French media conglomerate Lagardère said it faces a writedown of about €900 million ($1.18 billion), partly due to the poor performance of its sports marketing division, Lagardère Unlimited, which owns the IEC in Sports, Sportfive and World Sport Group rights agencies.
In a trading update for the fourth-quarter of 2011, Lagardère said the writedown included a reduction in the value of its 20-per-cent stake in pay-television broadcaster Canal Plus France.
“In 2011, the weak environment in global economy and in stock markets on the one hand, and the performances (for the second half of 2011) and prospects of the Unlimited [sports division] branch on the other hand, are likely to give rise to significant impairment losses,” Lagardère said.
“On the top of that, impairment losses on Canal Plus France shares will be added. Overall, the impairment losses, which are mainly related to these two assets, may amount to around €900 million.”
Lagardère has invested over €1.2 billion in its sports marketing division since 2007, but the returns have been poor. The conglomerate’s general managing partner, Arnaud Lagardère, invested in the business to reduce the group’s reliance on print media advertising and publishing.
Arnaud Lagardère said on Tuesday that he still believed Lagardère Unlimited would become a successful venture, and suggested the company would profit from increasing investment in sport by the Persian Gulf nation Qatar. “If there is a partner for us in sports, it will be Qatar,” he said.
Qatar Holding, the investment arm of sovereign wealth fund the Qatar Investment Authority, became Lagardère’s largest shareholder late last year by increasing its stake from 7.6 per cent to 10.07 per cent just before Christmas. A Qatari representative is to join the board of Lagardère Unlimited.
The Lagardère group’s overall sales in 2011 fell by four per cent to €7.7 billion.