Vivendi chief says music industry gloom overdone

Jean-Bernard Levy, chairman of the management board and chief executive of Vivendi, speaks during a news conference to present the company's 2006 full year results in Paris March 7, 2007. Levy has no plans to spin off the music unit Universal and he said on Saturday he believed the gloom surrounding the industry had been over done.

CANNES, France (Reuters) - Vivendi Chief Executive Jean-Bernard Levy has no plans to spin off the music unit Universal and he said on Saturday he believed the gloom surrounding the industry had been over done.

Speaking at the annual Midem conference, Levy said the music industry was going through a huge transition at the moment, with new business models for mobile and Internet services appearing all the time.

But he predicted there would still be a viable market for physical products like CDs for many years to come and he said the industry's future lay, as always, in spotting the right creative talent.

"I think altogether today there is an exaggeration in the industry," he told the conference.

"Of course it is not doing that well, but look at us, we have flat revenues, a good two digit margins and it's not as dark as what many people describe."

The music industry has been hit in recent years by Internet piracy and the rapid growth in digital sales but the planned job losses at British company EMI have highlighted the issue even further.

Levy joked that Universal could benefit from its rivals' problems, by gaining more staff or bands, but he said that ultimately a stronger competitor would benefit the whole industry.

"We like to have strong competitors," he said. "I hope that after the shake up (at EMI) there will be a strong set of major companies that will help the music industry to grow."

Universal is the world's largest music company, with artists such as Amy Winehouse, Mika and U2, and Levy said he was very committed to the group.

"Back in 2003 the numbers didn't look very good," he said "(But) as a shareholder of Universal, I have seen the numbers go up quite sharply. We had in '03 a 3 percent operating margin business and we have today a 12 percent operating margin business.

"We do have a lot of satisfaction ... and we're very committed."

DIGITAL TO GROW

He said digital entertainment would continue to grow, due to the developments in technology, broadband penetration and globalization but he said this would not necessarily mean the immediate demise of the CD.

"If we (have the right creative policy) and if we understand the technology well and the consumer well, then ... digital entertainment will continue to expand and will be very successful," he said.

"It is a transition into a very diversified model, of which CDs will still play a part. So I do not think it is black and white."

A report released this week by the international trade body, the IFPI, said global music sales were expected to be down around 10 percent for 2007, despite a 40 percent increase in digital music sales.

(Reporting by Kate Holton; editing by Tony Austin)