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Zee reports higher profit in Q2 of fiscal 2011-12

However, advertising revenues for the quarter showed a decline at Rs 3,949 million; banks on digitisation for better business prospects in future

BestMediaInfo Bureau | Delhi | October 18, 2011

Zee Entertainment Enterprises Limited (ZEE) has earned a consolidated revenue of Rs 7,184 million in Q2 (ending September 30, 2011) of fiscal 2012. The consolidated operating profit (EBITDA) for the quarter stood at Rs 2,075 million with a PAT of Rs 1,600 million, representing growth of 10.1 per cent and 26.7 per cent, respectively, over the corresponding period in the previous fiscal. The EBITDA margin for the quarter was 28.9 per cent.

However, advertising revenues for the quarter showed a decline at Rs 3,949 million which the company attributes to lack of big sporting events during this period. Subscription revenue for the quarter stood at Rs 2,910 million.

Subhash Chandra, Chairman, ZEE, said, “The competitive intensity in the television segment continues to be high. Given the backdrop of slowdown in advertising spends, our performance reflects the same. We have a very strong balance sheet and I am confident that we would take advantage of the growth opportunities ahead of us. Our investments in the sports genre have continued during the quarter.”

Chandra added, “The television economy continues to grow robustly on the back of subscriber growth and digitisation. Last week, the Cabinet cleared the ordinance on digitisation, which is a very positive move. This development will definitely give a boost to the cable and satellite industry and help create a more sustainable business model for the television industry. Currently, DTH is leading the adoption of digital technology in the distribution value chain. At the end of September 2011, there were around 39 million gross DTH subscribers in the country. With this ordinance, the Cable and DTH industry has got a great opportunity to consolidate the distribution business.”

Punit Goenka, Managing Director & CEO, ZEE, commented, “Zee Entertainment has a wide portfolio of television channels and we have seen some gains and some losses in our market shares during the quarter. We are confident that we would continue to grow our business profitability in a sustained manner. During the quarter, we have seen a healthy increase in our operating margins, partly due to lower sports losses and partly due to better cost efficiency measures. Though advertising spends are better sequentially, overall trends remain subdued and FY2012 does look to be a year of tepid growth in advertising spends on television.”

Speaking about the outlook for the business, Goenka said, “We are working towards correcting the loss in market shares in some of our businesses. With the digitisation mandate being passed, it will further be able to create value for the business.”

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