Laurent Mairot - EVP, IR and Head of Corporate Development Arnaud de Puyfontaine - Chairman and CEO Herve Philippe - CFO

Laurie Davison - Deutsche Bank Adrien de Saint Hilaire - Morgan Stanley Charles Bedouelle - Exane BNP Paribas Marcus Diebel - JPMorgan Julien Roch - Barclays Capital Stephane Beyazian - Raymond James & Associates Lisa Yang - Goldman Sachs Bruno Hareng - Oddo Securities Tom Singlehurst - Citigroup Conor O'Shea - Kepler Cheuvreux Louis Citroen - Arete Research Daniel Kerven - Bank of America Merrill Lynch Ian Whittaker - Liberum Capital Limited

Welcome to Vivendi's Full-Year 2016 Results Conference Call. Today's conference is being recorded. At this time I'd like to turn the conference over to Laurent Mairot, EVP, Head of Corporate Development and of Investor Relations. Please go ahead, sir.

Good evening, ladies and gentlemen. Welcome and thank you for joining us for Vivendi's full-year 2016 earnings. Your hosts for today's call are Arnaud de Puyfontaine, Chairman of the Management Board and Chief Executive Officer and Herve Philippe, member of the Management Board and Chief Financial Officer. This presentation will be in English. This call is webcast on Vivendi.com, where presentation slides are available for download. I encourage you to read the important legal disclaimer at the end of this presentation on page 43. The full-year 2016 financial report will be available on our website after the end of the call. On our website, you will also find a replay of this call that will remain available for 15 days. As usual, we will leave time for a Q&A session at the end of the presentation. And now, I have the pleasure to introduce our Chairman of the Management Board and Chief Executive Officer, Arnaud de Puyfontaine.

Thank you, Laurent. Welcome, ladies and gentlemen. Thank you for joining us today for Vivendi's full-year 2016 earnings presentation. As always, it's a pleasure to start the year by sharing with you the Group's developments and perspectives and I can already say that 2017, after two years laying the foundations, will be a year of growth. Before handing over to Herve Philippe, our CFO, to comment on the financial results, I would like to remind you of the thinking behind our growth strategy. Vivendi is in a strong position to embark on an exciting journey. As you know, the Group operates in a very attractive industry. Four main trends are shaping the entertainment landscape. More consumers. By 2025, the world's middle class is set to increase by 2 billion in Africa, in Asia and Latin America. They will also enter the leisure economy and consume entertainment.More entertainment. Average time spent on media activities in the world is steadily increasing -- 7 hours and 30 minutes estimated in 2018, compared to 7 hours in 2014.More devices. The number of smartphones, first screen for media consumption, will grow from 4 billion in 2016 to more than 6 billion in 2020. And then, more revenues. In fact, revenue generated by the entertainment and media industry are expected to grow from €1.5 thousand billion in 2015 to more than €2,000 billion in 2020.In this environment, our ambition has remained unchanged since 2014 -- building a world-class content and media player. Vivendi already owns very powerful assets in this industry which are now being brought together and reinforced to collectively generate more value. The Group enjoys and is building leading positions in the three most dynamic segments of the creative industries -- music, with Universal Music Group, mobile games with Gameloft and television, cinema, audiovisual content with Groupe Canal+. So, our first pillar is content creation. In music, in TV, in cinema and in mobile games we have the creative expertise and know-how to produce content both in quality and quantity throughout the world. Vivendi invested more than €2.5 billion in content last year. Our second pillar is content distribution which is key to reach scale and to maximize the value of our content. Vivendi relies first on its own network capacities. This is the case in television, where the Canal+ group is a major publisher and distributor of pay-TV channels in France and abroad, especially Africa. This is also the case in digital distribution, with Dailymotion, the wonderful showcase of our content worldwide, with 3 billion videos viewed every month. A new Dailymotion with a completely revamped user interface will be available in spring 2017. In addition, Vivendi partners with telecoms operators to obtain strong positions locally and with digital platforms to offer worldwide exposure to its content. As a result, Vivendi is able to pursue this ambition strategy, thanks to the long term stability provided by its main shareholder, the Bollore Group. Our Chairman, Vincent Bollore, the Supervisory Board and the management team all share the same vision -- making Vivendi greater than the sum of its parts. Let me now dive into more details regarding to our content businesses. In music, the shift of streaming from a niche market to a mass market is a reality. Since 2014, the number of subscribers to paid music services has more than doubled to exceed the symbolic 100 million mark in 2016. After a decade of value destruction, streaming is a great opportunity for the music industry to bounce back and find new long term growth. This transformation positively affects all markets, both mature and emerging. UMG is at the forefront of this transition. By establishing partnerships with more than 400 digital streaming platforms, in 2016 streaming and subscription accounts for 35% of UMG total recorded music revenues. By continuously discovering and managing artists, three most-streamed artists in the world -- Drake, Rihanna and Justin Bieber -- are all UMG talents. By investing in high-growth and emerging markets, 60% of UMG sales are generated by local artists in their own country. In addition, Vivendi is strengthening UMG by developing new ways of monetizing music content. That's the rationale behind our initiatives in live events. For instance, we're deploying entertainment venues called CanalOlympia in Central and Western Africa. Four are already open and a fifth one will be inaugurated tomorrow in Burkina Faso. Let me now shift your focus onto gaming content, where our investments have been fruitful. As you know, videogames are today one of the most attractive segments in the media industry, with total revenues estimated at $100 billion. Mobile gaming already accounts for more than a third of this industry and is expected to grow rapidly in the coming years. So, it makes complete sense for Vivendi to gain a foothold in the market with strong potential, complementing its existing businesses. The recent acquisition of Gameloft, one of the most creative and dynamic companies in mobile games worldwide, fits into this strategy. Its integration within Vivendi is proceeding accordingly to plan and, I must say, even better. The first synergies are about to become a reality. A Paddington mobile game will be released at the end of 2017 to enrich the Paddington experience alongside Studiocanal movie and UMG soundtrack. Gameloft can rely on strong assets -- a massive audience with 1 billion games downloaded in 2016; a large portfolio of more than 160 games; worldwide distribution with 170 partnerships with telecom operators. With Vivendi's industrial and financial backing, Gameloft will reach new growth milestones and develop innovative projects. Our ambition is to place the Gameloft teams and their creativity at the center of a long term strategy for the Company. Let me now move to our audiovisual activities. As you know, there is a growing appetite for TV and video content. This global market is expected to grow by 2.5% per year between 2015 and 2020. This explains why we want to develop our own original audiovisual content and to build a large network of production companies. First of all, Studiocanal fully plays its role as the content factory for Vivendi, with box office success in 2016. Bridget Jones's Baby ranked number one in the UK box office and has generated $250 million worldwide so far. Likewise, Canal+ Group is a renowned player in series creation. This season, a record of eight Creations Originales were produced. Le Bureau des Legendes ranked number one in the iTunes Store in the U.S., whereas Jour Polaire had the best start in France for a Creation Originale since 2013.Our investment in IP and original programming are complementary to our investments in audiovisual. After acquiring minority stakes in various production company, managers' groups, [indiscernible] and Bambu Producciones in Spain, Vivendi now covers the full range of audiovisual formats. Our ambition is to increase our investment in content production, internally or through partnerships, with the objective of retaining equity in IP. Our expertise is recognized on the creation side and also on the distribution side. In 2016, international pay-TV revenues grew significantly in comparison to 2015, plus 5.7%, particularly in Africa, where the number of individual paying subscribers reaching almost the 2.8 million mark at the end of last year. We also have a strong position in Poland, in Vietnam and overseas, totaling 3.4 million subscribers. In addition, Canal+ Group recently signed a deal to launch the pay-TV service in Myanmar in 2017. In France, Canal+ Group consolidated its leadership in pay-TV with an individual customer base of 8.2 billion at the end of 2016. As you know, we launched a transformation plan for the Canal+ channel pay-TV in France to recreate a real proposition for our subscribers. Its implementation is on the right track. We first clarified our offer between pay and free TV with strong editorial positions. In addition, pay-TV offers were overhauled to better address consumer needs and behaviors. Subscribers are now able to pick and mix their own deals around the Canal+ channel which provides more customization options, more choice and more freedom. To expand its subscriber base, Canal+ Group has also entered into strategic partnerships with Orange and Free to supply the themed packages bunded into these operators' triple-play deals. These partnerships represented 2.9 million additional customers for Canal+ Group. As part of this transformation plan, we also implemented a roadmap at Canal+ in France to reduce costs by €300 million. The full effects of this plan will be seen in 2018. We have a twofold approach to distribution -- strategic partnerships with telco operators, to be strong locally; and with digital platforms, to be strong globally. Two examples of partnerships with telco operators -- Vivendi is the main Telecom Italia shareholder, with more than 23.9% of the ordinary shares. These investments enable us to support the largest Italian telecoms company in its development projects and to tap into new sources of growth in southern Europe -- very good progress so far. For the distribution of Studio+, the first global offer dedicated to premium short series, Vivendi entered into agreements with Orange and Bouygues Telecom in France, with Telecom Italia in Italy and Telefonica in LATAM. Viviendi is also a partner of the largest digital platform in the world. We deal with the major streaming platform in music -- Apple, Amazon, Spotify, Pandora, Deezer. In mobile games, it's worth mentioning that Gameloft is better placed to talk with partners such as Google or Apple when backed by Vivendi. To sum up our ambition -- make Vivendi a world-class player in content creation and distribution -- the Group has laid the foundations to achieve this ambition. Since 2014, we have done what we said we would do. We have strengthened our core businesses, UMG and the Canal+ Group. We have developed new opportunities -- acquisition of Gameloft; partnerships with telco operators; rollout of CanalOlympia venues. Vivendi is fully committed to delivering long term value to its shareholders. More than €8 billion have been already returned to shareholders since 2014 through dividends and buyback. The distributions of an ordinary dividend of €0.40 per share with respect to 2016 will be proposed. So, 2016 was an eventful year and a transition year for Vivendi. The outlook is as follows. In 2017, revenues are expected to increase by more than 5%. Due to the measures taken in 2016, EBITA is expected to grow by around 25%. I will now hand over to Herve Philippe. Thank you for your attention. Philippe -- Herve Philippe, over to you.

