| MUMBAI:
Having gained market share in the TV ratings game, Zee Entertainment Enterprises
Ltd. (ZEEL) is seeing a surge in earnings with third-quarter consolidated revenues
growing 53 per cent to touch Rs 4.18 billion. Net profit also saw robust
growth for the fiscal third quarter ended 31 December, jumping 179 per cent to
Rs 958 million.
The consolidated operating
profit stood at Rs 1.36 billion, after expensing of initial investments in new
activities (Zee Sports, Arabia) amounting to Rs 232 million. These are higher
by 187 per cent as compared to the year-ago period. The results include
the financials of Taj TV Ltd (Ten Sports) with effect from 13 November, ETC, international
and educational businesses of Zee. Zee will separately announce
the results of its other demerged entities - Zee News Ltd (ZNL), Wire & Wireless
India Ltd (WWIL) and Dish TV. While ZNL and WWIL are already listed, Dish TV is
likely to be listed by February. Fuelling ZEEL's third-quarter growth has
been a 59 per cent rise in advertising revenues to Rs 2.1 billion, benefitting
largely from Zee TV's prime time ratings gain and higher average rates on most
of the network channels. "Zee Entertainment finished the third quarter
with outstanding performance, highlighted by strong advertising revenue growth
of 59 per cent, extremely robust operating profit growth of 187 per cent and 179
per cent growth in net earnings. Our television broadcasting business continues
to lead industry in converting rating success into strong growth in revenues and
operating profits. The performance reflects our success in delivering superior
content to viewers and stronger relationship with our consumers," says Zee
chairman Subhash Chandra. Adds Zee wholetime director Punit Goenka, "Zee
TV continued to increase its viewership share from 28 per cent in 2Q FY2007 to
29 per cent during 3Q FY2007, along with growth in time spent. During the quarter,
average gross ratings points (GRPs) of Zee TV grew to 250 levels, with gains coming
mainly from prime time. The growth has been led by continued success of ‘
Sa Re Ga Ma Pa’ , Saat Phere’ and ‘ Kasamh Se’, while our
new launches ‘ Dulhan’ and ‘Betiyan’ have helped bolster the
prime time shares. Zee TV now has five programmes in top 20 and 11 programmes
in top 50." Zee also saw gains in the other channels. "Zee Cinema
continues to be the No. 1 movie channel, and increasingly is becoming a reach
channel for the advertisers. Zee Café and Zee Studio have gained shares.
We will continue to reinforce our competitive advantage and deliver more value
to viewers and shareholders," says Goenka. Contributing to the strong
third-quarter performance was a 55 per cent surge in subscription revenues at
Rs 1.96 billion. This was bolstered by new revenue streams coming from direct-to-home
(DTH) services and digital cable. Other sales and services was Rs 116 million. "We
are extremely pleased to see the steady steps towards digitization of the Indian
cable and satellite industry. Conditional access system (Cas) has been successfully
implemented in the notified areas of Mumbai, Delhi and Kolkata. With more subscribers
opting for digital services even in other parts of the country, it will give a
big boost to our subscription revenues in the near future. Our investment in Ten
Sports is doing well. All these have extremely positive and long term impact on
our business," says Chandra. Elaborating on the performance, ZEEL CEO
Pradeep Guha says, "We are pleased with the strong operating results in the
third quarter. We have outperformed the market locking in higher advertising rates
which would continue to help us in the future. Looking ahead, we are confident
that continued execution of our content strategy would result in a revenue growth
faster than that of industry. Additionally, with digitization of Indian cable
and satellite industry, we expect to reap a rich harvest from subscription based
revenues."
Sports business adds Rs 610 million to kitty
The sports
business revenue during the third quarter was Rs 610 million, after consolidating
the results of Taj TV from 13 November 2006. EBITDA from Sports business during
this quarter was Rs 133 million. "The main event for Ten Sports during
the quarter was the Pakistan-West Indies series, which helped it garner significant
revenues from the Pakistan and the Middle East beams. This was in addition to
its other lead programs such as WWE, UEFA and Champions League. Ten Sports has
also begun the telecast of the South Africa-Pakistan series on its Pakistan beam,"
Zee says in a statement. "Zee Sports continued to grow on the Indian
football opportunities; it covered the Asian Football Confederation under 20 championships
in Kolkata in November and the Federation Cup in December. India is fast becoming
a focus area for the world football governing body FIFA as well. Among some of
the other events that Zee Sports covered was the Delhi Marathon, WTA tennis and
the Italian Serie A. Zee Sports also bagged a three-year deal for the UEFA Cup,"
the release adds. On a standalone basis, ZEEL posted a net profit of Rs
793.70 million for the quarter ended 31 December 2006 from Rs 341.60 a year earlier.
Total income stood at Rs 2.46 billion as against Rs 2.4 billion during the same
period.
Condensed statement of operations
The table below presents
the condensed statement of operations for ZEEL and its subsidiaries for the third
quarter of FY2007 versus FY2006, as published. The FY2006 numbers also include
the cable, news and direct consumer business undertakings, which have now been
demerged. Hence the numbers are not comparable.
Comparable figures with FY06
For better understanding of performance of ZEEL, the table
below presents the proforma FY2006 numbers of ZEEL, on a comparable basis. These
numbers are illustrative of the performance on a like to like basis.
Segment-wise revenue streams
The following table sets forth the percentage of revenues
that each type contribute to consolidated revenues for the third quarter of 2007
and 2006.
Comparable figures with FY06
For better understanding of performance of ZEEL, the table
below presents the proforma FY2006 numbers of ZEEL, on a comparable basis.
Expenses account
The following table sets forth the percentage of costs that each
type contributes to consolidated expenses for the third quarter of 2007 and 2006.
FY06 Expense chart
For better understanding of performance of ZEEL, the table
below presents the proforma FY2006 numbers of ZEEL, on a comparable basis. These
numbers are illustrative.
Segment-wise performance
ZEEL is a diversified entertainment company with a multi-pillar
approach to business. Its operations lie in three segments: (i) Content and broadcasting,
(ii) Film Production and distribution and (iii) Education. The table below
presents Zee’s third quarter performance for FY2007 in the key segments.
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