Zee Entertainment Enterprises Ltd has reported consolidated revenues of Rs 7,548 million for the third quarter ended December 31, 2011. The consolidated operating profit (EBITDA) for the quarter stood at Rs 2,160 million, while profit before tax was at Rs 2,243 million. The EBITDA margin for the quarter stood at 28.6 per cent and the PBT margin was 29.7 per cent.
Subscription revenues for the quarter stood at Rs 3,262 million. While subscription revenues have recorded a bigger increase, the reported subscription revenues reflect a growth of only 15.7 per cent y-o-y, because of the change in accounting treatment of domestic subscription revenues, which are now being reported net of expenses.
Advertising revenues for Q3 stood at Rs 3,955 million, a degrowth of 10.1 per cent y-o-y, while ad revenues remained flat on q-o-q basis.
The sports business revenue during the quarter stood at Rs 901 million, while the operating losses were at Rs 100 million. The key properties on the Sports channels bouquet during the quarter included telecast of Pakistan Vs Sri Lanka series, Australia vs South Africa series, Zimbabwe vs New Zealand series and SAFF Championship. WWE continues to be a strong property attracting audiences as well as advertisers. The forthcoming quarter would see the telecast of cricketing events like Pakistan vs England series, Sri Lanka vs England series and West Indies vs Australia series.
In a statement issued, Subhash Chandra, Chairman, ZEE, observed, “The slowdown brings its own set of challenges in all spheres of business activity. We hope that inflation will be contained in the near future and the interest rates will start easing out injecting some degree of growth in the economy. Advertising trend continues to be slower than expected. However, the television economy continues to grow on the back of higher subscriber growth and increasing digitisation.”
He further said, “The competitive intensity in the television segment continues to be high. Given the backdrop of slowdown in advertising spends, our performance reflects the same. However, our reliance on ad revenues is cushioned by the robust build-up in subscription revenues. We have a very strong balance sheet and I am confident that we would take advantage of the growth opportunities ahead of us and will record improved operating performance in the period ahead.”
Punit Goenka, Managing Director and Chief Executive Officer, ZEE, commented, “Zee Entertainment’s wide portfolio of television channels had some gains and some losses in market shares during the quarter. We are confident that we would regain the market share losses through our planned content line-up and continue to grow our business profitability in a sustained manner. During the quarter, we have been able to maintain healthy operating margins, partly due to lower sports losses and partly due to better cost efficiency measures. Advertising spends are flat sequentially, and the overall trends also remain subdued. Our strategy during the last few years has been to create a formidable entertainment enterprise and invest in the business in a focused disciplined way.”
Speaking about the outlook for the business, Goenka continued, “While the competitive intensity remains high in the Indian television industry, we continue to make efforts towards further enhancing our market share. Media Pro, our joint venture for subscription revenues, has started on a good note and we are very confident of a robust performance going forward. With the digitisation mandate being passed, it will further be able to create value for the business. We have already seen a robust sequential growth in our domestic subscription revenues. Also, our content focused approach, combined with better monetisation of subscription revenues, will contribute to the company delivering steady return in the year ahead.”
Statement of operations:
A: Operating revenues and expenditure for Q3 FY2012 are not comparable to those for Q3 FY2011 because of the change in accounting treatment of domestic subscription revenues, which are now being reported net of expenses. This change has been necessitated due to the formation of Media Pro, a joint venture, which pays subscription revenues to ZEE net of expenses.
B: Operating revenues and EBITDA for Q3 FY2011 includes a non-recurring one time fees of Rs 700 million for premature termination of sporting events rights.