Thank you very much, Arnaud and good evening to all of you. It's really a pleasure to present you the 2016 full-year results. Obviously, indeed, as Arnaud just mentioned, 2016 was a year of transition and transformation. In terms of Group perimeter, the only significant item to highlight are indicated on slide 19, are that, first, Telecom Italia has been accounted for as an equity affiliate, starting December 15, 2015. As a reminder, the accounting for Vivendi's shares of Telecom Italia earnings is based on our pro rata economic interest and is delayed by one quarter. And second, Gameloft which has been consolidated since June 29, 2016.With regard to currency changes, the most noticeable change was the negative impact of the lower pound, down 11.4% on average for the year and to a lesser extent the positive impact of the higher yen. Note that the impact of these currency changes are mostly just conversion-related, mainly at the level of revenues. We will see the key financial metrics and as expected, this was a transition year in terms of financial performance, as you can see in this slide number 20. Overall, total revenues were almost flat compared to last year at €10,819 million. UMG's solid performance in terms of revenue growth, plus 4.4%, almost compensated for the decline at Canal+. Under IFRS figures, EBIT was down 2.9% at €1,194 million and net income Group share for continuing operations was up 77% at €1,236 million. On a non-GAAP basis, while operating profit was down with income from operations and EBITA down around 20%, adjusted net income for the year was up by 8.4% at €755 million, with a very positive contribution of Telecom Italia. With cash generation of €729 million and €341 million after interest on taxes, we ended the year with a net cash position of €1.1 billion after returning $4.2 billion to our shareholders. We'll now get into the details on the economic performances of the businesses, starting with Universal Music, on slide 21. The solid performance in 2016 confirmed the return to growth initiated in 2015. The transition in the music industry is progressing quickly and the results for the year showcase UMG's solid performance. Total revenues were up 4.4% with around 3% growth for recorded music, while the year was rather weak in terms of releases. In a fast-moving market, recorded music posted growth in revenues for each of the four quarters, including in Q4, where revenues increased by 0.9% despite the negative impact of a decline in physical sales in a quarter traditionally heavy in physical sales. We have generally more than one-third of full-year physical sales. This is thanks to the strong increase in streaming and subscription revenues. Streaming and subscription revenues grew sequentially quarter over quarter. And for the full year 2016, streaming and subscription revenues reached almost €1.5 billion, up 58%, more than offsetting the steep decline of approximately 29% in download revenues and of 15% in physical sales. Streaming and subscription operations are the larger source of revenues and now account for two-thirds of digital revenues and more than one-third of recorded revenues. Publishing revenues grew almost 7%, benefiting from the positive momentum of streaming as well as from higher performance income. 2016 was also marked by a strong performance in merchandising, with dynamic touring activity from the artists we're working with, recognizing that this activity generates lower margins than recorded and publishing activities. In terms of profitability, income from operations and EBITA were up organically by 10.7% and 9.1% respectively, mainly as a result of revenue growth and cost savings. As mentioned during the presentation of the results for the first nine months, there were some timing effects on costs in 2016, with some of the costs shifting to the fourth quarter. Overall, we're very satisfied with the increase in the income from operations margin to 13% compared to 12.3% in the previous year. Moving to Canal+ Group on slide 22, 2016 results are in line with our expectations. The transformation plan implemented in 2016 will start to translate into concrete results in 2017. Over the fourth quarter, we observed the same trends we have been seeing since the beginning of the year. For the year, total revenues decreased by 4.2% organically as a result of two opposing trends. First, the solid growth of the international pay-TV operations, mostly in Africa, where revenues grew by 20% due to the strong evolution of the subscriber base which stood at almost 2.8 million at the end of the year, growing by 516,000 over the fourth quarter, the best performance ever. This illustrates once again the success of our strategy of offering the best content and the best offers. The year was also very strong for the free-to-air channels in France, with a 7% increase in revenues. Despite a strong competitive environment, our audience levels were high and are increasing in line with our objectives. Conversely, certainly, the pay-TV operation in France and Studiocanal are still experiencing decreasing revenues. Revenues for pay-TV in France declined by 6.1% over 2016 due to a continuous decline in committed subscribers as well as lower advertising revenue with a reduced free-to-air window. Studiocanal is still underperforming, with a lighter line-up compared to 2015 which was a record year for Studiocanal. Coming back to the situation of pay-TV in France, as Arnaud mentioned, we have addressed this issue. Measures have been adopted and implemented. This is not a small fix and the transformation plan spans several quarters. The €300 million cost optimization plan is well on track. Through the agreements with Free and Orange, we now have 3 million wholesale customers. While it is too early to evaluate their success, the new offers have attracted positive reactions. During 2016, Canal+ Group's income from operations was down €239 million compared to last year as a result of a €205 million decline in revenues at pay-TV in France, with both subscription and advertising revenue decreasing; second, increased content cost at pay-TV France, mostly for the new French Lique 1 contract which started mid-August; third, increased content investment for the free-to-air channels in France with the aim of growing their audiences; and fourth, lower profitability of Studiocanal due to the lack of major releases. The increase in profits from the operation in Africa could not offset all of these income and note that the very strong commercial performance in Africa in the fourth quarter translated into higher acquisition costs. The decline in income from operations explains the evolution of EBITA in 2016, but in 2016 we recorded €60 million of negative one-time items. With regard more specifically to Canal+ channels in France, the losses amounted to €399 million. Although the cost optimization plan is well on track and we have exceeded our target for 2016 with more than €100 million, the positive impact is compensated by the decline in advertising revenues with the reduction of the free-access window on Canal and by higher