MUMBAI: Zee Entertainment Enterprises Ltd?s (Zeel) financial performance has grown in strength in the five years since 2007-08, the year that saw the Subhash Chandra-promoted group?s flagship channel Zee TV swell its share in general entertainment by 56 per cent to 26 per cent amidst stiff competition.

Zeel, which pioneered private sector television entertainment 20 years ago, has seen its income in 2011-12 rise to Rs 30.405 billion, 65 per cent more than in 2007-08, while its net profit increased to Rs 5.891 billion, 53 per cent higher than five years ago. The income and profit figures increased as it kept a tight control on programming cost. Its programming cost to income from operations was 37.4 per cent compared with 28.2 per cent five years ago.

The last two years have also seen Zeel turning into a zero debt company with loans to effective networth dropping from 13.5 per cent in fiscal year 2008 to zero in fiscal year 2011.

Zeel?s share of advertisement income and subscription income has nearly been at the same level over the last five years, which suggests that the advertisement revenue has kept pace with the growing subscription revenue. The share of advertising revenue in fiscal year 2012 was 52.1 per cent compared with 50.7 per cent five years ago.

As the Subhash Chandra television entertainment group continued consolidating its financial performance, the company?s market capitalisation has swung back to the end-March 2008 level. The global financial crisis in the second half of 2008 had caused its market cap to sink to Rs 46.157 billion at the end of March 2009 from Rs 106.072 billion a year earlier. At the end of March 2012, Zeel?s market capitalisation was Rs 123.202 billion, 14 per cent higher than the pre-2008.

The operating profit margin in fiscal year 2008 was the highest in the last five years. The television entertainment group is yet to reach the operating profit margin of 30 per cent achieved during the year. Its operating profit margin in the fiscal year 2012 was 24 per cent, down from 27 per cent in fiscal year 2011 and 28 per cent fiscal year 2010.

"The sports business losses have somewhat dragged down the overall Ebitda level. But Ebitda from non-sports business is still significantly higher and ended at 34 per cent in the first quarter of this fiscal," said a media analyst.

Fiscal year 2009 saw improvements across key operating metrics of Zeel. Its net profit for the year at Rs 5.124 billion was 34 per cent higher than a year earlier, on an 18 per cent year-on-year increase in income from operations to Rs 21.773 billion. This was also despite a drop in operating profit margin.

The fiscal year 2010 was a year of creating operating efficiencies for Zeel, which helped it reduce expenses by 2.63 per cent year-on-year to Rs 15.863 billion. The income from operations during the year had remained flat at Rs 21.998 billion.

The performance in 2010 was a result of a conscious decision to focus on cash flows and improve earnings, which was well complemented by programming properties and distribution strengths from cable and reach of pay TV.

Zeel made the most of the digital drive led by the exponential growth of direct-to-home television, which had made it possible for cable and satellite television to reach 80 per cent of the TV households in the country. In the fiscal year 2011, Zeel?s income rose 36 per cent to Rs 30.088 billion from Rs 21.998 a year earlier.

In the fiscal year (2012) just before it entered 21st year of its operations, Zeel?s profitability was hit by curtailed advertisement spends caused by a slowing economy amid a global financial crisis for the second time in the last five years. Its income in the fiscal year 2012 was nearly flat at Rs 30.405 billion, while its net profit shrunk to Rs 5.891 billion from Rs 6.369 billion.

As Zeel managing director and CEO Punit Goenka puts it, the company?s financial performance has been stable in fiscal year 2012, having touched Rs 15.8 billion of advertising income and Rs 13.2 billion of subscription revenue.

Beginning with one channel in 1992 to 31 channels today and counting, Subhash Chandra‘s Zee Entertainment Enterprises Limited has indeed come a long way.

Indiantelevision.com spoke to industry vetarans like Kunal Dasgupta, Shashi Sinha and and some of the former Zee employees to trace back Chandra‘s dynamism and the company‘s history.

Former MSM CEO Kunal Dasgupta

On Subhash Chandra and Zee?s early life

Through the early stages and the difficult years, it was Subhash Chandra‘s vision and dynamism that helped the company get through and create a brand.

The most important thing to note about Zee is that they survived the initial pangs and have become a permanent part of the Indian media landscape. Despite the presence of multinational media companies, they survived the onslaught and have become successful.

On competitive spirit of Chandra:

Chandra was always a strong competitor. There was never any question that Star, Zee and Sony were here to stay. I think that the perception that Zee was up and then down and came back again was only a media creation. In reality these three companies have always been successful.

On media business being promoter-led:

A media company has to be promoter-led and not just be professionally run. There has to be an entrepreneurial spirit. You have to take risks. That is how a media company will thrive. If there is no risk taking appetite, you will stagnate.

