Indiantelevision.com Team

(21 January 2009 11:00 pm)

MUMBAI: Media companies are feeling the heat of the economic slowdown. Zee Entertainment and Enterprises Limited (Zeel), the first to announce its third-quarter results, has seen its consolidated net profit down by 26 per cent over the year-ago period on the back of a slow advertising growth.

Zeel posted a consolidated net profit of Rs 840 million for the quarter ended 31 December 2008, as against Rs 1.13 billion in the prior year period.

The company's consolidated revenue stood at Rs 5.46 billion, representing a mere five per cent growth.

Zeel chairman Subhash Chandra said, "The entertainment and media industry is also seeing the impact of the overall downturn in the global economy. We are in the midst of a downward trend in advertisement revenues. However, this is being offset through a growth in subscription revenues, reemphasizing that the company is broad-based and less vulnerable to changes in advertising revenues. Zeel is built on sound fundamentals and I can say with confidence that we have the resilience to show a growth momentum in the months ahead."

Operating profit was Rs 1.12 billion during the quarter under review, as against Rs 1.52 billion in the year ago period. Operating profit margins stood at 20 per cent, as compared to 30.3 per cent last year.

Advertising revenue grew 2 per cent year-on-year (YoY) at Rs 2.68 billion while subscription revenue increased 17 per cent YoY at Rs 2.27 billion in the third quarter of FY'09.
The company announced that sibling Hindi general entertainment channel Zee Next has incurred losses of Rs 81 million in the quarter.

Other sales and services, comprising syndication sales, income from education business, income from film distribution, play out and production services, events and commission on advertisements and subscription sales, stood at Rs 497 million, a fall from Rs 594 million over the corresponding quarter last fiscal.

Domestic subscription revenues stood at Rs 1.13 billion, up from Rs 878 million last year, while international revenues were Rs 1.15 billion, up from Rs 1.07 billion.

Revenues from domestic DTH operators, already included in domestic subscription revenues, stood at Rs 283 million.

The company's expenditure grew 19 per cent to stand at Rs 4.34 billion. Overall, programming and operating cost increased to Rs 2.68 million as compared to the Rs 2.55 million in the corresponding period last year. This includes startup cost of Zee Next and Zee Entertainment Studio, as well as higher cost of movie rights and advertising revenues on telecast of ICL Matches passed on to Essel Sports Limited. Selling and other expenses are up by 58 per cent. This includes expenses towards placement fees, off air marketing etc.

Zeel CEO and whole time director Punit Goenka said, "Our channel shares remained steady across genres. We widened our footprint across the globe and across customer segments, thus retaining our position of preeminence in the GEC business."

"The emphasis of the company remains revenue leadership and we initiated several exercises to trim costs that will help us remain productive and competitive during the coming quarters. Our teams worked hard to offer our customers well-designed content and a wider variety of interesting programming designed to satisfy different tastes. This will continue to be our formula for success," he added.

Sports Biz

The sports business revenue (Zee Sports and Ten Sports) was Rs 1.16 billion, a jump of 34 per cent over the corresponding quarter last fiscal. Cost incurred was Rs 979 million, an increase of 19 per cent over the corresponding quarter last fiscal. Revenues and cost include advertising revenues on telecast of ICL matches passed on to Essel Sports Ltd.

Zee Entertainment Studio

ZES, the film production and distribution business of the company, released five feature films in the quarter - one each in Hindi, Kannada and Marathi and two in Bangla. It registered revenues of Rs 36 million and incurred costs of Rs 139 million in the quarter.