reorganization charges. Now, on slide 23, you can see the positive contribution of Gameloft in 2016, with €132 million in revenues and €10 million in income from operations since we started to consolidate this company at the end of June. Over the second half of the year, revenues were up 6% compared to the second half of 2015 and in the fourth quarter 2016 Gameloft recorded its best quarter in its history in terms of total revenues and ad revenues, reaching €69 million and €7 million respectively. In 2016, despite the release of only four new games, revenues grew by 5% in the full year which demonstrates just how resilient Gameloft's business is. In total, 65% of 2016 revenues were generated by in-house franchises. Going to slide 24 which covers the other businesses, we're working on many new initiatives such as opening a network of entertainment venues in Africa, co-producing live events and festivals and developing new paid streaming services such as WatchMusic and Studio+, both started to be roll out at the end of the year in partnership with some telcos. All the initiatives launched in these other businesses, as well as the transformation of Dailymotion, are still in the investment stage and thus result in losses at the income from operations level. Turning to slide 25 and the consolidated P&L under IFRS, as you can see, EBIT was down only 2.9% as a result of the decrease in operating profit, partially offset by the end of the amortization of PolyGram's catalogs recorded in the line, amortization and depreciation of intangible assets acquired through business combinations. Then we have the positive impact of the consolidation of Telecom Italia at €169 million. Income tax, we're significantly lower in 2016 compared to the previous year. This is mainly due to the fact that in 2015 we recognized an income tax charge of €124 million on the sale of the remaining stake in Numericable-SFR and €122 million in relation to the 3% tax contributions on dividend. Finally, as you can see, the decrease in earnings attributable to Vivendi's shareholders is mainly due to the significant impact of earnings from discontinued operations booked in 2015, primarily the contribution from GVT which was sold in May of last year. Therefore, excluding discontinued operations, earnings from continuing operations attributable to Vivendi's shareowners increased by 77%, reaching approximately €1.2 billion. Then on slide 26 you have the consolidated adjusted net income P&L. The total revenues of the Group were flat in 2016. On the income from operations level, UMG growth was not enough to offset the decline in Canal+ Group's income from operations. Overall, income from operations was down €208 million compared to 2015. In 2016, EBITA included €21 million in net negative one-time items, compared to just €1 million in 2015. Restructuring charges amounted to €94 million in 2016. Overall, EBITA was down €218 million. This decrease was, after, more than offset by, first, a €224-million increase in income from equity affiliates, resulting from a €216-million contribution from the solid performance of Telecom Italia. Second, a €37-million decrease in net income tax. This decrease is mostly attributable to the good performance of UMG and I believe the use of NOLs in some jurisdictions. Third, a €30-million reduction in non-controlling interest, mainly due to the acquisition of the minority interest in SECP in the third quarter of 2015. This led to an adjusted net income of €755 million, up 8.4% compared to last year. Then, moving to the balance sheet on page 27, the major changes in assets at the end of December 2016 compared to the end of 2015 were, first, the increase in goodwill for €810 million, mainly as a result of the consolidation of Gameloft, with a provisional goodwill of €609 million. Then, the increase in financial investment of almost €800 million, mainly related to the investment in Mediaset for approximately €1.4 billion and additional investment in different stakes, partially offset by the sale of the remaining stake in Activision Blizzard as well as the net proceeds related to the settlement of the litigation with Liberty Media. At the end of 2016, financial investments were mainly comprised of our stakes in Telecom Italia, Mediaset, Ubisoft, Telefonica, Banijay Group and Fnac. The net cash stood, as you see, at €1.1 billion. We'll discuss the changes in a few minutes. Net cash was comprised of €5.1 billion of available cash and €4 billion of gross debt. It is worth highlighting that in May and in November 2016 we issued bonds totaling €2.1 billion under very good conditions, in order to refinance the repayment of existing bonds, one of which was reimbursed last December for €500 million and another one will be repaid next March for €750 million. With respect to equity on liabilities, we can highlight three main items -- the decrease in equities just linked to the return to shareholders; the decrease in working capital related to the repayment of the interim dividend which was acquired as a liability in December 2015; and finally, the decrease in provision due to the settlement of the Liberty Media litigation. Taking a close look to the cash generation in 2016 on slide 28, as you can see, the CFFO was down €163 million. The total increase in cash generation at Universal Music was more than offset by decreased cash generation at Canal+, minus €228 million, as well as the increased cash utilization for the project of new initiatives which are still in the investment phase. But the cash flow after interest on taxes which was negative in 2015, improved to €341 million in 2016. With regard to the change in the net cash position on page 29, the net cash stood at €1.1 billion at the end of December 2016 compared to €6.4 billion at the end of December 2015. The main movements over 2016 were -- the payment of dividends, as you see, for €2.6 billion; the acquisition of Vivendi shares for €1.6 billion; the cash generated by operations, mainly by UMG; €3.4 billion of cash outflows for the investments in Mediaset and the increases of our stakes in Telecom Italia, Gameloft and Ubisoft, as well as the acquisition of 26% in Banijay/Zodiak and 11% in Fnac. These investments were partially financed by the sale of the remaining stake in Activision Blizzard as well as the net proceeds we saved in connection with the settlement of the Liberty Media litigation. Since the end of December there have been no significant developments on the cash front. To conclude, as Arnaud explained earlier, the two last years have been dedicated to strengthening the Group and to building the foundation for future growth and long term value creation. 2016 was a year of transition and transformation. UMG growth is back on track and the transformation adopted and implemented at Canal+ is expected to start bearing fruit in 2017. So, in 2017, revenues are expected to increase by more than 5% and EBITA is expected to grow by around 25%. Cash generation after interest on taxes should increase even further. Thank you very much for your attention and we will now start the Q&A session.

