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ZEEL posts strong Q2 FY14 performance; profit up 26% at Rs 236 cr

Ad revenue up 10.5 per cent while subscription revenue recorded a growth of 16 per cent and consolidated operating revenue was up by 15.5 per cent

BestMediaInfo Bureau | Mumbai | October 23, 2013

Zee Entertainment Enterprises (ZEEL) reported second quarter (ended September 30, 2013) fiscal 2014 consolidated revenue of Rs 11,013 million. The consolidated operating profit (EBITDA) for the quarter stood at Rs 3,105 million, recording a growth of 42.7 per cent over the corresponding period of previous fiscal. PAT for the quarter stood at Rs 2,363 million. The EBITDA margin for the quarter stood at 28.2 per cent and the PAT margin was 21.5 per cent.

Advertising revenue for the quarter was Rs 5,833 million, a growth of 10.5 per cent over Q2 FY13. Ex-sports, advertising growth for the quarter is upwards of 20 per cent, which is higher than the industry growth rate.

Subscription revenue was Rs 4,581 million for the quarter, a growth of 16 per cent over the corresponding period last fiscal. During the quarter, domestic subscription revenues stood at Rs 3,350 million, while international subscription revenues were Rs 1,231 million.

Profit after tax (PAT) for the quarter stood at Rs 2,363 million, a growth of 26 per cent over corresponding period last fiscal.

Subhash Chandra, Chairman, ZEE, stated, “The Indian economy continues to face challenges of depreciating rupee, current account deficit and growing inflation. However, the situation is expected to improve in the coming quarters as a result of the curbs on gold imports, a weak rupee benefiting exports, and a sharp slowdown in domestic demand pulling down consumption and investment goods imports. The Entertainment & Media industry growth is marginally impacted by the overall slowdown in the economy. The television sector, in particular, continues to grow on the back of better subscriber growth linked to increasing digitisation.”

Commenting on the results, Chandra said, “While overall business environment has stayed slightly weak, ZEEL continues to grow its business at a healthy pace. There was an apprehension about the trends in advertising spends given the overall weakness in the economy. But the television media industry has continued to grow in double digits during the second quarter. ZEE has outpaced the industry advertising revenue growth once again. We look forward to continuing our investments in creating compelling content across genres and take advantage of the growth opportunities ahead of us. We will continue to pursue growth opportunities, which would enhance long term shareholder value.”

Punit Goenka, Managing Director and Chief Executive Officer, ZEEL, commented, “We are pleased with the performance during the quarter. We have seen robust growth in market share in some of our key channels and overall have been able to maintain network viewership share. Once again we have outperformed the television industry advertising revenue growth and have delivered 20 per cent plus yoy growth, excluding sports. Despite the launch of new channels both in domestic and international markets during the quarter, we have managed to improve our EBITDA margins over the corresponding period last year. Sports performance for the quarter has been good but due to a heavy sports calendar and rupee depreciation, the business is expected to be in losses for some more time to come.”

Talking about new initiatives, Goenka commented, “In line with our strategy of undertaking value-accretive investments, we launched &pictures, an interactive Hindi movie channel aimed at targeting the younger mindset. The channel endeavours to build upon the existing film and digital resources to create a continuing conversation with an audience that is interested in staying connected and engaged with the world around them. This quarter also saw the soft launch of Zee Anmol, an FTA Hindi GEC which is the first channel in the Indian television space to be simultaneously launched on mobile and television platforms. Positioned as 'Dil Choo Jaaye', Zee Anmol is a channel that believes in touching people's hearts through real, genuine emotions that will be depicted through some of the best shows that Indian Television has ever seen.”

Speaking about the business outlook, Goenka said, “Beginning next quarter, we will see reduction in advertising inventory across the network in accordance with TRAI regulations. We are in the process of negotiations with advertisers and are confident that this will not have any major impact on revenue monetisation. Digitisation will lead to fragmentation of audiences. At ZEE, we believe this presents a huge opportunity to create new products for specific segments, which will allow us to monetise this opportunity both from advertising and subscription standpoint. Therefore, we continue to innovate in terms of our content and formats.”

Info@BestMediaInfo.com

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