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Q1-10: ZEEL Ad Revenues Fall 13%; Strategic Refocus On Subscriptions

It's another quarter with a QoQ rise in net profits and revenues for Zee Entertainment Enterprises Ltd - profits are up 25.9% to Rs. 913.2 million, though down 43% from Q1-09. Revenues rose 50.2% to Rs. 4759.3 from Q4-09. Expenses were controlled and fell by 9.1% to Rs. 3664.2 million. Operating profit margin stood at 24.6% and EBITDA Rs. 1170 million. In the quarter, the company redeemed  Foreign Currency Convertible Bonds (FCCBs) aggregating  $3.79 million. Details: Release | Financials Ad Revenues Fall 13% QoQ; Change in Biz Model To Subscriptions Though the company rallied its operating efficiencies, attempted content improvement and balance sheet management (to reduce debt during the quarter and consequently interest costs) , it was unable to make up for the adverse effect of the slump in advertising revenues. Revenues from ads fell 13% from Q4-09 and by 29% from Q1-09 to Rs. 1979.6 million during this quarter. Explaining the situation, ZEEL chairman Subhash Chandra said that the macro advertising environment remained weak and the quarter saw intense competition in Hindi entertainment segment. Overall ad expenditure on TV, he predicted, would not be as buoyant as they were in the last few years. The company has announced that over the next few years, it will shift its business model from an advertising led model to a subscription led one, following global trends. Advertising was the prime revenue generator for the company in FY09, contributing 49% (Rs. 10.6 billion) to revenues of Rs. 21.73 billion. International Subscriptions International subscriptions brought…

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