| MUMBAI:
Zee Entertainment Enterprises' net profit has seen a sharp 43.18 per cent fall
in the first-quarter amid slowdown in the advertising market, but was better than
market expectations.
Zeel's shares rose 10 per cent in a weak market as
the company said its net profit in FY'10 would be 10-12 per cent higher. The market
also responded to Zeel chairman Subhash Chandra's statement that advertising revenues
are seeing "early signs of recovery."
Zeel
also has trimmed costs to adjust in a tough market condition. The company's expenses
fell 10 per cent to Rs 3.59 billion in the quarter, mainly driven by personnel
cost which declined 44 per cent to Rs 390 million. In the fiercely competitive
Hindi general entertainment channel space where prices have skyrocketed, Zee TV
has kept tight control on its purse strings. Overall, programming and operating
costs rose a measly 1 per cent to Rs 2.39 billion, while selling and other expenses
dropped 12 per cent to Rs 808 million.
Zeel's consolidated net profit
was Rs 913.20 million, down from Rs 1.61 billion in the earlier year.
Revenue
declined 12 per cent to Rs 4.76 billion as advertising income fell 29 per cent
to Rs 1.98 billion.
Subscription revenue rose 12 per cent to Rs 2.41 billion,
mainly on the back of a surge in earnings from DTH. Domestic DTH income was Rs
467 million during this quarter, an increase of 88 per cent over Q1 FY '09. Subscription
revenues from domestic cable, however, slowed, growing at 6 per cent over the
corresponding fiscal in 2009.
Consolidated operating profit stood at
Rs 1.17 billion, down 19 per cent, while operating profit margin for the first
quarter was 24.6 per cent. On
the sports front, Zeel posted a revenue of Rs 870 million, up 35 per cent from
the year-ago period, while costs stood at Rs 1.14 billion. Operating loss from
the sports business was Rs 272 million.
Zee
Entertainment Studio (ZES) spent Rs 84.1 million on production of two regional
movies and released them in the quarter. Revenue from these two films was Rs 30
million.
Zeel repaid Rs 1.35 billion of debt and restructured the balance
loan amount to bring down its interest cost. The company has a total debt of Rs
4.4 billion. Says Zeel CEO Punit Goenka, "Our focus on the balance sheet
led to reduction of debt during the quarter and consequently interest cost came
down." | 
