zee-enter (By Preethi J & Nikhil Pahwa)


Zee Entertainment Enterprises Ltd (ZEEL), which operates the ESSEL Groups entertainment channels like Zee TV, Zee Cinema, Zee Sports, Zee Cafe, among others, has reported revenues from subscription higher than advertising, on a consolidated basis.

What is key here, though, is that ZEEL has recorded a rise in both consolidated net profit and revenues since last quarter -this is the first time this has happened in the last 14 quarters. ZEEL Chairman Subhash Chandra has said that “The emerging need is one of a change in mindset for the near term, with higher emphasis on cost consciousness.” Rising competition has decreased industry margins this year and Zee plans to focus on improving efficiency to tackle the gloomy economic scenario.

Details: Financials | Release

Advertising

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ZEEL’s advertising revenue, just as others in the industry, has witnessed a considerable slowdown from when it peaked in the second quarter of the 2008-09 fiscal. Last quarter, the company made Rs. 2684 million from advertising. The decline in advertisng is being attributed to economic slowdown and strike of TV production crew in November 2008. Overall, Advertising revenues were down 15% for the quarter, though. for the full year ending March 31st 2008, advertising revenues were Rs. 10617.8 million, higher Rs. 9013.8 in subscription revenues.

Punit Goenka, CEO of ZEEL has said that “Given the current market situation, visibility remains low on advertising revenues, though we are reasonably confident that things will be much better during the first half of fiscal 2010.”

Another reason for the decline in Ad revenue is that ZEEL stopped selling ads for some of Zee News’ channels in Q4; consequently, corresponding income and expenses were not booked under ZEEL.

Subscription

Domestic subscriptions stood at Rs 1230 million, while international subscriptions were at Rs. 1115 million. Zee claims that they have an “inherent library strength” and their content library enables creating new channels at marginal costs to increase the subscription growth rates.

DTH Revenue: Of the total subscription revenue, the revenues from domestic DTH operators were Rs 381 million, up 35% from Q3, and 93% from the same quarter last year. Subscription from domestic cable grew by 20%

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Sports

The Sports Business revenues during the fourth quarter of FY09 were Rs 767 million, while costs incurred this quarter were Rs 629 million. Operating margin for the quarter in the sports business stood at 18%. Ten Sports and Zee Sports claim to together command 29% of the sports broadcasting market in 2008. The sports business revenue from the two channels has also dropped from Rs 1.16 billion for the same quarter last year to Rs 767 million this quarter.

Films

ZEEL will review its plans for Zee Entertainment Studio and curtail investments during this year. ZES released 3 films – one each in Hindi, Marathi and Telugu, but continued to lose money, with revenues of Rs. 81 million and incurred costs of Rs. 164 million in the current quarter. For the fiscal, the division registered revenues of Rs 336 million and incurred costs of Rs 443 million. This is despite benefiting from revenues accrued by the launch of a Kannada film and a Bengali film launched in December 08.

Key Corporate Developments

ZEEL has formed a subsidiary with Asia TV called Zee CIS Holdings in Russia, to operate its Zee Russia channel.

Subsidiary Zee Entertainment Studios is producing movies under the banners Zee Limelight and Zee Motion Pictures.

It has formed more subsidiaries – ZES Holdings, Mauritius; ZES International, UK

Asia Today Ltd has 100% ownership of Zee Studio, Zee Cafe and Zee Trendz.

Divested stake in Dubai venture – In February, ZEEL divested stake in its subsidiary Pan Asia Infrastructure Ltd which was set up in 2006. Calling it a “non-core” activity, the company has exited it for $4.2 million. Will this affect the channel Zee Aflam?

Financials

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ZEEL has recorded a rise in consolidated net profit after tax of Rs 968.1 million over revenues of Rs 5.77 billion for the quarter ended March 31, 2009. Last quarter, it had suffered a huge dip in net profits, making Rs 839.7 million over consolidated revenues of Rs 5.46 billion. This includes revenues from Taj TV Ltd, ETC Networks and Zee Turner.

Operating profit margin for the fourth quarter was 23.4%.
Related: Q309: IBN18 Ups Viacom18 Stake; ZEE News To Shut Zee Gujarati; ZEEL