Zee's earnings hit by rise in programming investments: MPA

MUMBAI: If you are looking at Zee Telefilms as a short term investor, think again. Earnings and margins will continue to be under pressure as the company's investments in programming and marketing are on the rise to keep pace with competition.

Zee Telefilms CMD, Subhash Chandra, told analysts in a conference call on 20 October to take a long, or at least medium, term view. If you are looking at this company for quarterly profits, then please do not invest in this company, he said.

Zee has made investments in new channels like Zee Smile, Zee Telugu and Zee Sports. Besides, the company would focus on consolidation of Siticable and its digitisation. "The new channels would take around 12-36 months to break even. Zee Sports is likely to take three years," Chandra said.

What does all this imply? Higher programming and marketing costs has begun to exert significant earnings pressure on Zee, according to an international research report.

Hong Kong-based Media Partners Asia (MPA), forecasts Zee's operating profit in 2005-'06 to fall by 17 per cent year-on-year to Rs 3.6 billion, a 25 per cent margin on a projected revenue of Rs 14.5 billion.

Zees core broadcast business also appears to be under pressure, the report says. Zee's EBITDA (earnings before interest, taxes, depreciation and amortisation) declined 11 per cent Y/Y (excluding losses from the new businesses), and 9 per cent Q/Q during the latest quarter to reach Rs 912 million.

The company posted a total revenue of Rs 3.36 billion ($75 million) during the Q2 FY 2006 period (September 2005 quarter), up 9 per cent Y/Y but down 3 per cent Q/Q while EBITDA fell 43 per cent Y/Y and 41 per cent Q/Q to Rs 585 million (margins down to 17 per cent versus 33 per cent a year ago). Net income (after minority interest) declined by 39 per cent Y/Y and 46 per cent Q/Q to Rs 412 million.

According to MPA, the new investments are critical to Zee as they are made to address weak ratings and build a market for new niche channels. Flagship channel, Zee TV, also faces strong pressure from Star One, which was launched in 2004. Apart from the programming costs, Zee has to invest in distribution or carriage fees to push certain channels.

Dish TV, the direct-to-home (DTH) venture where Zee owns 20 per cent, had 480,000 subscribers till September-end. But it is signing up around 3,500 customers a day and expects to touch one million subscribers by the end of this financial year. The average revenue per user (ARPU) is reportedly running at Rs 200 per month with services subsidised through the provision of a free annual subscription after a one-time charge of Rs 4,000, MPA said.

India's leading broadcasters including Star, in fact, are seeing a squeeze on earnings and margin growth as investments increase in the backdrop of stiff competition. But, Zee will be more affected than Star as its advertising growth is slower. Star's ad growth in India is about 20-30 per cent, offsetting a major erosion in margins. Zee, on the other hand, saw a growth of about 14 per cent Y/Y in the first half of FY 2006 and 12 per cent growth during the recent quarter.

Latest Reads
Disney announces successor of MD Siddharth Roy-Kapur

MUMBAI: Walt Disney International has announced the successor to its former managing director Siddharth Roy-Kapur. As a second stint with the organization, Mahesh Samat has made a comeback and will lead The Walt Disney Company India as the managing director. He will pursue his new responsibility...

Television TV Channels People
Life is more imaginative than fiction in a story like POW, says writer-director Gideon Raff

MUMBAI: Sometimes, coming back home after 17 years is not always a happy ending. "Prisoners of War" is the story of three Israeli soldiers, who were held captive for that many years following their kidnapping while on a secret mission with their unit.

Television TV Shows Thriller
IPL media rights bidding postponed sine die

MUMBAI: The BCCI has made it clear that the media rights auction cannot take place till the time it gets a concrete go-ahead and a formal approval from the Justice RM Lodha committee. Till the evening of 24 October (Monday), BCCI did not receive the okay from the committee which said, "it is in...

Television TV Channels Sports
Q3-16: DIRECTV mitigates AT&T U-Verse TV subscriber numbers fall

BENGALURU: AT&T acquired DIRECTV added 323,000 net subscribers and hence helped mitigate the company’s Entertainment and Internet Services Group (Entertainment) segment’s loss of 326,000 U-Verse subscribers for the quarter ended 30 September 2016 (Q3-16, current quarter). About 70 percent of...

Television TV Channels English Entertainment
"Let India open its market, we will open ours" - PEMRA chairman Absar Alam

Pakistan’s TV watchdog - the Pakistan Electronic Media Regulatory Authority (PEMRA) - charimanAbsarAlam was in the line of Pakistan’s Geo News anchor Shahzaib Khanzada’s fire last week. In his Monday to Thrusday current affairs talk show AajShahzaibKhanzada Kay Sath - the anchor grilled him time...

Television TV Channels GECs
BIG Magic acquires 'Boonie Bears' exclusive FTA rights

BIG Magic has acquired exclusive FTA rights of ‘Boonie Bears’, the No.1 and most popular animated series in China. BIG Magic has renamed it ‘Babloo Dabloo’ for the Hindi viewing audience. Babloo Dabloo airs every Monday – Sunday 10 am – 11 am & 5 pm – 6 pm only on BIG Magic

Television TV Channels GECs
PBL: Setting stage for next big thing on Indian sporting landscape

India has witnessed the emergence of a multi-sports culture over the past few years. This significant development has come on the back of a promising display by Indian sportspersons across various disciplines, the meteoric rise of home grown leagues and the consequent widening of the fan base of...

Television TV Channels Sports
CNNMoney new section will be about the fastest growing economy; MoneyStream app launched

MUMBAI: Attracting 1.8 million average monthly page views, witnessing a 37 per cent growth in video consumption and 16 per cent in unique browsers month-on-month from India in less than a year’s time is not smooth. In its ambitious plan of global expansion, CNN Digital is leaving no stone unturned...

Television TV Channels News Broadcasting
Content a 'Game of Thrones'; AT&T's control over HBO, Cartoon Network, Warner Bros faces regulatory lens

The global media landscape is resulting in a new juggernaut as an internet and cable behemoth yesterday purchased an entertainment conglomerate making the former unmatched in its size and reach to consumers through home broadband, smartphones, satellite television and a battery of movies and cable...

Television TV Channels English Entertainment

Latest News

Load More

Sign up for our Newsletter

subscribe for latest stories