Sale of sports business buoys ZEE’s Q2FY18 net profit to Rs 5,912 mn

Zee Entertainment Enterprises Limited (ZEEL) has reported consolidated revenue of Rs 15,821 million for the second quarter ended September 30, 2017, recording a decline of 6.7 per cent on YoY basis. 

ZEEL’s consolidated advertising revenue in Q2FY18 grew by 2.9 per cent YoY to Rs 9,867 million. Despite the adverse impact of GST on advertising, domestic advertising grew by 5.8 per cent YoY on a comparable basis (excluding sports, RBNL and IWPL) to Rs 9,028 million. Advertising revenue of ZEEL’s international business was impacted due to currency appreciation and continuation of some region-specific issues. 

Domestic and international subscription revenues for the quarter declined by 13.5 per cent YoY and 16.1 per cent YoY, respectively, on account of sale of sports business. On a like to like basis, the domestic subscription revenue grew by 7.2 per cent to Rs 4,043 million (adjusted for sports). In the current year, the contract renewal negotiations are taking slightly longer due to ongoing litigations regarding TRAI’s tariff order. Despite the delay, ZEEL’s full year outlook for domestic subscription revenue growth remains unaltered. 

Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) for the quarter ended September 30, 2017 was Rs 4,912 million, translating into EBITDA margin of 31.0 per cent. Profit After Tax (PAT) for the quarter, including exceptional gain from the sale of sports business, was Rs 5,912 million. The other income for the quarter includes notional gain of Rs 1,609 million on re-measurement of previously held equity interests in India Webportal Private Limited (IWPL) and Fly By Wire International Private Limited to its acquisition-date fair value. 

In Q2FY18, ZEEL was the #1 non-sports entertainment network with a viewership share of 18.3 per cent. The pay Hindi GEC bouquet saw a sharp improvement in its market share and the regional portfolio continued to perform well. 

Dr Subhash Chandra, Chairman, ZEEL, commented, “We are now a 25-year old organisation and it is with great satisfaction and pride that I look back at this journey and the numerous milestones we have achieved. Starting as India’s first private television channel, we have grown into a truly global entertainment content company with a worldwide footprint and a strong presence across all forms of entertainment. Indian M&E industry has grown by leaps and bounds, but it is just the beginning. I am confident that we will continue to shape the entertainment industry, much like we have done over the last two and a half decades.” 

Punit Goenka, Managing Director & Chief Executive Officer, ZEEL, said, “At ZEEL, it has been exciting 25 years during which we significantly increased our viewership and expanded our regional as well as global presence. This was achieved while delivering a strong financial performance. It has been possible because of our ability to evolve our content offerings in line with changing consumer preferences.” 

Commenting on the Q2FY18 results, Goenka said, “We are satisfied with our performance against the backdrop of tough macro-economic environment during the quarter. Our advertisers were negatively impacted during transition to GST, which led to a temporary pull-back on their ad spends. Post the decline in the first half of the quarter, the growth recovered strongly and is back on track. Despite the adversity, our domestic ad revenue grew at 5.8 per cent on a comparable basis. The domestic subscription growth for the quarter was at 7.2 per cent. Despite the loss of advertising revenue and elevated expenses during the quarter, we have been able to deliver a healthy margin of 31 per cent.” 

He also mentioned about Z5, ZEEL’s new digital product that is slated to launch in the second half of this financial year. Z5 will offer an unrivalled content catalogue appealing to all demographics and bring unique viewing experience to the consumer.