[Operator Instructions]. We will take our first question from Laurie Davison from Deutsche Bank. Please go ahead.

The first question is on your guidance. You've given us EBITA guidance for growth of 25%. What's the income from operations for 2017 associated with that? So, how much restructuring costs are we going to see within the EBITA guidance? The second question is, can you just give us a bit of help with the split of your 5% revenue guidance between the different three divisions? And the third and last question is, what should we be expecting for Vivendi Village new initiatives in terms of EBITA and income from operations loss in 2017? Thank you.

Well, thank you for your questions. Obviously, each time you give something in our guidance, the questions which are coming are to be much more precise on that. So, I'm sorry, but it will be difficult to answer very specifically your question. Obviously, there we will -- we will have, in 2017, probably less [indiscernible] charges than the one we had in 2016. But nobody knows completely today, so it's very difficult to be precise on that. That's why we have given our guidance at the EBITA level. We will not also give too precise guidance on each division; but if you do the math, you can consider that, if you do -- if we make something which is more than 5% globally speaking for all the Group, this should rely on good performances on both main divisions, in my view. And for the Vivendi Village operations, obviously we had a bad year in 2016 due to some specific operations, especially in Watchever in Germany and relaunch of other activities. So, we'll see in 2017, what will be the result and we will disclose, obviously, the result. We have very good operations in Vivendi Village thanks to ticketing and to MyBestPro especially and we cannot be too precise on that. Today, we have given global guidance to you. Thank you very much.

We will take our next question from Adrien de Saint Hilaire from Morgan Stanley. Please go ahead.

So, focusing first on Canal+, I mean, Studiocanal had a very difficult Q4 which means that I think Studiocanal had its weakest revenues in five years. Is it reasonable to assume that this business then gets back to its normal run rate of revenues next year or not? Secondly, could you please talk about the Canal+ KPI performance, perhaps in the first two months of the year and how perhaps happy you are with the net adds performance or not, in France in this first quarter? And then, lastly, I know it's a difficult question and not one where you like to get specifically, but would you generally consider the margin expansion that we've seen at UMG in 2016 as a good benchmark for the next years?

Arnaud speaking. So, I will take your question. So, the first one on Studiocanal -- Studiocanal, as I mentioned in my presentation, is an important development for us. But, as you may recall, when we announced our results in February I made it very clear that Studiocanal would have a difficult 2016, because we knew since autumn 2015 that the line-up for Studiocanal was very weak. So, the performance is disappointing. We're absolutely not satisfied with those results. But they are not unexpected. And I can tell you that as regard to the plan for 2017, we're going to be back on track as regard to the traditional performance of this part of the business. And I'm also happy to report, for those who are living in France, that they should rush to see what is going to be seen as a blockbuster in 2017 which is a film called Alibi.com, that has had 200,000 entries first day; we reached 1 million this week and we expect it to be one of the blockbusters of the movie industry in 2017. So, again, 2016 -- a transition for Studiocanal; not unexpected poor results. 2017, back on track with kind of the traditional performance of the business and even some plan for growth based on the new organization that we have put in place. Second question, as regard to Canal+, as you know, there has been kind of a complete overhaul of pricing, slash, product composition, slash, distribution. And we launched it in November/December. We're now mid-February. It's too early to be able to be more precise. We will be more specific during the communication of our first quarter results. What I can share with you is, the first sign are pretty encouraging. More to come during our next quarterly presentation. And last but not least, on Universal Music Group, I remember when I took the job 2 1/2 years ago, I remember the first question on the music and all the things was, the industry, what is going to happen? Downloading is going to be severely hurt by streaming. Is it another blow for the industry? Etcetera. We kept on saying that we thought that there was an environment that could open a new area of growth for the industry. On the like-for-like basis, we have seen quarter-on quarter positive evolution of number of subscribers. We have this kind of down trend on physical and downloading distribution which is now compensated by the evolution on streaming. We're dependent, as you know, on the evolution of the numbers of subscribers, but they are, both for Spotify and the others and Apple, streaming music proposition, on a growth pattern and we expect that to continue. And with our leadership position in the industry, we expect that Vivendi will benefit from that situation. That being said, it is not a slam dunk. There are some unknown as regard to the rate of evolution of subscription, of the rate of growth of emerging country, because we see a good momentum but we know that the industry -- I mean, the music business is concentrated on mainly five territories. And so, I mean, we've got some pluses, but it's still an industry under recovery. But within that unknown environment, we're cautiously optimistic as regard to the momentum and expect in that environment, 2017, to be able to pursue the kind of momentum that we have seen now since 18 months. Thank you.

We will take our next question from Charles Bedouelle from Exane. Please go ahead.

Thank you all. So, a couple of questions. The first one, maybe just to clarify on the EBITA guidance, because you said that we don't really know the level of restructuring, but I guess it would be easier to guide on the IFO which has less one-offs. So, I was just wondering why guiding on EBITA and not IFO. I mean, maybe there is something I missed here. And the second question I had was, I know you don't want to share too much on Canal and the complete overhaul, but how do you think about the risk of spinning down, when consumers see that you can get Canal or part of Canal for very cheap, for example on Free? I mean, any thoughts on how you manage the volume versus the price, if I may say, of your new offers? Thanks.

I will take the second question. And, well, we have made some assumption. And at the end of the day, what we can see, that the level of, we're going to take a cheap proposition in that kind of a transfer is, as far as we can see, very, very limited. So, what we do see is that the kind of strategy which has been to reshuffle the model and to put the consumer at the heart of that decision as regard to consumption and to be more than -- in kind of a bottom-up type of structure rather than top-down, has proved to be pretty compelling. So, the first momentum is limited kind of a rate of transfer or cannibalization, in terms of consumers moving from the previous offer to the kind of prices of Free. What we have seen is a good take on the different packages that we have put which is pretty encouraging as regard to the level of ARPU. And last but not least, we're absolutely fully convinced that, at the end of the day, in terms of the future of pay-TV, you pay for good offer. So, if you have a good proposition, if you have good content, people are going to be ready to pay for that. And if you take, for instance, the sports package, I mean, if you want to get the best offering in the context of the French market, the best offering is the Canal offering, where you have Canal Sport offer, plus beIN SPORTS offer, plus the exclusivity on Euro Sports. And if you are very keen on movies, cinema, TV series, when you see the quality of our offering, the quality of what we put on the air and the level of quality of content and the spread of the content and the quality and numbers of good films and series, we can see that people are ready to pay for that. So, yes, we're building that kind of a new shape. Yes, we'll be able to report to the market when we're going to have more sustainable trends. But what we can say this evening is that the vision -- the bet and all the rationale behind our strategic move as regard to the reshuffle of the Canal+ pay-TV -- so far, so good and the risk attached to any evolution which has been well-estimated, is, as we speak, under control and we're cautiously optimistic. I'm talking about, obviously, the pay-TV. As you have seen, the growth in our international operation at Canal+ is sustainable, is very healthy and we can see that as going on for the coming fiscal year.

But just to answer the first question on the guidance on EBITA towards the guidance on IFO -- this is a good question, but obviously, I'm sure that if we would have given you guidance based on the IFO, you would immediately have asked, what would be between IFO and EBITA? So, we considered finally that it was more simple to give the guidance at the EBITA level, because there is everything, in fact, at the EBITA level and you will be not in a position, that way, to say that we will have put more exceptional between IFO and EBITA. So, that's why we finally found that this guidance based on the EBITA was maybe more difficult to achieve or more constrained for us, but it was better for investors. Thank you.

Okay. And maybe if I can just add a very quick follow-up question on Mediaset, obviously it's been a significant investment in the recent months. Would it change anything to your strategic vision for Mediaset -- and if you can explain in more details what it is, it would be great -- if Mediaset sells Mediaset Premium? Just, it's a what-if game, but it's a possibility. Or if they close it down or if they don't build -- so, can you just explain a little bit what's going on and how do you see your position under those values changes, potentially, ahead?

