's why we don't want to be too precise of that today because -- but we are very confident on 2019 targets, which have been issued (inaudible) on past.

To complete my answer, we can add that for the this new costs I would say in terms, what we have won in English Premier League, for example, Maxime Saada has said in an interview in (inaudible) the amount which has been paid was reasonable and in line with expectation and below what was previously paid by SSA (ph). But clearly this amount has not been disclosed and we are satisfied with the price, which has been, which has been paid.

Arnaud de Puyfontaine -- Chief Executive Officer

And I would add on that, as we said from the previous calls and the situation when you see with the benefit of hindsight's as regard to rise. 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 these and paying price which, in our view, are completely unsustainable and will then jeopardize the kind of the 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 these very strict discipline in mind and which has been applied.

Matthew John Walker -- Crédit Suisse AG, Research Division -- Analyst

All right, thanks.

Operator

From UBS, we'll hear from Richard Eary.

Richard Eary -- UBS -- Analyst

Thanks very much indeed, most of my questions just, just to sort of follow up questions. Just first of all, in terms of the full 50 number for Canal+ this year you said is in line with TV but slightly behind on Studiocanal. Are you not really given the huge amount of color on the profitability between TV and Studiocanal, can you just sort of clarify whether that's a 10 million, 20 million, 30 million, 40 million impact in terms of Studiocanal, so we can just understand what the magnitude is? The 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 impact flowing out of the Facebook and Tencent deals and Google deals that were actually signed it in December last year and April last year for Tencent. So just get a bit more clarity on that, that'd be really helpful?

Arnaud de Puyfontaine -- Chief Executive Officer

Wait, sorry, excuse me if just let Herve answer the previous question, which has not yet been done so, Herve the floor is yours. And then we will take your question, Omar. Thank you.

Herve Philippe -- Chief Financial Officer

Well, to answer the question on Canal+, I'd said you're seen in the year that the target was EUR450 million before restructuring, which is the figure we have given and the fact is today that we are confident in the path of the Television Actives but less on Studiocanal. We have not given more specific magnitude of what could be the impact of the EUR4 50 million target before restricting, but it is not for a large amount of (inaudible).

The answer to 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 fair to say that Facebook deal and YouTube deal, YouTube which have recently launched its subscription service they contributed -- they contribute to our steady growth in the nine months of 2018, but we cannot precise the amount of that.

Operator

Next up, we'll hear from -- Next up, we'll hear from Omar Sheikh, Morgan Stanley

Omar Farooq Sheikh -- Morgan Stanley -- Analyst

Good everyone. Just a couple of quick ones--

Arnaud de Puyfontaine -- Chief Executive Officer

Wait, sorry, excuse me. Just let Herve answer the previous question, which has not yet been done. So Herve the floor is yours. And then we'll take your question, Omar. Thank you.

Herve Philippe -- Chief Financial Officer

Well, to answer the question on Canal+, we -- I've said previously in the year that the target was EUR450 million before restructuring, which is just the figure we have given and the fact is today that we are confident in the part of the Television activities but less on Studiocanal. We have not given more specific magnitude of what could be the impact of the EUR450 million target before restructuring, but this is not for a large amount of offers.

The answer to 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 has recently launched its subscription services, they contributed -- they contribute to our streaming growth in the nine months of 2018, but we cannot precise the amount of that.

Arnaud de Puyfontaine -- Chief Executive Officer

Omar?

Operator

One moment and I'll open his line. Sir your line is open. Richard your line is open, can you hear us?

Richard Eary -- UBS -- Analyst

Yes, I can. I thought that answered my question. And therefore Omar was next one -- next in the queue.

Arnaud de Puyfontaine -- Chief Executive Officer

Omar are you online? Next question.

Operator

Omar, your line is open.

Omar Farooq Sheikh -- Morgan Stanley -- Analyst

Great, OK, right I think I'm now able to ask the question. So I wanted to just ask a couple. First of all, on the timing of the sale process, 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 for some of your benchmarks, since you spoke in July. That's the first question.

And then maybe a second one, going back to the third quarter streaming revenue growth number you mentioned Q2 as being one of the, perhaps expansionary factors in the third quarter. I wonder whether you could say -- quantify how much you've had and presumably that was only for one month in the quarter, given it was -- I think it was coming off the free contract period. And so if that's the case, should we anticipate that the YouTube music impact will be for three months in Q4. Thank you.

Arnaud de Puyfontaine -- Chief Executive Officer

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 months deadline. We stick to the initial planning and we don't want to be under any pressure as regarded to the possibility to lead the process and organize the process in the most efficient way, according to our objectives. So we stick to what we did announced end of July this year. Herve?

