ZEEL has healthy balance sheet to participate in IPL media rights e-auction: Punit Goenka
According to the ZEEL MD and CEO, the media network has a healthy balance sheet and can participate in the IPL tender on its own
Zee Entertainment Enterprises Limited (ZEEL) has said that it has the ability to participate in the Indian Premier League (IPL) media rights e-auction on its own since it has a strong balance sheet with zero debt.
“We can participate in the IPL tender on our own. We have a very healthy balance sheet with zero debt. Certainly, we have the qualification to participate in the tender,” ZEEL MD and CEO Punit Goenka said during the company’s Q4 earnings call.
On the IPL media rights being split by the BCCI, Goenka said the company can bid for a part (TV or digital) or the entire rights (TV + digital). “It doesn't prevent us from bidding for either part or all. We are evaluating our options as to what is the best strategy for the company going forward.”
Queried if the company will raise debt for funding the IPL media rights acquisition, Goenka said the money required for the IPL media rights bid doesn’t need to be paid upfront. “We don't have to pay any money or a large sum of money upfront. It's only when the rights start you have to pay for them. Until then, there are only instruments like bank guarantee, etc,” he stated.
Answering a question about the funding raised by Viacom18 from Uday Shankar and James Murdoch’s Bodhi Tree Systems, Goenka said he was unfazed by competition as the media and broadcasting sector has always been competitive.
“This sector has always been heavily competitive so it's not something new that we are witnessing. Zee has the capability to compete with both deep-pocketed as well as international brands as we have demonstrated that several times in the past and I don't think anything will be lagging this time,” he asserted.
He also stated that competition bodes well for the broadcasting sector as it will lead to more investments in content, which will lead to more monetisation. “When more content is created more consumption happens and therefore more monetisation. We welcome competition as it always keeps us on our toes and makes us do better.”
On the merger deal with Sony Pictures Networks India (SPNI), Goenka informed that ZEEL has filed the scheme of arrangement for the merger with the stock exchanges in January and awaits approval for the same. Furthermore, it also made a pre-filing with the Competition Commission of India (CCI) in February, followed by a formal filing in April. Post that, it will seek NCLT approval once the other approvals are in place.
“We have filed the scheme of arrangement between the two entities along with the key documents with BSE and NSE in January 2022. We are currently awaiting approvals from the two stock exchanges. In addition, we have also made a pre-filing with the CCI in February 2022. Basis the guidance received on our pre-filing, we have made a formal filing to the CCI for the proposed merger in April 2022,” he elaborated.
"We expect to submit the scheme of arrangement to NCLT after receiving the necessary approvals from the stock exchanges following which NCLT will call for a shareholder meeting to approve the scheme in due course."
In his opening remarks, Goenka said that the biggest comeback for the media & entertainment (M&E) sector has been the movie business spurred by the complete reopening of the cinemas across the country in the latter part of the quarter.
“At Zee, our studio business performed phenomenally well during the quarter with films across languages including 'The Kashmir Files', and 'Valimai' garnering an extremely positive reaction at the box office. In fact, The Kashmir Files went on to gross over Rs 200 crore at the box office making it one of the few films to achieve this feat post the impact of the pandemic,” he said.
Zee Studios, Goenka said, is a very strategic part of the company's portfolio and it plays a very synergistic role in the success of linear and digital businesses. Likewise, Zee Music is also an important part of the company’s portfolio.
Goenka conceded that the advertising revenue remains overshadowed due to several factors like the continued stress in the FMCG segment, which is the biggest ad spender on TV. However, Goenka is hopeful that advertising growth will return to positive levels in FY23.
“The sharp rise in inflation coupled with a higher input cost for this segment impacted the marketing spends which in turn had a cascading effect on the sector. Moreover, the ancillary effect due to ongoing conflict between Russia and Ukraine and the larger economic factor around the same will continue to impact advertising revenue in the near term,” Goenka informed.
In the broadcasting business, Goenka said that the focus continues to be on sharpening the offerings to reflect the changing consumer preferences and significant efforts have been directed towards key markets including Hindi, Marathi, and Tamil. “We have strong teams in place for each market and I remain confident in their ability to help regain our shares in each of these markets very soon,” he said.
He also mentioned that the freeze on broadcast tariff continues to hurt the subscription revenue of the broadcasters. He also noted that the company has withdrawn Zee Anmol from DD Free Dish to stem the decline of the pay-TV universe.
“The embargo on pricing continues to impact our subscription revenues and as a proactive measure to help the pay-TV ecosystem, we have withdrawn our Hindi GEC from the DD Free Dish. While this may lead to some short-term impact we do see it as an accretive step in the long term,” he said.
The ZEEL chief also stated that ZEE5 has been witnessing positive growth in its operating and financial metrics. "We are happy to see our investments to enhance the content and the overall user experience pay off in this direction."
According to Goenka, the M&E companies will be focussing their investments on a seamless blend between content and technology to serve consumers effectively across all platforms. "Our aim will always be to steadily grow in the industry across all aspects and we will be investing aggressively to support that aspiration."
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