Lodestar UM CEO Shashi Sinha

I think Subhash Chandra has done a great job. To have a vision to think through and to have a perspective that would fuel Zee‘s growth.

At that time only Doordarshan was there and they hardly used to sell; you had to stand in queues for slots. So, to create something like this was so magical. As global giants Star and Viacom are there, you need that entrepreneurial mindset to survive and grow. Chandra looked at languages, distribution and all the pieces of the media business. It is not easy to do everything in the beginning when the market is small and there isn?t enough money. But it was a good team and Ashok Kurian helped him at that point of time along with others.

Zee as a bouquet is very good. Chandra has set up a strong distribution network and he has got regional channels. One
channel going up and another going down is a minute detail, but he has consolidated the network very well . You can?t find a
bigger bouquet and they have been ahead of time. Before any other DTH operator came in, Dish TV was launched. They were the first ones to launch regional and set up a channel distribution outfit.

Chandra‘s son Punit Goenka is doing well too and he has a very good understanding of content.

For an Indian group to be so dominant and do so well, it?s a great achievement.

Essel Production head Nitin Keni

Zee?s beginning as a private broadcaster

Zee had a highly creative atmosphere in those early days and, being a new company, was less corporate. It was like ‘Do it first, Understand later‘.

Subhash Chandra was not just involved as chairman but also in every single thing because that was the beginning. He was practically there to give directions and guided us in major things.

That was the time when the whole country was getting liberalised. So I think that was also on his mind: that the Indian economy was opening up and Zee should start looking at the aspirations of the young people and the new society. We wanted Zee to be modern, young and aspirational.

Zee‘s movie production efforts

I was also part of the launch of Zee Cinema in 1995. There were lots of legal issues because there were many claimants to the movie library. So we had to be careful and bought rights directly from film producers.

Since there was a joint venture arrangement between Star and Zee, both of us were acquiring movies and they were pooled together. Zee already had a library of 2000 movies and Star also had acquired certain movies.

After I did my MBA from IIM, I joined NFDC because there were no private broadcasters at that point of time. I was very keen on cinema, so I started to make movies on my own. Zee also funded one of the films, Gadar. Though the movie was a box office hit, Zee never got the kind of returns it should have. Only the satellite rights gave Zee the true value.

In India, movie making is still not as organised as in other countries. Zee was not in film distribution, so in 2005 I tried facilitating that. I came as a consultant since I was running my own company at that time and we tried getting into distribution through a joint venture with Rajshri.

Why Zee did not make much progress in movie production? That is because Zee was focusing more on the television business (it‘s a 30 channel network today); the film business took a backseat. Zee floated a motion pictures arm in between but it did not work since it required a different kind of culture and organisation as compared to television.

On Subhash Chandra the visionary

Chandra dares to dream and he actually converts them into reality. I think he also created a platform for the next generation of media leaders to take the company global.

Chandra has given freedom to his CEOs; he curbs their wings also depending upon how they perform. He won‘t allow them to mess up with the company that he has built over the years.

Although he has passed on the baton to his son, he is very much guiding him and us. He continues to be passionate about media despite venturing into other growth areas like infrastructure.

Independent media consultant Kantaa Advanii

My six years at Zee have been a period of learning. Being a pioneer in the Hindi TV entertainment business in the country, we made our own rules and broke them. I was never faced with a situation where I was told not to try something new. So in that way, it was an extremely encouraging time that I spent at Zee.

I interacted more with Subhash Chandra when i was made head of sales for the entire network. Contrary to ‘rumours‘ at that time of him being an interfering boss, I found that he is a very hands on person and likes to keep track of what is going on in his company. He believed in letting people do their things and was present as a guiding force.

Another commendable thing about Chandra is the fact that he has a very shrewd idea of what might work and what might not. Despite this instinct, he never backed out of a calculated risk. He is a visionary and a part of this is his ability to take chances and face the consequences. In case of a failure, he took it in his stride.

A milestone of 20 years is a defining moment in any organisation‘s life span. It is a reason to celebrate, when the dream we envisioned two decades ago has blossomed. We are now at an inflection point, a position from where we have to leapfrog and move to the next growth trajectory.

In 1992, Zee was established with strong values, focusing on Customer, Excellence, Creativity, Integrity, and to this day we still espouse these values. It is my belief that the key attributes that we have adopted since inception are Vision and Innovation; not just in thought, but in action. This has helped us to achieve domain expertise and consistent growth levels, emerging as industry leaders with a single-minded focus on realising aspirations.

We have a proven track record, which provides us with an enviable 30-channel network, reaching 650 million viewers across 168 countries. With a financially robust business model and a professional team, we are one of the largest content producers and aggregators globally.

