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MUMBAI: Zee Entertainment Enterprise Ltd (Zeel) expects the
television industry to post advertising growth in the 7-9
per cent range this fiscal, weighed down by a slowdown in
the economy.
Hiking
ad rates has been tough and any growth the industry has been
able to make has come from volume rise. Categories like telecom,
auto and financial services have stayed mute in the fiscal-first
quarter while FMCG and consumer durables continue to up spends.
Zeel's ad growth, however, has come from a mix of rate and
volume increase. Market share expansion in viewership has
eased Zeel's position, enabling it to up ad rates. The company
expects to end the fiscal outperforming the industry.
In
the fiscal-first quarter ended June, Zeel reported 18 per
cent growth in advertising revenue to Rs 4.47 billion.
Zeel's
ad growth estimate for FY'13 is higher than GroupM's new forecast
of 5.6 per cent to Rs 148.12 billion for the television segment
in the calendar year 2012. While the Telecom category cut
down spends substantially in the first half of the year, financial
services were adversely affected by poorer economic conditions.
Even consumer durables spent less in the first half of 2012
than the prior year period.
GroupM,
however, anticipates a bounce back in 2013 and predicts ad
spend growth to climb 14 per cent that year.
Zeel's
content expenses will rise in the fiscal as it plans to up
its original hours of content from 25-26 to 32-34. The company
will also continue to pour investments into new media.
Zeel's
sports losses will continue but it will be much lower than
the FY'12 loss of Rs 1.48 billion. The launch cost of the
two channels - Ten Golf and Ten HD - was Rs 250-300 million.
Since regulation requires HD channels to be completely ad
free, Zeel has initiated talks with the government seeking
permission to get this regulation removed.
Earlier,
Zeel had guided sports losses to be at Rs 650 million-Rs 700
million for this fiscal. The company expects revenue from
sports broadcasting to improve in FY'13.
Zeel
will continue to invest in the southern market. The company
sees an opportunity for market share improvement in Tamil,
Telugu and Kannada. It estimates the Tamil ad market size
to be Rs 15 billion.
International
subscription revenue was up 16.5 per cent to Rs 1.14 billion
for the first quarter of the fiscal. A weakening rupee has
helped Zeel post growth in international subscription revenues
despite the market suffering from multiple economic issues.
Zeel's
gross debt is pegged at Rs 13 million while it is sitting
on a cash pile of Rs 11.83 billion.
Also
Read:
GroupM
downgrades India's ad expenditure growth to 6.6% in 2012
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