Montreal-based media and spirits company Seagram Company (NYSE: VO) reported a narrowed fourth-quarter loss this morning due to strong sales at its Universal Music Group and an improved film business. Net loss for the quarter was $128 million, or $0.29 per share, compared with a year-ago loss of $129 million, or $0.32 per share, excluding a gain from 1998 transactions with USA Networks (Nasdaq: USAI). Consensus analyst estimates were for a loss of $0.35. Revenue for the quarter rose 6% to $3.7 billion, from $3.5 billion last year.
The world's largest music company, Universal Music Group saw revenue of $1.4 billion, a 7% increase from last year. Citing industry data, the company reported a 37.3% single-week market share of current albums at the end of May, a record for the U.S. music business achieved with the help of artists such as Eminem, Bon Jovi, Sisqo, No Doubt, Sting, Hanson, and Dr. Dre.
The company's Universal film division posted revenue of $827 million in the latest quarter, a 5% increase, helped by screenings of hits Erin Brockovich and Gladiator, jointly produced with other studios. The unit also distributed five of the top-20 selling DVD titles of all time: American Pie, The Mummy, End of Days, The Bone Collector, and Saving Private Ryan.
Visions of convergence
In June, Seagram announced it would be acquired by French media and utility company Vivendi, which has a large cable and wireless presence throughout Europe. The new company, to be called Vivendi Universal, will play "a leading role in the global convergence of telecommunications and entertainment media," and will have the ability to deliver content and services "everywhere, at any time and across all platforms and devices." In addition to Seagram's deep music and film catalogs, events during and since the fourth quarter helped move the company closer to its goals.
Universal Music and Sony (NYSE: SNE) announced the joint development of a subscription service to distribute music and video over the Internet. The company also granted a music license to Internet radio service ClickRadio and invested in DataPlay, a company developing disk recording media for Web-enabled consumer appliances and handheld gizmos.
The company also announced bluematter, a commercial music download format that works with RealJukebox software from RealNetworks (Nasdaq: RNWK). Among those now offering the system on a trial basis are audiohighway.com (Nasdaq: AHWY), Excite@Home (Nasdaq: ATHM), Launch Media (Nasdaq: LAUN), and Lycos (Nasdaq: LCOS).
Not being swept into the convergence vortex is Seagram's spirits, wine, and beverage group, which includes under its umbrella names such as Chivas Regal, VO Canadian Whiskies, and Absolut Vodka. The group, whose revenues increased by single digits while marketing grew over 20%, will be sold after the Vivendi merger is complete. As well-branded as these old-world "liquid assets" may be, they are not core assets of new-economy leader Vivendi Universal.
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Related Links:
Universal Music Group to Test Commercial Downloads, 8/17/00
Vivendi and Seagram Unite, Fool News, 6/20/00
AOL/Time Warner: You've Got Rivals?, Rule Breaker Portfolio, 6/15/00
