ZEEL confident of maintaining the growth momentum

Zee Entertainment Enterprises Ltd (ZEEL) is confident of maintaining the growth momentum if COVID-19 remains under control along with economic recovery, said MD and CEO Punit Goenka during the Q2 FY22 earnings conference call.

He expressed the hope that the industry will rebound by the end of this fiscal due to the improved business sentiments. The reopening of cinemas and shopping malls are good signs of revival of the economy.

He said: “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,”

According to him ‘due diligence’ has been exercised for the ZEEL-Sony Pictures Networks India (SPNI). “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,” said Goenka.

He said: “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.” 

Goenka said that the streaming platform ZEE5 has improved the digital platform growth in areas like content and user experience, further leading to better monetization and user acquisition.

He said: “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.

While asserting that the NTO 2.0 imbroglio is hurting the subscription growth of the company, Goenka expressed confidence that ZEEL's subscription revenue would grow.

“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 said.

According to an analysis by Elara Capital, ZEEL continues to face stiff competition in regional genres of Marathi, Tamil and Telugu from Star Group. Also, the urban Hindi GEC genre is dominated by Colors and Star. Rural GEC is the only genre wherein ZEEL enjoys competitive advantage, led by Zee Anmol . But this is not good enough for ZEEL to outperform the industry average on ad growth.

“FY22 subscription revenues may be muted Subscription revenues may be muted in FY22E (-1% YoY growth) on NTO 2.0 implementation. Post that too, we do not expect >5-6% YoY steady-state subscription revenue growth as ZEEL lacks strong recall in HSM urban markets. Zee TV significantly lags peers – Shift to selective viewing may not augur well as it lacks leadership in many key genres,” says the analysis.

According to Elas analysis, investment in large-scale content may be a key trigger to effect Zee5 turn-around as direct movie release strategy may be unable to grow subscribers, with cinema normalizing.


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