The business of entertaining people is a good one to be in and there has never been a better time than now, especially in countries, where discretionary incomes are rising and people are seeking quality family entertainment.

Our offerings span varied genres, General Entertainment, Movies, Music, Sports, Lifestyle covering most languages across the world. For 20 years we are dedicated to creating and showcasing engaging content that can be enjoyed by people anywhere.

Our shareholders‘ value has grown at a compounded annual growth rate (CAGR) of 30% since listing on the stock exchanges. The result of thought leadership, execution excellence, robust value system, capable talent pool, and most importantly an all-encompassing insight into viewer pulse, along with a natural flair for innovation.

In an age of fast-evolving preferences, brand loyalty is the last thing that can be taken for granted by marketers. Translated into actionable units, this tells us to strive even harder in order to maintain our leadership and sustain the momentum that we have created for ourselves.

It is with a sense of pride that I enumerate some of the significant developments in the last fiscal. Zee TV became the first Indian channel to be granted the landing rights in China. This will enable us to cater to the large audience base in China, and will open the doors to Indian entertainment.

Our distribution joint venture, Mediapro Enterprises, in a short span of time, has been successful in creating efficiencies in the entire value chain. Zee also launched one more niche channel, Ten Golf in FY‘12.

During the year, we were ranked at an impressive 217th position in the ET Top 500 Companies Report, which was higher than many multinationals in India and chosen as the no. 1 media company by the Fortune Magazine.

2011 was challenging for the global economy, as well as the entertainment industry. Against this backdrop, we have had a sterling collective performance that deserves special mention.

India‘s Television industry is poised for a quantum leap, riding on the digitisation wave. From mere aspiration, digitisation is now going to become a reality over the next few quarters. As per the latest FICCI KpMG report, the Indian Television industry will grow from Rs 329 billion to around Rs 735 billion in the next five years. This provides us with a huge opportunity to grow in the coming years.

I strongly believe that, with the digitisation drive and consolidation in the cable industry, the ability to control the market share in terms of quality, technology and service will rest with few dozen players, rather than the 60,000 cable operators prevailing today. The market for pay services will have to develop and evolve over the next three to four years, as the current ARPU levels are extremely low.Consolidation is expected in the DTH market as well, since it is not at a profitable level at this stage. Only with increase in the ARPU levels, broadcasters will be able to invest in better quality programming, otherwise it remains an unviable proposition for many players.

On the other hand, the production industry also needs to be more organised. This will bring in correction in programming costs, which have escalated drastically and unduly. In addition, the industry needs a better and comprehensive rating system, crisscrossing the entire length and breadth of the country. This will help the industry to recover the enormous losses that currently prevail. I am sure that with the elimination of anomalies, the industry is poised for an attractive growth in the coming five to seven years.

Over the years, our employees have demonstrated remarkable loyalty, and take great pride in using their talents and experience to build our global brand and businesses. With a strong emphasis on building organisational excellence through ‘Samwad‘, an HR initiative, we are on our way to create an even greater workplace environment.

Finally, I thank our board of directors for their support and exemplary guidance. I also take this opportunity to express my gratitude to all our stakeholders, who continue to repose faith and trust in us over the years.

As a dedicated team focused on delivering exceptional service, that add real value to all stakeholders, we are ready to drive the business forward for the next 20 years and beyond.

Mumbai: Global broadcast industry magnates will attend the Indian broadcast industry?s annual global festival that starts this year. The inaugural Indian TV Festival will be held in Goa for two days from 2 November 2012, providing for the first time a platform to network and exchange ideas for television executives and people who create and ideate.

Zee TV?s Subhash Chandra, Star Network?s James Murdoch, Sony America CEO Michael Lynton, Disney International chairman Andy Bird, Channel 4 head commercial marketing and research Hugh Johnson and HBO Asia CEO Jonathan Spink and executives from companies Comcast and Fremantle will speak at the festival.

The festival is being organised by the Indian Broadcasting Foundation (IBF). It will have interactive seminars, keynote sessions, as well as a marketplace with 60 stalls exhibiting content relating to every television genre.

Star india CEO Uday Shankar, who is also IBF president, said the event had been in the making for a year. "We wanted to create and sustain a platform where the broadcast community can meet to exchange ideas. It will be an annual event where members of the broadcast industry and their allied partners will come."

The event will be used by industry members to share their vision and the way forward. "We do not come together to share ideas and best practices. The aim is to meet away from our workplace and competitive mindsets. The aim is to make this event the most iconic television gathering of creativity, minds and strategy," said Shankar.

