ZEEL Q2 FY2019 revenues up 24.9% at Rs 19,759 mn; ad revenues grew 22.7%

Zee Entertainment Enterprises Limited (ZEEL) reported a consolidated operating revenue of Rs 19,759 million for the second quarter of fiscal 2019, recording a growth of 24.9 per cent on a YoY basis. 

Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) for the quarter ended September 30, 2018 was Rs 6,757 million, translating into EBITDA margin of 34.2 per cent. Profit After Tax (PAT) for the quarter was Rs 3,867 million. 

Advertising revenue 

During the quarter, ZEEL’s consolidated advertising revenue grew by 22.7 per cent YoY to Rs. 12,106 million. The 23.3 per cent domestic advertising revenue growth, while aided by a softer base, was driven by the robust demand across key categories for TV advertising and ZEE5’s contribution to advertising revenue. While the TV advertising revenue growth was led by the continuous increase in the network’s market share over the last few quarters, ZEE5’s growing user base and time-spent will aid the overall growth. 

Subscription revenue 

During the quarter, ZEEL’s consolidated subscription revenue grew by 21.3 per cent YoY to Rs 6,082 million. Domestic subscription revenue for the quarter increased by 26.0 per cent YoY, whereas international subscription revenue increased by 1.9 per cent Yo Y. The higher than normal domestic subscription revenue growth was driven by two reasons: a) early closure of some of the distribution contracts as compared to last year, and b) monetisation of Phase III subscribers. For the TRAI tariff order, we have already started discussions with our distribution partners for seamless transition to the new regime. We believe that the regulation could be beneficial for all the stakeholders in the value chain and improve the overall customer experience. 

ZEEL’s total expenditure in Q2FY19 stood at Rs 13,001 million, higher by 19.2 per cent YoY compared to Q2FY18. 

Programming cost for the quarter increased by 25.5 per cent YoY to Rs 7,263 million. This increase was driven by content cost for ZEE5, movie production costs and elevated movie amortisation costs for the broadcast business. Advertising, publicity and other expenses for the quarter grew 22.5 per cent YoY to Rs 4,051 million due to higher marketing and promotion costs for ZEE5 and movies released during the quarter. 

ZEE5 performance metrics 

Since launch in February, ZEE5 has been the fastest growing digital entertainment platform and has become the #2 platform in India. 

In September, ZEE5 had 41.3 million monthly active users (MAU), recording a growth of 190 per cent compared to April 2018. Over the same time, video views grew 340 per cent and videos viewed per user almost doubled, leading to a significant improvement in user engagement. 

ZEE5 users currently spend an average of 31 minutes per day on the platform. 

ZEE5 has been consistently amongst the top-5 free and the top-3 grossing entertainment apps as per the Google Play store rankings. 

The app downloads more than doubled in the second quarter, making it the second most downloaded entertainment app on Google Play store during the quarter. 

ZEE5 also featured as the editor’s choice app in the ‘Made by Indians’ section on Independence Day. 

International Business 

During the quarter, ZEEL’s International business revenue was Rs 2,026 million. The advertising revenue grew by 14.6 per cent on a comparable basis (In Q2FYI8, Rs 15 million of advertising revenue pertaining to sports business was part of the International ad revenue), while the subscription revenue grew by 1.9 per cent. Break-down of international business revenues:

• Advertisement Revenue of Rs 580 million
• Subscription Revenue of Rs 989 million
• Other Sales and Services of Rs 457 million