BENGALURU: Subhash Chandra-led Zee Entertainment Enterprises Ltd (Zeel) today reported an 11.5 per cent and 28.3 percent increase in consolidated total revenue and profit after tax (PAT), respectively, for the quarter ended 31 December 2017 (Q3-18) as compared with the corresponding quarter of the previous year (year-on-year [y-o-y]). Zeel’s consolidated operating revenue, which comprises advertisement, subscription and other sales and services revenue, rose by 12.1 percent y-o-y in Q3-18.
Zeel reported consolidated total revenue of Rs 1,886.11 crore for Q3-18 as against Rs 1,691.58 crore a year ago. PAT for the quarter under review was Rs 321.72 crore vis-a-vis Rs 250.80 crore for the corresponding year ago quarter. Consolidated operating revenue was Rs 1,838.07 crore up from Rs 1,639.12 crore in Q3-17.
Adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) for Q3-18 increased by 15.2 percent y-o-y to Rs 594.42 crore (31.5 percent margin) from Rs 515.79 crore (30.5 percent margin). Adjusted EBITDA includes cost of fair value loss on financial instruments at fair value through profit and loss (net) of Rs 41.92 crore in Q3-18 and of Rs 71.35 crore in Q3-17.
Operating revenue break-up
Ad revenue in the quarter under review increased by 25.8 percent y-o-y to Rs 1,202.02 crore as compared with Rs 955.45 crore. Zeel said in its earnings release that adjusted for the sale of its sports business, domestic advertising grew by 30.4 percent to Rs 1,137.3 crore. Subscription revenue declined by 15.5 percent y-o-y to Rs 501.69 crore from Rs 593.46 crore. Adjusted for the sale of the sports business, domestic subscription revenue grew by 7.5 percent to Rs 403.6 crore. International subscription revenue stood at Rs 98.1 crore. Other sales and services revenue swelled by 48.1 percent to Rs 134.36 crore.
Other income decreased by 8.1 percent y-o-y to Rs 48.04 crore in the quarter under review from Rs 52.46 crore.
Company speak
Zeel chairman Chandra said, “It is very heartening to see the rebound in the economy after four quarters. The initiatives taken by the government had some short-term impact on the growth but these measures will strengthen the economy in the long run. The Indian M&E sector will be a beneficiary of this growth story as people spend more time and money on consuming entertainment content. ZEEL, with its strong portfolio of entertainment offerings, is well positioned to capitalise on this opportunity.”
Zeel managing director and CEO Punit Goenka said, “We are delighted to deliver a strong operating performance during the quarter. The slower growth in the last four quarters was due to specific events that required advertisers to recalibrate spends. As the impact of these factors is now behind us, ad spends have bounced back strongly and the outlook remains encouraging. The recent cut in GST rates across a wide category of products should aid the growth. Our domestic ad revenue growth of 26 percent is a testimony to the fact that television continues to remain the most effective medium for brand building. With a dominant time share along with an increasing reach, television will remain an important medium for advertisers in the foreseeable future. On top of this, digital platforms are driving incremental video consumption which represents another growth opportunity for content monetisation. Our new digital platform, Zee5, scheduled to be launched in February, will enable us to capture this growth.
“The domestic subscription growth for the quarter was at 7.5 percent. The growth so far has been lower than what we had last year as the content deals with our distribution partners are taking slightly longer to conclude due to litigations regarding the TRAI tariff regulation. Last year we had closed majority of these deals in the second and third quarter. However, this does not have any significant impact on our full year outlook for subscription growth.”
In a tweet today, Goenka had this to say:
Our domestic ad revenue growth of 26% is a testimony to the fact that TV continues to remain the most effective medium for brand building. With a dominant time share along with an increasing reach, TV will remain an important medium for advertisers in the foreseeable future.
— Punit Goenka (@punitgoenka) January 17, 2018
Let us look at the other numbers reported by Zeel
Zeel’s total expenditure increased by 8.9 percent y-o-y in the quarter under review to Rs 1,338.38 crore from Rs 1,228.60 crore. Operating costs reduced by 4.3 percent y-o-y to Rs 672.98 crore from Rs 703.50 crore. Employee benefits expense in Q3-18 increased 8.2 percent y-o-y to Rs 153.54 crore from Rs 141.88 crore. Advertising and publicity expenses increased by 71.2 percent y-o-y to Rs 179.62 crore from Rs 104.90 crore. Other expenses increased by 37.2 percent to Rs 237.51 crore from Rs 173.05 crore.
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