Herve Philippe -- Chief Financial Officer

Okay. But I'm not in a position on your question to be given on the third quarter the impact on the fourth. We can say that growth recorded in the third quarter was largely due to the number of subscribers to the main platform is absolutely what explain largely the growth of the subscription and streaming service and you have the growth of these number of subscribers, which is definitely known on the market. So, I cannot give more comments on that. Thank you.

Omar Farooq Sheikh -- Morgan Stanley -- Analyst

Okay, Merci beaucoup.

Operator

Our next question is from Laurie Davis, Deutsche Bank.

Laurie Davison -- Deutsche Bank -- Analyst

Hi there guys. First question, just on the impact from Canalplay on the Mainland from sub base, what was sub additions being without this lag and how many Canalplay subscribers is still washed through the system. Second question is, what was the impact of free channels in TV France division? And the third question is on the publishing revenues within Music, do you expect that fourth quarter, we are going to start to see lagged impacts 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 COB benefit. So are you expecting publishing to accelerate even if we face tough comps on the recorded side? Thanks.

Herve Philippe -- Chief Financial Officer

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.

And to answer the question on the, Free-TV, we gave a global figure for all of television in Mainland France, for both the Pay-TV and Free-TV, which has declined by 3.3% and we can say that the Free-TV and Pay-TV are in line and so there's no specific big difference between both. For the Publishing in Q4, whenever there is this interact for us, we believe that publishing knows a similar dynamic that is Recorded Music whereas the gross, in streaming and subscription, and we have also as a result of fleet growth, I would say in publishing. So performances are important in publishing too, I would say.

Laurie Davison -- Deutsche Bank -- Analyst

Okay and on the CLP impacts, CLP rise from next year? Do you expect that to add some publishing growth next year?

Arnaud de Puyfontaine -- Chief Executive Officer

Well, as we got to the COB and we obviously are pleased that the COB has been recognizing the value of music. But that being said, it's important to keep in mind that these new rates only applies to a small percentage of UMPG and the publishing industry over revenues. So as regards to the global impact, I'm going to hand over to Herve.

Herve Philippe -- Chief Financial Officer

Well, impact will depend on how much revenue CIUs earns in the coming years, I would say and how much they are able to carve out of their music bucket. So new rate is -- for the period is 15.5% of music revenue, significant step-up of 11% in 2017. That impact will depend on how much revenues we'll use in the coming years.

Laurie Davison -- Deutsche Bank -- Analyst

Okay, thank you.

Operator

We'll take our next question today from Tom Singlehurst, Citi.

Thomas A Singlehurst -- Citigroup Inc, -- Analyst

Thank you. Tom here from Citigroup, congratulations on a great quarter. The first question is just on the sort of trend. I know there's going to be volatility quarter-by-quarter depending on the release schedule and the phasing of the company. 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, the 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 both 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? Well, thank you very much.

Herve Philippe -- Chief Financial Officer

(Multiple speakers) 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 routes end of 30th of July and such a merger is not on the agenda. So coming back to the initial comments, you will have the answer to your question on that part. Now on the first part?

Arnaud de Puyfontaine -- Chief Executive Officer

On the first part, this is question, the volatility with sales and growth in different quarters, so on streaming and subscription, it can depend clearly on number of subscribers, it can also have some ups and downs coming from the market share and Universal Music has very well performed in the three -- first quarter of 2018. So we'll see some volatility into the fourth quarter. It is difficult to predict mainly due to the physical part of the sales of Universal Music.

Thomas A Singlehurst -- Citigroup Inc, -- Analyst

And have you got an idea of what the market blend in the third quarter? Would you speculate what that would might be?

Arnaud de Puyfontaine -- Chief Executive Officer

Sorry I don't understand the question.

Thomas A Singlehurst -- Citigroup Inc, -- Analyst

You were saying that you've 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.

Arnaud de Puyfontaine -- Chief Executive Officer

No, frankly, I have no figure for the global market, but we know that in Spotify for example, we have gained some market share, due to the big success especially Drake in the third quarter. So it depends on one quarter to the other of the different releases which can happen.

Thomas A Singlehurst -- Citigroup Inc, -- Analyst

That's very clear. Thank you very much.

Operator

(Operator Instructions)Next we'll go to Julien Roch, Barclays.

Julien Roch -- Barclays -- Analyst

My first question is now that 2018 is almost over and we only have six weeks left, can you give us an indication of how much restructuring we should expect at Canal+, because your guidance is pre-restructuring when most people look at numbers post restructuring. That's my first question.

My second question specifically for Herve, is EUR30 million a large amount? 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?