Charles, I think that you're going to get the surname of Mr. Two Questions in that exercise. But, thank you. That's a good question. As regards to Mediaset, it's a listed company and we're in this kind of transition period, so I'm not going to dwell into the details. What I can say is, we have decided, end of last year, to take this stake in the company after some intensive discussion with Mediaset. And we're in the position today to be still willing to build a strong industrial relationship with this company. It is part of the Vivendi strategy. As you know, we have been very consistent as regard to southern Europe, to be part of our strategy and our DNA. And whatever happens as regards to different scenario and options, et cetera, is not going to change our willingness, vision and strategy. And I am optimistic as regard to the possibility to find a positive outcome. The kind of a scenario you are mentioning will not change this vision.

We will take our next question from Marcus Diebel from JPMorgan. Please go ahead.

Just a question on Canal. I mean, you previously guided already for some cost savings that you wanted to achieve in 2016. Have you achieved that amount or will be a bit more back-end-loaded? That would be my first question here. The second question is more on competition in sports rights. You mentioned the quality that you want to achieve. Given your comments six months ago, do you feel, in the market, there's a bit more competition in the long run for sports rights, i.e., from Turk operators? So, just a few comments, if you think the market environment has changed here. And then, lastly, on your revenue guidance, 5%, could you just tell us what you think -- how much of that is coming from FX? I understand it's not going to be a big amount, certainly. But just if you can add a few comments here as well. Thank you.

I will take the question on sports rights. We're developing our strategy in an environment which is full of competition. And if you allow me to give a little bit of insight to my answer to your question. Canal+ has competed against TPS in the mid-2000s. Then, when TPS was bought and consolidated by Groupe Canal, then after Orange came as a competitor. When Orange decided to really diminish its investment in content, then Al Jazeera came with beIN SPORTS. And now, we've got a competitive environment from potentially different players. And the one that has been the most active on that field is Altice, slash, SFR. So, I mean, we're in an environment, we're fully aware that competition is part of the game. I'm reiterating the point that, if you see the current situation, the Canal+ offering in sport is the only one which is very comprehensive; very strong. So, if you are a sports fan, clearly, you've got to be a subscriber to the sport package. It's not a nice-to-have, it's a must-have. And we will develop that very pragmatic approach to provide our subscribers with a good offer. Is that to say that we will be ready to do anything? And I say [indiscernible] things, to jump over the roof or to -- sky's the limit and to do crazy things in terms of numbers, to be able to secure the content? The answer is no. But what is for sure, in the context of the story of that group and the -- what happened in its different phase and since we have started this new long term journey with Groupe Bollore as a number one shareholder, it provide us with the sustainability of our vision, the solidity that is going to enable us to go through peaks and troughs and also the possibility to be seen as the best partner for the right owners. So, you've got some competitors who's got different type of approach. What is absolutely sure is that I don't have €50 billion debt in the balance sheet. And as regard to the short, mid and long term of the sustainability of our presence, I think we're really a good partner to work with. And if you allow me, if you see, for instance, the relationship we have with the Rugby Federation and the League, there has been a competition as regard to the rights. We had a very good, sustainable and historical relationship with this Federation and they can count on us, as we can count on them. And that's going to be for the long time. So, many things that is providing us with some competitive advantage. Will we be faced with competition? Yes. Are we going to lose or win? We may be losing, but the long term is not going to really make us change that. Again, not getting and put crazy prices as regard to the things and at the end of the day good content will justify good price of acquisition which will then be able to be supported by our subscribers and clients. So, it has to be a healthy and positive, win-win type of relationship and we expect our short, mid and long term strategy to be really led by that type of behavior. On the other question, I'm going to hand over to Herve.

Thank you, Arnaud. Just to answer the first question concerning the cost reduction program at Canal+, I absolutely do confirm the €300 million target for this program. We're very confident in the possibility to achieve those €300 million. We have already done a large part of the job in 2016, with around €100 million and I already say that €300 million will be achieved within the next two years. On your third question which was on the guidance for the revenues, I confirm that this is a guidance which is at constant FX. Thank you.

Just to follow on that, Philippe -- so, you said you already generated €100 million out of the €300 million in 2016? I didn't fully hear that. Because previously you guided for a number, I think it was around €60 million.

No, we -- in 2016, we have done already €100 million. And the full cost reduction program is €300 million and we're very confident to achieve that level, due to the work which is already done and the work which is done week after week and maybe we can at certain point give a higher figure, but today we confirm the €300 million.

We will take our next question from Julien Roch from Barclays Bank. Please go ahead.

First question, a really quick one -- just to clarify, you say that organics ex one-off item was 0.9% for recorded music in Q4? That's my first question. The second one is, taxes were quite low on an adjusted basis in 2016, 22%. You said you used NOL in certain jurisdiction. What should we expect in 2017 for adjusted tax rate? It's impossible to model. Also, maybe tell us how much NOL you have left. And then the last question is on Canal+ subscribers. I know you said you wanted to wait for Q1 to give us some color on the success of the new offers, but if you look at Q2 and Q3 decline, you lost 90,000 and 70,000 and you lost more in Q4 at 130,000. So, I would have expected lower sub losses in Q4, thanks to growth from the November 15 onwards, with the new offer. So, can you confirm that you had subscriber growth between November 15 and the end of December? Merci.

Well, to answer your question first on the organic growth of recorded music in the fourth quarter, I confirm the 0.9% positive growth in recorded music. For the tax rate, we have part of used a part of NOLs in some jurisdiction, especially the U.S. and France. And maybe for 2017 we can say that the level of the tax could be a little bit higher than the 22% we have in the adjusted P&L for 2016. For the subscribers of Canal+, I just want to say that, obviously, you have good calculation and we have a declining number of subscribers. This is partially due also to the fact that the new offers have been launched at the end of November and during this period, the previous week's prior this new offer, were some people waiting for the new connection to subscribe. So, this is also one reason of the decline we have seen in the fourth quarter in the number of subscribers. This being said, after the launch of the new offer, there are some people waiting for those new offer and we want us to wait some weeks or months, is to be in the position to have very good and precise figures to give to the market and to be sure of the strength of the trend.

We will take our next question from Stephane Beyazian from Raymond James. Please go ahead.

Three questions, if I may, the first one regarding Havas -- sorry to come back on that, but we touched on it, on the merger. You [indiscernible] at the last call. And I was curious, since the last call, again, just a purely theoretical exercise, if you're able to be a bit more specific on the example of synergies that you think are plausible between the two companies. My second question is, the AGCOM in Italy is -- I was wondering if you were exchanging with the AGCOM on their investigation about the fact that you're holding shares in Telecom Italia and Mediaset. Is there a specific agenda? And if they were to take a decision going against your strategy, what can you do, basically, on this? And a third and last question -- I think there was some comments today from Orange this morning -- well, I know there were some comments from Orange management that the French football rights auction could be potentially awarded [Technical Difficulty] than we expected, meaning possibly in the coming month. I was just wondering if this is also your expectation. And also, if there is any news on the timing for the European games auction; and how do you see, let's say, the issue of having to run potentially the two auctions together and how could sort of be an issue with the fact that the antitrust is considering also to review the market this year -- how you sort of link the three events all together. Thank you.