Sunil Lulla, Times Television Network MD & CEO, and his team have put together the event.

Turner International India GM Entertainment Networks South Asia Monica Tata noted that the industry is worth Rs. 330 billion and is expected to reach Rs 1000 billion by 2017. "We have to set ourselves for the future. Television penetration is 60 per cent which means that there is opportunity for growth. New technologies like high definition, DTH offer opportunities."

"This is an event that is of, by and for the industry. The event will look at ideation across all genres including general entertainment, news, sports. The television industry needs to collaborate more strongly. Media Partners Asia is our knowledge partner and they will release a report at the event," Tata said.

Times Television?s Sunil Lulla said the event is for people who make TV happen. "For the industry to grow three fold you need conversation which will allow for new ideas to be formed. You need confidence so that competitors can also be collaborators. You also need commitment. The event will allow people who offer technology and services to meet people. Goa makes magic happen which is why we are holding the event there. We will announce more speakers in due course. The aim is to have an event that is full of dialogue."

MUMBAI: Former Indian captain Kapil Dev has returned to the BCCI fold by cutting off all links with Subhash Chandra?s Essel Sports, the company behind the now defunct Indian Cricket League.

As per the BCCI amnesty scheme, Kapil is now entitled to get Rs 10 million as part of BCCI?s one-time benefit scheme and pensions. The BCCI will also clear his arrears.

"The BCCI has received a letter from Mr. Kapil Dev, former India captain. Kapil Dev has informed the Board that he has resigned from the Essel Sports Private Limited / ICL. He has also stated in the letter that he has always supported the BCCI, and will continue to do so in the future. The BCCI acknowledges Mr. Kapil Dev?s immense contribution to Indian cricket., and looks forward to a fruitful association with him in the years to come," BCCI president N Srinivasan said.

In 2009, the BCCI had announced an amnesty scheme for all players and officials who were part of the ICL, which saw a mass exodus from the ICL fold to the BCCI.

Similarly, other cricket boards also granted amnesty to their players for breaking ties with the rebel cricket league which eventually led to its death. Recently, the BCCI had granted amnesty to Kiran More, who was associated with ICL.

MUMBAI: Beating the economic slowdown and market expectations, Subhash Chandra-promoted Zee Entertainment Enterprises Ltd (Zeel) has posted a 21 per cent jump in net profit for the fiscal-first quarter on the back of a strong ad growth and cut in sports losses.

Operating revenue also rose 21 per cent to Rs 8.43 billion for the quarter ended 30 June 2012. Advertising revenue surprised market forecasts, jumping 18 per cent to Rs 4.47 billion, as the company?s flagship channel, Zee TV, gained market share and viewership.

Zeel reported consolidated net profit of Rs 1.57 billion for the quarter, up from Rs 1.30 billion.

Zeel chairman Subhash Chandra said, ?It is encouraging to see that Zeel has recorded a strong improvement in the operating and the financial performance during the quarter. This has been on the back of increased investments that we are undertaking to grow the business and the market share."

Zeel operating revenue also jumped 21 per cent during the quarter to Rs 8.43 billion (from Rs 6.98 billion), while expenses grew by 12 per cent.

Consolidated operating profit (Ebitda) for the quarter zoomed 50 per cent to Rs 2.33 billion, from Rs 1.56 billion in the year-ago period. Ebitda margins for the quarter stood at Rs 27.7 per cent.

Said Zeel MD and CEO Punit Goenka, ?Zee has started the year on a good note with improvement in the operating performance in Q1 FY?13. During the quarter, we have been able to improve operating margins, partly due to higher viewership share and partly due to lower sports losses.?

Zeel? ad revenue growth came primarily due to increase in market share of many of its channels. The advertising climate, though, stays sluggish.

Subscription revenue rose 19 per cent to Rs 3.64 billion. However, on a QoQ basis, it fell 9.45 per cent (Rs 4.02 billion in Q4). Domestic subscription revenue for the fiscal-first quarter stood at Rs 2.50 billion showing 20.7 per cent growth, while international subscription revenue was at Rs 1.14 billion (up 16.5 per cent Y-o-Y).

On the expenses front, programming and operating cost for the quarter saw a 10 per cent rise to Rs 3.76 billion, from Rs 3.42 billion a year ago. Employee cost rose 19 per cent over the earlier year. Selling & other expenses for the quarter stood at Rs 1.45 billion, increasing by 16 per cent. Total costs incurred by the company rose 12 per cent to Rs 6.1 billion.

Sports business:

The sports business revenue stood at Rs 992 million in the quarter, while cost incurred was Rs 1.20 billion.

Zeel share price jumped 2.64 per cent to close Friday at Rs 149.85 on the BSE.