Zee Entertainment Enterprises Ltd. (ZEEL), Network18 and TV18 recently released their Q1FY2016 results. During the first quarter of the year, what is noticeable is that the revenues from operations declined when compared to the previous quarter Q4FY2015, while expenses too increased since the last quarter. We take a deeper look into the results.
ZEEL’s operating income and total expenses decline since last quarter
While ZEEL Q1FY2015 operating income grew quite considerably since the same quarter last year, it however saw a marginal decline in comparison to the last quarter (Q4FY2015). Total income from operations grew by 26.6 per cent in comparison with the corresponding quarter during the previous year. The income from operations grew in Q1FY2016 to Rs.1,339 crore from Rs.1,055 crore in Q1FY2015. However, the income from operations declined marginally in comparison to Q4FY2015 which was at Rs.1,347 crore, a decline of 0.5%. Advertising revenues, however, saw a good growth since the last quarter and the corresponding quarter last year. It grew by 25.2% in comparison with corresponding quarter last year and increased by 16.4% since the previous quarter (Q4FY2015). During this quarter the advertising revenues stood at Rs.779.9 crore, while in Q1FY2015 it was Rs.622.1 crore and in Q4FY2015 it was Rs.669.6 crore. Subscription revenues on the other hand grew in lower double digits at 12.1% since Q1FY2015 and declined by 9.4% since Q4FY2015. It grew to Rs.462 crore this quarter from Rs.412 crore in Q1FY2015, while in Q4FY2015 subscription revenues stood at a high of Rs.510 crore.
ZEEL’s total expenses however during the quarter saw a large rise as it grew by 36.6% in comparison with Q1FY2015. However, the expenses had declined marginally by 4.5% since the last quarter. Total expenses grew to Rs.1,045 crore in Q1FY2016 from Rs.765 crore in Q1FY2015. This was mainly contributed by the rise in operating expenses by 51.3% and advertising and publicity expenses by 20%. Operating expenses in Q1FY2016 grew to Rs.610 crore from Rs.403 crore in Q1FY2015. Advertising and publicity expenses on the other hand grew to Rs.96.6 crore in Q1FY2016 from Rs.80.3 crore in Q1FY2015. However, the marginal reduction in expenses from Q4FY2015 was also due to operating costs and adverting and publicity expenses being higher. While operating cost in Q4FY2015 stood at marginally 1.6% higher at Rs.620 crore in comparison to Rs.610 crore in Q1FY2016, advertising and promotion expenses were much 37.5% higher at Rs.132 crore in Q4FY2015 in comparison with Rs.96.6 crore in Q1FY2016.
The profit after tax (PAT) of ZEE for the quarter increased to Rs.242.3 crore from Rs.210 crore in Q1FY2015 and Rs.231.9 crore in Q4FY2015. This is an increase of a good 15.3% from the corresponding quarter last year and a marginal rise of 4.4% since the last quarter.
Network18’s operating income declines, expenses rise since Q4FY2015
Network18’s total income from operations grew by 12% since the corresponding quarter last year but declined by 6% since the last quarter. This was seen in the income from operations which include advertising and subscription revenues increasing by 12.3% in Q1FY2016 from Q1FY2015, while it declined by 6.3% from the previous quarter Q4FY2015. The income from operations for Network18 in Q1FY2016 was Rs.786.1 crore, while in Q4FY2015 it was Rs.839.3 crore and in Q1FY2015 it was Rs.699.7 crore.
Total expenses of Network18 also grew marginally since the last quarter but grew larger in comparison with the corresponding quarter last year. While in comparison to the Q1FY2015 it grew by 10.6% as total expenses recorded was Rs.811.9 crore in Q1FY2016 from Rs.733.5 crore in Q1FY2015, during the previous quarter Q4FY2015 it was at Rs.789 crore. The reason for this is the increase in programming costs and distribution, advertising and business promotion expenses. While programming costs were marginally lower in comparison to the Q4FY2015, it had increased by 21.7% since Q1FY2015. Programming costs accounted for Rs.206.3 crore in Q1FY2016, while in Q4FY2015 it was at Rs.208 crore and in Q1FY2015 it was at Rs.169.5 crore. Distribution, advertising and business promotion expenses increased by 6.1% since the last quarter and by 9.8% in Q1FY2015, as it stood at Rs.211.2 crore in Q1FY2016, Rs.198.9 crore in Q4FY2015 and Rs.192.2 crore in Q1FY2015. The network registered a net loss after tax of Rs.5.9 crore.
Large spends in rebranding dent TV18’s revenues
TV18 operating revenues grew by 13 per cent in comparison with Q1FY2015, however it declined by 5.5% since the last quarter. In Q1FY2016 the operating revenues was Rs.596.7 crore in comparison with Rs.629.7 crore and Rs.527.7 crore. The total expenses of the network was also as much as the total revenues it earned during the quarter and as a result TV18 suffered a net loss after tax amounting to Rs.10.6 crore. The reason for this according to TV18 was as a result of the expenses incurred by the rebranding of the ETV regional entertainment channels to Colors during the quarter. This can be seen as marketing, distribution and promotion expenses increased significantly by 19.7% since the last quarter and by 32.9% since Q1FY2015. Programming costs increased marginally to Rs.208.5 crore in Q1FY2016 from Rs.203.3 crore in Q4FY2015, but increase by 25.8% since Q1FY2015 where it stood at Rs.165.7 crore.