Okay. So, let's start by the last one. I think we're not making any speculation. We're just preparing for the different scenario and we'll see what happens. I'm not going to comment on unknown things. What I can say, as regard to the connection with the competition authority, is that we have an ongoing relationship with the competition authority. You may recall that on another topic which was the process as regard to the exclusive distribution of the beIN SPORTS, there has been a decision from the authority really to postpone and to review the kind of global structure of the market by mid-2017 and there is an ongoing process and we're part of the process. So, more to come in due time. As regard to the AGCOM, we have had first contact with the AGCOMs and our advisor have been interviewed. We're expecting to be given the opportunity to explain our position. We're not in control of any of both company, whether it's Mediaset and Telecom Italia. We understand that there is this local [indiscernible] which is a law that is not got no jurisprudence and which the definition has to be precised globally. We'll provide the Italian authority with all what is required to be able to forge their views. But as a matter of fact and as a player in the industry, I think that, be it internationally or locally, the kind of a relationship between telco companies in terms of distribution and content of broadcasting company on the other hand -- I think that it's a very healthy momentum to be providing the players, to be able to take stock of what's currently happening. And if you see, for instance, in the U.S., what is going on with AT&T and Time Warner, for instance, I guess that there is a kind of a wake-up call that at a certain stage should be given to the rule of the different markets, to be able to acknowledge the point that we're playing in a very agile world, where the rule of the games are changing and where the consumer is forging kind of the consumer behavior which is very different. So, we're very keen to be able to work with the Italian authority to be able to help that and hopefully to enable, in Italy, as it's going to be in France, with kind of a healthy environment to be able to grow in that industry. And as regard to Havas, I mean, you can access to our annual report, where you will see all the kind of related parties disclosure which will give you an extensive ideas of what has been done in 2015. You will see in the 2016 that it grew. Well, this is an environment where this convergence between media content, advertising and communication services is happening, so I'm not going to speculate on anything that may or may not be happening. I am hearing the rumor. We don't have a formal plan as we speak. And what I can say is that we want to make Havas a competitive advantage for Vivendi and Vivendi a competitive advantage for Havas. And by the way, when you see, now, competitive environment and you see some competitors like WPP, you see that WPP has invested a lot of money in media companies. Check Vice.com. Check what happened in France with a media group, [indiscernible] Independent, where WPP took a 25% stake. So, just to name a few. The world is made, everywhere, of more and more convergence between that. So, we're happy of benefiting from the expertise about that. It's something that is completely transparent and which is going along the lines of this convergence. That's what we can say. And full disclosure is available and will be available, just to give you the extensive and complete list of the different initiatives. Thank you.

We will take our next question from Lisa Yang from Goldman Sachs. Please go ahead.

First, a few questions on Canal+. Is it possible to have the revenue profit contribution of the wholesale customers in Q4? What was also the level of advertising revenue dropped in Q4 within the pay channels? And how much ad revenue is left now within the Group? Do you expect further impact from the decline in 2017? And the other question related to Canal+ is on the churn -- the 16.7%. How do you explain such a big increase? I also noticed that ARPU has increased. So, have you just been giving less discounts? So, how should we think about your future policy in terms of managing ARPU versus trend going forward? And the other question is on Universal. Is it fair to say that, within your guidance of 5% revenue growth, music should be growing much more than 5%? Because I don't see how Canal+ can grow 5%. And in this case, is that acceleration baking in any new releases? So, in this case, can you also comment on the pipeline of new releases? And the final question is on Facebook. So, there are some reports about negotiation with Facebook to license music. How big of a game-changer you think that could be? Thank you.

Okay. I'll take Facebook. Well, as Universal Music Group, slash, Vivendi, we will support any initiatives to make music available with, as I said, hundreds of different platforms and initiatives. And if we're provided with the right terms of agreement in the relationship with any player who wants to be part of the game, we see that as positive.

Okay. To try to answer to all your very specific question, no, we cannot disclose the turnover on the wholesale element in the fourth quarter. To consider the decrease in the advertising on the pay-TV in France, yes, this had an impact in the fourth quarter. This could also have an impact at the beginning of 2017 due to the fact that we have reduced the free period, starting in September, in fact. So, there could be an impact in 2017 too. Then, to come to the question on Universal Music, we're still in a period of transition. So, we have good hopes of growth for Universal Music; but you see also the continuous decline in the physical sales and in the downloads. So, this will be -- good -- momentum is very good. We have very good countries in which the physical sales are still important and which are at risk in some jurisdictions like Japan and Germany. But, generally speaking, we're confident for the whole growth of Universal Music next year.

If I may add two things, the model that we discussed in the past, as regard to making a pay-TV offer a really pay-TV offering in terms of the product provided to the customer, is exactly what we have done. So, Canal+ pay-TV and the subscribers is going to have very limited free-to-air access, because if you pay for something, you've got to get a product that is aligned with the amounts you paid for. And what we have done in terms of advertising is really, we have had the good momentum in our free-to-air channels, Canal 8 and Canal Star. So, even if that's absolutely true and we factored in in our plan the loss of free airtime and to be monetized in terms of advertising, we have nevertheless a kind of a steady transfer from the pay-TV channel to the free-to-air channel which would compensate for part of the loss. Number one. Number two, as your comments in terms of the 5% and music, et cetera, I think that it is worth to be a little bit less bearish as regard to the expected performance of Groupe Canal in 2017. So, you shouldn't draw too quickly a line as regard to our ambition for this part of the Company. So, we'll see, but just as an indication. Thank you, Lisa.

And what about the trend?

We're seeing good trends. It's true that what happened at the end of the year and you'll see an increase. But we enter that was part of the plan now too and this is one component of the plan, to reduce churn. Some initiative have been taken and we expect to see the outcome in 2017. And that's part of the plan.

We will take our next question from Bruno Hareng from Oddo. Please go ahead.

A question on Canal+. I haven't heard you speak about the new box. Is it supposed to be released more in Q2, Q3 or Q4 this year? Second one on Canal+ -- what type of partnerships could you be signing with Orange? Any color on this would help. And, last question, more general and I'm not sure what you are going to say on this, but I think, Arnaud, you said two years ago that it would take you something like two years to stabilize the perimeter or the scope of Vivendi. Do you think it has now stabilized or not? Thank you very much.

I'm going to take the stabilization. I made the comment in 2015 during our AGM that it will be -- that we will have kind of a -- we'll take a rendezvous in 2017 as regard to the use of cash as regard to the different initiatives. What I can share is that, over the past two years, we have built strong foundation from there to be able to grow and to achieve our strategic objective, as I mentioned at the beginning of the presentation. And I am very excited by the solidity of those foundation and I think that the momentum that we have really given to the business is providing us with a belief that we will be able to have this growth profile that we wanted to give to the Company. The thing that was at the time not expected was the situation that we shared with the market in November 2015, as regard to the situation of the pay-TV France on Canal+. This has been dealt with during 2016. It is making this year of 2016 and the numbers, transition numbers. But when you see the guidance that we give to 2017 and expect it not to be a one-off and the ambition that we're having as regards to the shape of the Company, if stabilization is only to be in a position to get solid foundation to be able to grow, yes, I think that we have achieved what we wanted to achieve, still to be able to get sustainability in the recovery of the pay-TV Canal in France. But I think that in our initiatives in the gaming sector, in the music and in the audiovisual content and the building of this environment of distribution relationship which is providing us with the required scale, I think that we're in a kind of a turning point which, again, is enabling us this evening to give the guidance for 2017 which you shouldn't take for a one-off. I can see a kind of a trend for the growth profile of Vivendi.

