Advertising will surpass pre-Covid levels if the current trend continues: Punit Goenka

ZEEL MD & CEO is optimistic that the improved business sentiment will provide a strong growth momentum for the sector, helping businesses bounce back by the end of this fiscal

e4m by Javed Farooqui
Updated: Nov 15, 2021 9:29 AM  | 5 min read
Punit Goenka

After delivering a strong performance in Q2 FY22, ZEEL MD and CEO Punit Goenka is confident that the growth momentum will continue if Covid-19 cases remain under control coupled with the ongoing vaccination drive and a gradual recovery in the economy.

“Overall, with the receding fear of an anticipated third wave, the green shoots in demand are clearly visible. The reopening of malls, theatres, and other economic and leisure activities coupled with the festive season will certainly see advertisement spends bouncing back in the subsequent quarters. We remain optimistic that if this trend continues, advertising should surpass the pre-covid levels and swing into healthy growth,” Goenka told analysts during the Q2 FY22 earnings conference call.

Goenka is optimistic that the improved business sentiment will provide a strong growth momentum for the sector, helping businesses bounce back to pre-covid levels by the end of this fiscal. He is also hopeful that a gradual recovery in theatre occupancy along with the strong slate of films lined up for release from Zee Studios will further serve as a positive factor in the subsequent quarters.

He also informed that the due diligence for the ZEEL-Sony Pictures Networks India (SPNI) deal has commenced and is expected to conclude within the stipulated timelines. “Further to the in-principle approval received from the board, the due diligence process has commenced and is in steady progress. We are confident that this process will be completed in the stipulated timelines or even before that post which we will move forward with the next steps as mandated by the law.”

The ZEEL head honcho asserted that the second quarter has been a recovery and revival phase for the company and the industry at large. He also noted that the second wave of the pandemic had a sudden surge in cases which served as a disruption to the growth momentum in the previous quarter, and some effects of that also spilled over into the first half of Q2 FY22.

“We are glad to know that the increase in vaccination drives, and reduction in cases, have led to the gradual reopening of business activities across the country. This has provided an impetus to consumers and to overall advertiser sentiments, resulting in green shoots for macroeconomic growth,” he stated.

Goenka also highlighted that the underlying trend seen in the content consumption during the lockdown remained at the fore-front, as viewership on TV and digital video streaming platforms continue to record new levels of growth. “As per our plans, we launched 30+ shows across our channels, leading to a gradual recovery in viewership in certain markets where we had lost our share. The launch of high-impact entertainment properties and engaging films across platforms has encouraged advertisers to increase their spends across genres,” he added.

ZEE5's new strategy, Goenka said, continues to bear fruit as the company remains in growth mode for the business. He pointed out that noteworthy efforts have been taken to improve the digital platform growth across key aspects like content and user experience, which have led to higher user acquisition and monetisation.

“Globally, the platform continues to post steady positive growth across markets including the US where we launched in the previous quarter. We continue to invest in our core businesses to further ramp up our offerings to create compelling entertainment content for our viewers across the globe,” he said.

The impasse around New Tariff Order (NTO) 2.0 implementation continues to hurt the subscription growth of the company. The Telecom Regulatory Authority of India (TRAI) had recently extended the deadline for implementing NTO 2.0 to 1st April 2022. However, Goenka is confident that ZEEL's subscription revenue will see healthy growth once the NTO 2.0 settles down.

“The impasse around subscription revenue on the linear side of the business continued during the quarter, leading to a marginal decline. That said, we had announced our new pricing in October in line with NTO 2.0, but I would like to inform that in the latest communication the TRAI has allowed broadcasters time till 31st December 2021 to revise and publish the RIOs. The revised implementation date is now 1st April 2022. Like I maintained earlier as well, after a few quarters of disruption post implementation, we will be back to delivering healthy growth in subscription numbers,” he averred.

The ZEEL MD and CEO expects the strong Q2 performance of the company to continue in the coming quarter due to overall buoyancy in the economy, which is also benefiting the media & entertainment (M&E) sector.
“Post the impact of Covid-19 in the initial part of the quarter, the creation, and availability of original content along with relentless execution across businesses has led to revenue and EBITDA growth sequentially and YoY basis. We expect this robust growth and performance to continue in the coming quarters. Overall, there are very clear indicators pointing towards a sharp recovery for the economy and industry at large,” Goenka stated.
ZEEL CFO Rohit Gupta said that the advertising bounced back in the second half of Q2 FY22 due to a drop in the number of cases and the acceleration of the vaccination drive. He also said that ZEEL remained a strong number 2 network, with the network share increasing 70 bps to 17.7% due to 30+ new show launches across markets.
Gupta noted that the network's performance in Bangla, Telugu, Kannada, and Odia remained strong during the quarter. In Hindi, Tamil, and Marathi markets, ZEEL's market share improved further due to compelling show launches. “We will continue to launch new shows across markets to drive share gains. New channels now contribute about 1.2% of the network share,” Gupta stated.
He also mentioned that ZEE5's new strategy is well on track and the platform's financial and operating metrics have seen strong growth. “Global MAUs and DAUs, as on September 30th, stand at 93.2 million and 9.3 million respectively with watch time of 186 minutes. During the quarter, we launched 13 originals across languages. We have a compelling line-up of content in H2.”

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