Herve Philippe -- Chief Financial Officer

The first question was relating to the level of results at Canal+. No, I've given what I can give today. I will not give any more comments or details than those figures. The second question is--

Julien Roch -- Barclays -- Analyst

It is 30%--

Arnaud de Puyfontaine -- Chief Executive Officer

The Modernization Act, was it that question?

Julien Roch -- Barclays -- Analyst

The first question was on Canal+ restructuring. So you're now 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, it either leads to higher or lower margin and Billboard seems to believe it will lead to lower margin. So wanted to know whether you had already modeled the potential impact of the Music Modernization Act on Vivendi overall?

Herve Philippe -- Chief Financial Officer

Okay, thank you. It's just because we -- you are quite -- there is some difficulty. So in fact we do not anticipate that this will have a meaningful direct financial impact of Universal Music. This decision is very important for the benefit it brings to the ecosystem, especially for some writers, the artist before 72, engineers, producers, directors and so. So our artists were already receiving payments, but based on private agreement (inaudible) before 72. So it's too early, I would say to -- to imagine them to calculate what could be this impact. And we do not anticipate it to be meaningful.

Arnaud de Puyfontaine -- Chief Executive Officer

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 a swinging fact of Studiocanal as regard to the objective, but we wanted to keep the possibility to take good decision, especially in the context of what we did over the past four years and with the benefit of hindsight, we always have taken the right business and management decision on the 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 Herve's presentation to be keeping the room for taking good decision for the kind of a long-term value of the business.

Julien Roch -- Barclays -- Analyst

Okay, Merci.

Operator

Next up, we'll hear from Conor O'Shea, Kepler Cheuvreux.

Conor O'Shea -- Kepler Cheuvreux -- Analyst

A couple of questions from my side as well, so first question on Canal+, just to flush out a little bit more on Studiocanal, and maybe Herve 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 on stream. Just wondering, is there any ARPU impact of that.

Second question on Havas, you had great organic growth number in the UK, 10% which lifted the overall average. I couldn't identify if that was due to one particular win or not or whether -- what else are you confident of repeating that performance in Q4?

And then just a last question on UMG, I know this is a sales call, but you obviously had an excellent number on UMG in Q3 and a very strong lineup and strong charting in the US in particular in Q4, normally with heavy release schedule or 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? Thank you.

Herve Philippe -- Chief Financial Officer

Well, this is a call on the top line figures and not specifically on margins, so that's why I cannot give any precise answer on the level of margins at Studiocanal available or in average or below all Canal+ we're not giving some comments on that. And we have given some current information on the guidance to be very clear and transparent on you. But I cannot give any more details on that. On the ARPU -- on the ARPU side, it's quite -- it's more difficult to give some ARPU figures, especially at the international level because all the different mix of countries and so.

And in France also, we have some contracts with what we call is a possibility to cancel the subscription and so it makes the calculation more difficult to be consistent with what given in the past. And to answers the question on -- to give the precise example of the OTT offers, what can be the calculation of an ARPU with new subscribers on the OTT offers, which have a small price to entry and the freedom to release a subscription one month after. So that's why it's more complicated than it was in the past to calculate an ARPU, which was very simple.

And to answer third question on Havas, the question was referring to the United Kingdom, and that's true that we had a very good third quarter in Havas in the third quarter, it was -- they were negative in the first half, but very largely positive in third quarter. Thanks to some dynamism in the communication, especially in else with the agency Havas Lynx, but also in (inaudible) with Havas London which has recovered well, and media activity. So some main agencies in UK performed very well in the third quarter. Thank you.

Conor O'Shea -- Kepler Cheuvreux -- Analyst

Okay, OK.

Operator

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.

Arnaud de Puyfontaine -- Chief Executive Officer

Well, the addition is to thank you for listening. Thank you for your questions, and have great evening and we'll see you again early next year. Thank you. Good evening. Bye-bye.

Herve Philippe -- Chief Financial Officer

Good night to everybody. Thank you.

Operator

Ladies and gentlemen, that does conclude today's conference. Thank you all for your participation today. You may now disconnect.

Duration: 65 minutes

Call participants:

Arnaud de Puyfontaine -- Chief Executive Officer

Herve Philippe -- Chief Financial Officer

Charles Bedouelle -- Exane BNP Paribas -- Analyst

Adrien de Saint Hilaire -- Bank of America Merrill Lynch -- Analyst

Matthew John Walker -- Crédit Suisse AG, Research Division -- Analyst

Richard Eary -- UBS -- Analyst

Omar Farooq Sheikh -- Morgan Stanley -- Analyst

Laurie Davison -- Deutsche Bank -- Analyst

Thomas A Singlehurst -- Citigroup Inc, -- Analyst

Julien Roch -- Barclays -- Analyst

Conor O'Shea -- Kepler Cheuvreux -- Analyst

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