ZEEL's ad and subscription revenue for Q2FY18 up by 10.1% and 7.2% respectively
ZEEL saw an increase of its domestic advertising and subscription revenue to Rs 934.6 crore and Rs 404.3 crore year-on-year respectively in the second quarter of fiscal 2018. The growth strongly rebounded in the second half with the onset of festive season and has returned to normal growth trajectory
In the second quarter of fiscal 2018 Zee Entertainment Enterprises Limited (ZEEL) reported domestic advertising revenue of Rs 934.6 crore, up by 10.1 per cent year-on-year (YOY) adjusted for sports. Its domestic subscription revenue stood at Rs 404.3 crore, an uptake of 7.2 per cent year-on-year adjusted for sports.
Its consolidated advertising revenue in the same quarter grew by 2.9 per cent YoY to Rs. 986.7 crore. Despite the adverse impact of GST on advertising, domestic advertising grew by 5.8 per cent YoY, on a comparable basis (excluding sports, RBNL and IWPL) to Rs 902.8 crore.
As mentioned in the press release, their customers reduced advertising spends in first half of the quarter as implementation of GST disrupted their value chain. The growth strongly rebounded in the second half with the onset of festive season and has returned to normal growth trajectory. Advertising revenue of our international business was impacted due to currency appreciation and continuation of some region-specific issues.
Consolidated operating revenue for the second quarter of FY18 stood at Rs 1582.1 crore, recording a decline of 6.7 per cent on year-on-year basis. Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) was Rs 491.2 crore. PAT for the quarter was Rs 591.2 crore. EBITDA margin for the quarter was at 31 per cent.
The other income for the quarter includes notional gain of Rs 1,609 million on re-measurement of previously held equity interests in India Webportal Private Limited (IWPL) and Fly By Wire International Private Limited to its acquisition-date fair value.
In Q2FY18 its pay Hindi GEC bouquet saw a sharp improvement in its market share and the regional portfolio continued to perform well.
During the same quarter, ZEEL’s International business revenue (excluding sports business) was Rs 171.5 crore. On a comparable basis, the advertising and subscription revenues were lower by 19.9per cent and 7.6per cent, respectively. The adverse impacts of currency appreciation and region-specific issues have contributed to the decline in revenues.
Subhash Chandra, Chairman, ZEEL, commented, “We are now a 25 years old organisation and it is with great satisfaction and pride that I look back at this journey and the numerous milestones we have achieved. Starting as India’s first private television channel, we have grown into a truly global entertainment content company with a worldwide footprint and a strong presence across all forms of entertainment. Indian M&E industry has grown by leaps and bounds but it is just the beginning. I am confident that we will continue to shape the entertainment industry, much like we have done over the last two and a half decades.”
Punit Goenka, Managing Director and Chief Executive Officer, ZEEL, mentioned that despite the loss of advertising revenue and elevated expenses during the quarter, the company has been able to deliver a healthy margin of 31per cent. He said, “At ZEEL, it has been exciting 25 years during which we significantly increased our viewership and expanded our regional as well as global presence. This was achieved while delivering a strong financial performance. It has been possible because of our ability to evolve our content offerings in line with changing consumer preferences. Another step in this evolution would be the launch of our new digital product, ‘Z5’, in the second half of this financial year. It will offer an unrivalled content catalogue appealing to all demographics and bring unique viewing experience to the consumer. We are satisfied with our performance against the backdrop of tough macro-economic environment during the quarter. Our advertisers were negatively impacted during transition to GST which led to a temporary pull-back on their ad spends. Post the decline in the first half of the quarter, the growth recovered strongly and is back on track. Despite the adversity, our domestic ad revenue grew at 5.8 per cent on a comparable basis.
The domestic subscription growth for the quarter was at 7.2 per cent. As against the early closure of deals last year, content deals with distributors are taking slightly longer due to litigations regarding the TRAI tariff regulation. However, our full year outlook for subscription growth remains unaltered. Despite the loss of advertising revenue and elevated expenses during the quarter, we have been able to deliver a healthy margin of 31per cent.
The acquisition of 9X Media follows our stated strategy of expanding into regional markets and niche genres. 9X Media’s six music channels enjoy leading market shares in their respective segments and will further strengthen our entertainment offering to the consumer. The channels will benefit immensely from our network’s strength to achieve higher growth potential and cost synergies.”
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