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Zee Telefilms net profit down 27.8 pc in Q1 FY07

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Zee Telefilms net profit down 27.8 pc in Q1 FY07

Zee Telefilms Ltd has reported first quarter consolidated revenues of Rs 3,884 million, representing a 24 per cent growth over the corresponding period in the previous fiscal. The consolidated operating profit stood at Rs 726 million, after deducting expenses of initial investments in new activities, viz. Zee Telugu, Zee Smile, Zee Sports and others, amounting to Rs 571 million (14.7 per cent of consolidated revenues). Thus, consolidated operating profits of continuing businesses were Rs 1,297 million. These are higher by 8.4 per cent as compared to the corresponding quarter last year.

The growth rate is subdued mainly due to investments in programming and marketing focused on long-term buildup of mainline channels. Profit before tax for the first quarter of the fiscal 2007 was Rs 672 million, while net profit was Rs 562 million, down 27.8 per cent as compared to last year in the same quarter, when the net profit was recorded at Rs 778.5 million.

Commenting on the Q1 results, Subhash Chandra, Chairman, Zee Group, said, “We are pleased to report strong recovery in our market position and continuing uptrend in ratings on the flagship channel. The performance reflects our success in delivering superior content to viewers and stronger relationship with our consumers.”

“We are also happy about some recent developments relating to our business. The Delhi High Court has ordered the Union Government to issue a revised notification for implementation of CAS in the notified areas of Mumbai, Delhi and Kolkata by December 31, 2006. This will additionally help in bringing about addressability on cable. On DTH, DishTV enhanced its offering from June when the OneAlliance bouquet was also made available to subscribers. Also, the TDSAT order has directed STAR to provide their content to DishTV within 15 days. All these will have extremely positive and long term impact on our business,” Chandra added.

Commenting on the restructuring exercise, Chandra continued, “The restructuring exercise is expected to be completed by September-October 2006, subject to necessary approvals. This shall create four focused, pure play, listed companies ready to exploit the vast emerging opportunities in each line of business. It would result in streamlined operations in each area and would also clear the ground for acquisitions and strategic or financial partners in the demerged businesses, apart from unlocking shareholder value. The next several years would provide tremendous growth opportunities for all these four businesses.”

Punit Goenka, Wholetime Director, who is responsible for content creation, said, “Zee TV continued to increase its viewership share from 21 per cent in the fourth quarter FY2006 to 25 per cent during Q1 FY2007, along with a significant growth in time spent. During the quarter, average gross ratings points (GRPs) of Zee TV crossed 200 and for the last week it was at 240 GRPs, giving Zee a channel share of 29 per cent. The growth momentum has been led by widespread success of ‘Saat Phere’ and ‘Kasamh Se’, which rank 5th and 6th among the top programmes on television across genres. Zee TV now has leadership in the 9:00 pm to 10:00 pm time band, for the last six weeks.”

“Zee Cinema continues to be the No. 1 movie channel, and increasingly is becoming a reach channel for the advertisers. Zee Marathi has also considerably narrowed the gap with its competitor. Zee Sports continues to build on the back of football and ODI matches. We will continue to reinforce our competitive advantage and deliver more value to viewers and shareholders,” Goenka added.

Elaborating on the performance, Pradeep Guha, CEO, said, “During FY2006, the yield per spot of 10 seconds was lowest in the history of Zee TV. Zee TV has introduced many initiatives, which focus on improving inventory utilisation, attracting higher yielding categories of business and increasing effective rates across time bands. These efforts have resulted in a revenue growth faster than that of industry. Also, we have been able to establish Zee Cinema as a reach channel instead of a frequency channel, which will help us garner more advertising revenues.”


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