Just to answer the first question -- or, in fact, not to answer the first question, because we obviously don't want to disclose today a possible date of our launch of a new box. This will be part of an important marketing campaign, if such a new box is launched this year, so I cannot answer precisely to this question, indeed. On the partnership with Orange, you have seen that we have commercial agreements with Orange, especially in their offer on their fiber offer, so we're very interested in developing all possible commercial relationship with Orange. That's the only answer I can do, obviously.

We will take our next question from Tom Singlehurst from Citigroup. Please go ahead.

Tom here, from Citigroup. Thank you very much for taking questions. First question is on Havas, actually. Just trying to understand -- you talked very eloquently about the potential synergies between the two groups. I'm wondering why you're so reticent to confirm that you're just going to go for it. What are the factors that prevent you from announcing today that this is something that you want to own? And if you can talk a little bit more about what the gating factors for that transaction are, that would be great. Second thing -- on cash and cash deployment more generally, €1.1 billion of net cash. Should we consider that the larger transactions are now behind us and that, from here on, the perimeter of the business is going to be, ex maybe someone like Havas, a relatively constant? In particular, on the guidance, you mentioned it's constant FX. Is it also constant perimeter? Thank you.

Okay. On the question on Havas, we're two listed Company and since the very beginning of our journey there has been a lot of speculation about the relationship with Vivendi and Havas. So, please, give me a chance to close that debate as regard to what may or may not be happening. All right? We have had, for instance -- and you have read, I'm sure and heard many speculation about Orange. We have signed a commercial deal with Orange, end of July last year. Then, after, we heard a few comments about, we're going to sell Canal+ to Orange; then, after that, we would take a stake in Orange or that -- you know. We're in an environment where there are many speculation. And this kind of a debate is a debate where, if one day we were to be doing something -- I don't know -- is there a formal pitch today to work on that assumptions? No? But the point of me developing or on the other hand, from Yannick Bollore, when asked the question, that we have initiatives and we have a relationship and we're doing things, is not preempting the question as regard to if one day they're going to be one step further. You can have a long life and do a lot of things without having a kind of an integration in any shape or form. So, I'm not going to speculate on any things. I know that there is an environment which is speculating on our behalf. What I can tell you is that there is not such a project as we speak. What I can tell you and reiterate, is that I'm telling, yes, that there are very interesting initiatives between the two companies which are disclosed in our annual report and on our website and that there is an environment where branded content, data management and so on and so forth, is very high on the agenda of a media company like Vivendi and we have some initiatives with Havas on that. As regard to what may be the future of the relationship, it's all about speculation and this is something that I can't comment on any more.

Just to add two quick answers to your question, on the €1.1 billion net cash position, it's a net cash position. So, we have €5 billion which are available if we want. And for the third question you asked which was on the guidance and the revenues of 5%, I confirm that this is a guidance which is given at constant perimeter.

We will take our next question from Conor O'Shea from Kepler Cheuvreux. Please go ahead. Conor O'Shea: Just a couple to finish off, to follow on from, I think, Lisa's previous question about where the 5% revenue growth comes from, in terms of the 25% growth in EBITA, does that assume a significant increase at Canal+? And realizing that pay-TV sometimes takes a long time to turn around, if your revenue line is getting weaker sequentially into Q4, is that realistic to expect for 2017 an improved profitability or could it take a bit longer? Second question, on the number of subscribers from the telco partnerships, 2.9 million at the end of the year -- was that materially bigger at the end of February or is that the kind of landing rate for those deals that you've signed with Free and Orange? And then just a very last question, maybe for Herve, just a technical question -- in terms of the difference between the adjusted EPS per share and the adjusted diluted EPS per share, there's about a 10% difference for the full year -- €0.54 versus €0.59. Could you remind me why that is? And just if you can give us a sense of what the interest cost could be for 2017 or maybe just an average cost of debt. Thank you.

Let me answer first the questions -- growth in EBITA. We obviously wait for growth in both activities. If we intend to have a growth of 25% in the EBITA in comparison to 2016, everything cannot come from only Universal Music, indeed. So, we expect growth and important growth, at -- improvement at Canal+. For the wholesale customers which are 2.8 million at the end of December, we expect to have an increase in the growth and to benefit from the commercial actions of both Orange on the fiber and Free on this box and we expect to have growth during 2017 on this figure. For the question on the dilutive EPS, probably the answer will be easy to found in the annual financial report which is available on our Internet website just after this meeting. And I will find the answer, probably. Thank you. Conor O'Shea: Okay. Thank you. And just, sorry, on the interest costs, Herve, for 2017, do you have a sense of what that might be?

Well, it's quite easy to make the calculation, because the cash we have in bank, we give almost nothing and we have some debts which are at reasonable cost. So, we have tried to have deposits in bank with better conditions than zero which is the case for a large part of our deposits. But globally speaking, you can fear to have a very low remuneration, globally speaking, of the cash available in bank in 2017. Conor O'Shea: Okay. And just, offset by dividends potentially in Telefonica, Fnac and Mediaset -- is that on the positive financial income?

[Indiscernible] it's not exactly on the same line, but we had good inflow from Telefonica this year. We will expect to have other in 2017.

We will take our next question from Louis Citroen from Arete Research. Please go ahead.

I had two. The first one is, can you talk about the prospect for Vevo -- I think you're still the main shareholder in that asset -- and how you see it going forward? And then the second question is more a big-picture question. I mean, today, when you look at the independent streaming platforms, none of them are making money and they still seem to be some way off from making any. Isn't there a risk that, let's say, two years down the road, they all end up being owned by Google, Facebook or Apple and that you as -- that Universal as a label find itself only talking to these guys. Is that a risk or wouldn't that -- or not?

Well, the relationship with platform and with the incumbent, is a relationship that is going to evolve over time. I think that at the end of the day, on the long term, everybody should get an interest and to be sustainable. Some will disappear and other will grow. What is the unique selling proposition of a company like Universal Music Group? It is to be best of breed, number one worldwide in terms of talent scouting, number one. Number two, to be able to leverage on the -- its more than 34% market share, in terms of recorded music and with an amazing catalog which is making the Company at the core of the industry. So, is there going to be changes in who we're working with? Yes, absolutely. But what we do and the reason why we have confidence that we'll be able to grow through that and that we'll find a kind of a sustainable environment that is going to feed the long term growth of the industry, is because we've got those 400 digital platforms. It's because we're number one in the world and because we're also adapting the model which is making Universal Music Group the best-of-breed, second-to-none player in terms of being able to push the very best content in terms of music to the customers. And to do that, we have this kind of a comprehensive added value in the relationship with our talent, in terms of live events, in terms of merchandising, in terms of all the kind of a things that you can provide to a talent to be able to grow and to develop. So, we're not underestimating all the points and evolution threats on the journey, but we're well-positioned to be able to cope with them. As regard to Vevo, well, Vevo is clearly focused on innovation, monetization and original content. We have the position as a major shareholder. And in the world of distribution, in the world of the relationship between us in terms of content and the platform, Vevo is one of the platforms. So, we have an ongoing discussion to be able to define the right strategy for this player and it's work in progress.

