ZEE Q4FY17 ad revenues flat at Rs 8,469 mn; subscription revenues dip 6.1%

Zee Entertainment Enterprises Ltd (ZEEL) has reported consolidated revenue of Rs 15,280 million for the fourth quarter ended March 31, 2017. Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) was at Rs 4,687 million. EBITDA margin for the quarter stood at 30.7 per cent. 

Profit After Tax (PAT) for the quarter was Rs 15,142 million, which includes exceptional gain of Rs 12,234 million on account of sale of its sports business. 

ZEEL’s consolidated advertising revenue in Q4 FY17 was flat on YoY basis at Rs 8,469 million. Domestic advertising grew 8.1 per cent YoY to Rs 7,944 million despite the negative impact of demonetisation. Advertising revenue of the company’s international business, which stood at stood at Rs 525 million, was impacted by country specific issues during the quarter and the base quarter revenue was aided by telecast of popular cricket events in Pakistan. 

On a full year basis, the advertising revenue grew by 9.2 per cent in FY2017 to Rs 36,735 million, driven by strong performance of ZEEL’s regional channels and cinema cluster. While growth in H1FY17 was 17.4 per cent, H2FY17 was impacted by demonetisation and sale of sports business. 

The first phase of sale of sports business to Sony Pictures Network has been completed and $330 million has been received. 

Domestic and international subscription revenues for the quarter declined by 2.8 per cent YoY and 18.7 per cent YoY, respectively, largely due to catch-up revenues in Q4 FY16. In addition, consolidation of only two months of sports business impacted subscription revenue during Q4 FY17. 

Subscription revenue for FY17 was Rs 22,629 million, growth of 10.0 per cent over FY16. Domestic subscription revenue grew by 11.2 per cent to Rs 18,226 million. On a comparable basis, adjusted for sale of sports, the domestic subscription growth was 13.5 per cent. International subscription revenue grew by 3.0 per cent to Rs 4,403 million. 

Dr Subhash Chandra, Chairman, ZEEL, remarked, “The Indian economy has exhibited strong resilience with GDP growth of 7 per cent in Q3 FY17 despite demonetisation of high value currency. Implementation of Goods and Services Tax (GST) would unify India into one market. This, along with other reforms and push on infrastructure, would accelerate growth from already healthy levels. A normal monsoon as forecast by IMD could give a fillip to rural consumption.” 

Commenting on the company’s performance, Punit Goenka, Managing Director & Chief Executive Officer, ZEEL, said, “We are happy to deliver yet another quarter of strong financial performance despite the difficult economic environment. Our domestic advertising revenue grew by 8.1 per cent despite the impact of demonetisation.” 

He further said, “After a couple of quarters of weakness, advertising growth appears to be back on track. The GST roll-out could boost advertising spends as a part of potential tax savings might be reinvested. While there is uncertainty regarding the implementation of the new tariff regulation due to pending litigations, we have published the prices of our channels and bouquets. We are confident that with the strong competitive position of our channels in every genre, we will be able to drive subscription business.” 

“We have completed the first phase of sale of sports business during the quarter. While this had an impact on revenues, our focus is to strengthen national and regional channel portfolio, along with growing new businesses. We are exploring ways to extinguish preference share liability using the proceeds from the sale of sports business,” Goenka added.