Zeel ad revenue up 16%, subscription revenue declines in Q4FY18

Zee Entertainment Enterprises Limited (ZEEL) has posted consolidated operating revenue of Rs. 17,253 million for the fourth quarter of FY18, recording a growth of 12.9% on YoY basis. EBITDA for the quarter ended March 31, 2018 was Rs. 5,062 million, translating into EBITDA margin of 29.3%. Profit After Tax (PAT) for the quarter was Rs. 2,310 million.

Consolidated operating revenue for FY18 stood at Rs. 66,857 million, recording a growth of 3.9% on YoY basis. EBITDA for the fiscal ended March 31, 2018 was Rs. 20,761 million, translating into EBITDA margin of 31.1 %. Profit After Tax (PAT) for the year was Rs. 14,791 million.

During the quarter, ZEEL's consolidated advertising revenue grew by 23.9% YoY to Rs. 10,496 million. On a comparable basis (excluding sports, RBNL and IWPL) the domestic advertising revenue growth was 21.5%. The strong growth momentum in advertising spends witnessed in the last quarter continues. The recovery in rural demand is complementing the already strong urban demand which should continue to hold advertising in good stead.

For the full year FY18, ZEEL's consolidated advertising revenue grew by 14.50/0 YoY to Rs. 42,048 million. On a comparable basis (excluding sports, RBNL and IWPL) the domestic advertising revenue growth was 15.9%. The advertising spends in the first half were impacted due to roll-out of GST but bounced back sharply in the second half.

Domestic and international subscription revenues for the quarter declined by 0.7% YoY and 8.0% YoY respectively, primarily on account of sale of sports business. On a like to like basis, the domestic subscription revenue grew by 18.1 %. Domestic subscription revenue growth for the quarter was helped by the deals that were closed in the quarter and the catchup revenues associated with the same.

For the full year FY18, ZEEL's domestic subscription revenue grew by 11.8% YoY. The subscription revenue growth for the year was slightly impacted by the delay in phase-III monetisation due to the uncertainty regarding TRAI's tariff order.

ZEEL's total expenditure in Q4FY18 at Rs. 12,191 million, higher by 15.1% YoY compared to Q4FY17. The following table gives the break-down of costs.

Programming cost for the quarter at Rs 6,893 million increased by 6.7% YoY. This increase is driven by higher original programming hours in regional channels, higher movie amortization costs and content cost for lEES. Advertising, publicity and other expenses for the quarter grew 44% YoY to Rs 3,660 million on account of lEES launch expense and increased marketing activities for new properties. Additionally, the expense base for Q4FY17 was lower as some marketing and promotion events were held back due to demonetization.

For the full year FY18, total costs increased by 2.30/0 YoY to Rs 46,095 million. The underlying increase is higher but offset by the sale of sports business. On a like to like basis, programming cost increased due to higher original content hours across the network and higher movie amortization cost, while the reported programming cost declined due sale of sports business. Advertising, publicity and other expenses increased by 25.6% YoY to Rs. 14,164 million on account of brand refresh, launch of lEES and costs related to silver jubilee events.

Subhash Chandra

Subhash Chandra, Chairman, ZEEL, commented, "Looking at our performance one might not realise that the first half of the year was not as smooth, which is a testimony to the strength of our team. Being the number one TV entertainment network is a result of our strategy and the consistent hard work we have put in over the years. With the launch of ZEE5, we have taken a major leap towards our preparation for the future and we are confident that like TV business we will be in the leadership position in the digital space as well."

Punit Goenka

Punit Goenka, Managing Director and Chief Executive Officer, ZEEL, commented, "We are delighted with the strong operating and financial performance during the quarter. Domestic ad revenue growth of 24% is driven by broad based recovery in advertising spends. With high visibility of product campaigns, improving consumer demand and GST related benefits trickling down to ad spends, we are confident of continued traction in advertising spending. The full-year domestic subscription revenue growth of 12% is a tad lower than our initial expectations due to some unforeseen events. However, there is no change in our medium-term outlook for the same."

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