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ZEEL Q3 net jumps 74 pc; increases stake in Ten Sports, restructures business

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ZEEL Q3 net jumps 74 pc; increases stake in Ten Sports, restructures business

Zee Entertainment Enterprise Ltd (ZEEL) has reported a net profit of Rs 1,464 million for the third quarter ending December 31, 2009, a 74 per cent increase as compared to Rs 839 million in Q3 FY209.

Meanwhile, the company’s Board of Directors has also approved the proposal to acquire additional 45 per cent stake in its subsidiary, Taj TV Ltd Mauritius and additional 50 per cent stake in its subsidiary, Taj Television (India) Pvt Ltd, from Bukhatir Group for $44.145 million. Zee had acquired the initial 50 per cent stake in Ten Sports in FY07 at an enterprise value of $114 million.

Subhash Chandra, Chairman, ZEEL, in the analysts conference call said, “Once we have 95 per cent ownership of the company, we will integrate the backend operations of transmission to frontend operations of sales, which will help in rationalising costs. We propose to launch a new channel, Taj Golf, under the same subsidiary once we get all regulatory clearances.” He also mentioned that Zee Sports would also be a part of the same subsidiary.

Although the company’s total revenue saw a marginal decline of 3.8 per cent to Rs 5,632 million from Rs 5,857 million for same quarter last year, its advertising and subscription revenue increased by 1 per cent and 8 per cent, respectively, to Rs 2,707 million and Rs 2,684 million. However, revenues from other sales and services, which comprise revenues from syndication, film distribution and education sales, saw a YoY decline of 73 per cent from Rs 497 million to Rs 135 million.

In a company release, Punit Goenka, Managing Director and CEO, ZEEL, said, “Positive YoY growth in advertising revenues is reflective of our product strength as well as the fact that market sentiments on ad spends have improved considerably compared to a few quarters ago.” The company mentioned during the analysts conference call that it might increase its advertising rates in the coming quarters.

Ritesh Poladia, Assistant Vice President - Research, Dolat Capital, said, “ZEEL results are in line with our expectations. The company has shown advertising revenue growth despite major cricketing events like IPL. It is likely to maintain growth momentum.”

Meanwhile, ZEEL’s subscription revenues from international operations reduced by 12 per cent over the corresponding fiscal in 2009 and subscription revenues from domestic cable reduced by 3 per cent over the corresponding fiscal in 2009. The Films Division of the company did not release any movies this quarter. The division generated revenues of Rs 8.5 million and registered EBIT losses of Rs 99 million. The company’s total expenses reduced by 12 per cent to Rs 3,737 million from Rs 4,255 million in the same quarter last fiscal.

During the quarter, ETC Networks Ltd (ETC), a subsidiary of the company, acquired 100 per cent controlling stake in Cornershop Entertainment Company Ltd (CSECL), which owns three companies – Cornershop Animation Company Pvt Ltd, Digital Media Convergence Ltd, and Re-Med Services Pvt Ltd. The company has also approved the demerger of its education business from ETC Networks into Zee Interactive Learning Systems (Zee Learn) from April 1, 2010

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