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Group Profile | Businesses | Litigation |
Risk Factors
Risks associated with Intensified
Commercial and Technical Competition
Vivendi’s businesses face strong competition, which may intensify in
the near future due to the trend towards industry concentration among
existing companies, or the entry of new competitors in the relevant
markets. Growing competition exerts considerable pressure on Vivendi,
which may lead to a loss in market share if Vivendi is no longer able
to supply quality products and services and innovative offerings at
competitive prices.
In particular, Vivendi’s development depends on its ability to adapt
its services, offers, products and content to meet the requirements of
increasingly demanding customers, in increasingly innovative markets,
and in industries distinguished by rapid technological development.
The need for Vivendi to respond to such requirements and advances or
even, in some cases, to anticipate them, may lead to the group making
substantial investment without any assurance that the new products,
offers and services it has developed will not become obsolete within a
short period of time.
Risks Associated with the Lack of
Commercial Success of Recorded Music, Films
and Content Produced, Published or Distributed by the Group
The production and distribution of content represent an essential
proportion of Vivendi’s revenues. Its commercial success is dependent
upon the public’s response, which cannot always be predicted, and on
the existence and success of competing offers and general economic
circumstances.
Finally, when these operations are based on content provided by third
parties, no assurance can be given that such third parties will always
agree to transfer their rights for various communication media under
financial and commercial terms acceptable to Vivendi.
Risks Associated with
the Conduct of Operations in Various Countries
Vivendi conducts its operations in various markets in nearly 70 countries.
The main risks associated with conducting its operations internationally
are as follows:
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the local economic and political situation;
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exchange rate fluctuations;
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restrictions on capital repatriation;
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unexpected changes in the regulatory environment;
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the various tax systems, which may have an adverse effect on
Vivendi’s operating results or cash flow, and in particular regulations
relating to transfer costs and the withholding tax on the repatriation
of funds; and
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tariff barriers, customs duties, export controls and other trade
barriers.
Vivendi may not be able to protect itself against such risks.
Industrial or Environmental Risks
The group’s operations do not pose any major industrial or environmental
risks. This is because the group’s operations are, by their very nature,
primarily non-manufacturing, and a large proportion of the group’s assets
are intangible. However, the group remains alert to any environmental
risks that may arise or be discovered in the future.
Risks Associated with the Current Economic and Financial Situation
The unfavorable consequences of the economic crisis in recent years,
particularly the decrease in consumer purchasing power and level of
confidence, may lead customers to postpone or reduce their spending
on the products, services and content offered by the group or affect their
ability to pay for them, which in turn could have a negative impact on
Vivendi’s revenues and results.
Each year, Vivendi conducts impairment tests on goodwill and assets with
definite or indefinite lives, to assess whether their book value exceeds
their recoverable value. Current economic circumstances could lead
Vivendi to recognize impairment losses on such assets (see Note 9 to the
Consolidated Financial Statements (Chapter 4 of this report).
Market risks
For a detailed analysis of market risks (interest rates, foreign exchange
rates, market liquidity and stock prices), see Note 22 to the Consolidated
Financial Statements for the year ended December 31, 2014.
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Annual Report 2014