We will take our next question from Sophie Julienne from Bank of America. Please go ahead.

It's Daniel Kerven from Bank of America. Just going to have another go at the EBITA guidance. I'm sure the intention to give some visibility as to where EBITA may go to next year. But as things stand, the guidance is pretty meaningless if you achieve, as a result of the exceptional items, going from €150 million to zero, but it implies much smaller underlying improvement. So, as you said, it's pretty impossible to know what exceptions are going to be for 2017. So, is your intention with the guidance to give us an impression of your ambition for the underlying improvement in profitability?

Well, I would make the same answer than earlier, but obviously this is guidance we have given at that level. We would have been criticized if we have given guidance at the IFO level, probably. So, obviously, each year you have some exceptionals which are between IFO and EBITA and we preferred to give the guidance at that level because it relies on improving the profitability of the businesses, but it gathers everything at this level. That's why we have said it, to give this guidance this year.

We will take our next question from Laurie Davison from Deutsche Bank. Please go ahead.

I'm going to try one more time just to follow up on Daniel's question. I realize that it's hard for you to give restructuring costs. But could you just give us, perhaps, some ballpark figure of what you expect the underlying profitability to do for Group at the IFO level for next year? Even if it's just in a percentage growth rate range? Thank you.

Well, we expect a growth, obviously. This is because if -- with no growth at that level, obviously, it would not be possible to have guided to plus 25% of the EBITA level. But -- sorry, but, once again, we have decided to give the guidance at that level, not to give it at a different level at this stage. So, sorry, but I cannot answer more.

We will take our next question from Ian Whittaker from Liberum. Please go ahead.

Three questions, please. First of all, just in terms of music, Herve, you pointed out that one of the uncertainties regarding recorded music is the whole fact that you don't know what will happen with subscribers. One of the bigger issues in music is that you can get free music on YouTube. So, can you tell us how you see negotiations with YouTube moving forwards in the future? The second thing is just regarding -- touches on Canal+. Again, you sort of talked about Canal+ as the only place that you can get sports. But what there does seem to be a notable pickup in is piracy around sports. For example, [indiscernible] Facebook, there seems to be live streaming of matches on Facebook illegally and it seems to be the sort of, A, increase in the number of sites where you can stream live football matches. So, just wondered how worried you are about that and the implications there for your business moving forward. And then the third thing is just going back to the general Vivendi Village and your view there is, all businesses have to invest for growth and that's absolutely fine. But surely there comes a point, if this business down the line is still making the losses where it is, where you think, maybe we should just exit and it would be good overall for us in terms of our financials? And also, as well, just in terms of the amount of time spent. Can you give us an idea of how much longer you're willing to put up with those sorts of losses in the Village part?

Thank you. So, your question on YouTube. As a matter of fact, it is well-known that only the greatest common element as regard to all content honor on YouTube, that it's very, very, very hard, if not possible, to make any money on the long term with YouTube. Because the level of advertising pricing and so on and so forth is not making a sustainable business. And I would say that we're having discussion with YouTube as regard to the rate. And obviously, there is an acknowledgement from YouTube as regard to their trial to get into the subscription model with YouTube Red. So, do I think that it is a kind of an ongoing sustainable situation and do -- as regard to the current terms in content honor on YouTube and do I think that it's going to last forever as this? No, I don't. And as you know, there are ongoing discussion with YouTube. So, it's work in progress. But the size of the prize, as regard to being in a position to get better monetization of our content in an environment that is going to be less dependent on YouTube model distribution -- I mean, clearly, yes, there is a new rule of the game to be defined. As regard to the piracy, well, I think that piracy -- here, also, is a kind of a thing that has to be tackled. And you're absolutely right that piracy is not only on sport but on movies, in TV series and I guess that at a certain stage there are going to be need for greater regulation. Because if you pay peanuts, you get monkeys and we need to get kind of a healthy environment to be able to invest in qualitative content. So, we've got teams and engineers and we invest a lot in terms of fighting against piracy. We'd like the environment to be a little bit more courageous and bold in terms of, in the different countries, to be able to make -- to enforce the law, should I say. And be it for sports and be it for film, TV series and others, I mean, we'll do the very best we can to be able to get our rights defended and the law enforced. And is this a threat? I wouldn't say a threat. It's competitive factors that we're exposed to as we speak. And I guess that, in terms of the fight against piracy, there are more things to be getting on our business than threats per se. But it's a very big issue and we're on top of it. And hopefully we'll be able to get positive moves and evolution in the foreseeable future. To answer the question on losses at Vivendi Village, I would say also at a new initiative level, in fact, that way the losses, because it's mainly due to cost of launch of new project. And at the level of the Group, I do believe that it is very logical and very useful to have several project which can be launched which can be the -- is organic growth of tomorrow and maybe will, in those project, one, two or three of those projects will make, in the future years, the tons of money. What I can say is that each project is very specifically designed and we look at it on a financial basis, on a monthly basis and we look very carefully to the expenses which are done at that level. And after a certain period of time, if we consider that the expenses that have been done are too important in comparison to the expected profits, we can decided to stop which has been the case at Watchever, for example, in the recent past, in Germany, where we have decided to shut this experience after a couple of years which showed that it was not very completely profitable. But this was something we have tried. And maybe the Group has other opportunities in other fields, in what is today launched by Vivendi Village or new initiatives. Thank you. And [indiscernible] Vivendi Village that has been created to be able to develop those initiatives, when you see the evolution of the ticketing, for instance which is part of the Universal Music Group strategy and the initiatives, be it in France, in the UK, the launch as a kind of a greenfield in the U.S., we have seen tremendous progress. So, again, this is an example, just to illustrate the point, that consider Vivendi Village as a business on its own right, who's got its financial criteria and very, very strict discipline. And we see that as a kind of environment for growth initiatives, agile businesses, that are meant at one stage to be able to be reintegrated in the operation when they come to a mature stage.

Can I just ask two very quick follow-ups? One, just -- I know we've been over this multiple times, but just in terms of the 25% increase in your EBITA for 2017, that is based off the €724 million figure? That's the first question. And second of all, just in terms of coming back on the music streaming question, there's been a number of suggestions that a few of the sites may be in financial trouble and/or potentially could close. So, from your standpoint, in terms of for your streaming revenues, that presumably would have an impact on your potential growth, at least in 2017 and 2018.

Well, on your latter question, I think when you see the structure of streaming and you see the key players of growth, you've got the famous 80/20 rules. So, we're pretty optimistic that there is no threat as regard to the players who are the main sources of growth. So, yes, in an environment where there are some initiatives, trials, et cetera, we will have some players that will disappear. This stage of life is not going to create freight on the impact of the shape of the growth on the streaming revenues on our business.

And to answer the question on the guidance on the EBITA, obviously this is a guidance of plus 25% in comparison to the figure of 2016. Indeed.

So, the €724 million.

Correct.

Correct. Thank you.

So, I think we're done. So, as always, thank you for your attention. Thank you for your questions. Watch this space for 2017. And again, consider that, for us, the strategy of Vivendi is a very clear strategy and the capacity for us to be able to deliver on our guidance is something that we can confirm. Thank you very much. Good evening to all.

This concludes today's call. Thank you for your participation. You may now disconnect.