ZEEL’s reach will go back to normal in coming days: Punit Goenka

Goenka, MD & CEO, Zee Entertainment Enterprises Limited, said they are confident of signing a binding agreement on stake sale by July

e4m by exchange4media Staff
Updated: Jun 4, 2019 7:56 PM

Punit Goenka, MD & CEO, Zee Entertainment Enterprises Limited (ZEEL), during the Q4FY19 Earnings Conference Call, touched upon a lot of topics such as TRAI’s NTO, drop in reach and the decision to turn FTA channel to pay.

When asked what will be his guidance for FY20 on ad and subscription revenue on the domestic side, Goenka replied, “FY20 outlook for the industry on advertising will be low double-digit, that is my expectation. And of course, as ZEEL always does, we will expect to beat that. On the subscription side, it is little hard to tell at this time. Our guidance, which was of low teens, still stands, but I will be revisiting this guidance, may be at the end of Q1 and we will talk to you more at that time. And that obviously is for it to get better not otherwise.”

Admitting that the reach has been impacted due to the implementation of the new tariff order, Goenka said, “As an industry, the reach drop has been about 4-6 per cent (point), different for different genres. For us, in the Hindi genre, we have seen slightly more than the industry drop. But we are confident that in the coming months, we will recover this and therefore things should go back to normal.”

Goenka revealed they have a plan in place to increase the reach. “On the reach side, we are working with MSOs and DTH companies to do joint marketing to the consumers. And wherever the MSOs are not agreeing with us, we are doing ourselves consumer marketing for them to make the choice unilaterally. So that’s the only avenue available to us, either jointly go with the distribution company or go on our own wherever they are errant.”

He further added that on the FTA side, “It is imperative for us to arrest the de-growth on the pay subscription side of the business. If you track the last 4 to 5 years, the significant growth that you saw came on DD Free Dish. And you all track DTH companies and the listed MSOs, so you can see the numbers which were pretty much stagnating. And therefore, it is in the interest of the industry, then we had to pull out from the FTA strategy.”

Many broadcasters like Star India, Viacom18, Sony and ZEEL, have removed their channels from DD Free Dish and turned them into pay channels. When asked if the loss because of advertisement income in the start will be compensated by the subscription and overall advertising in the longer term, Goenka answered in affirmative. “Definitely, we see that improving on the subscription front and also part of that gains will come on the paid advertising side as well. Over the period of this full financial year, we should be in a position to enter next fiscal with full recovery.”

Goenka also mentioned how dealing with MSOs have become simpler because of the TRAI order. “Apart from a few MSOs who are still not coming around and trying to find backdoor entries to do deals which we have shut completely, most of them are falling into place and following the tariff order as prescribed by us and by the regulator, and therefore it should only make business simpler, rather than the bilateral negotiations it will be transparent.”

When asked about the reports of TRAI suggesting that this tariff order has resulted in increase in prices for consumers and it’s likely to put up a consultation paper on bringing this down, Goenka said, “Let’s wait and see what the consultation paper is, because frankly I went to TRAI myself and told them that your tariff order will increase this pricing and they didn’t believe me at that point in time. But let’s see what the consultation paper they come out with. My view is that any more disruption to this will have an upheaval not just from the industry but now even the consumer.”

Speaking about the promoter's stake sale, Goenka revealed, "Finally, I would like to give you an update on the progress of promoter’s stake sale. The discussions with the identified buyers is progressing well. With the political uncertainty behind us we expect the discussion to progress at an accelerated pace and we are confident of signing a binding agreement by July."

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