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Despite TRAI's new tariff order hiccup in Q4, Zeel numbers up for FY 2019

Advertisement, subscription revenue, operating and net profits for FY 2019 were up

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BENGALURU: The Subhash Chandra led Zee Entertainment Enterprises Ltd (Zeel) reported growth across all important parameters for the year ended 31 March 2019 (FY 2019, year, fiscal or period under review) as compared to the previous year FY 2018. The company says in its earnings release that it faced some revenue challenges in the fourth quarter (Q4 2019) because of the implementation of TRAI’s new tariff order (NTO).

Zeel reported consolidated operating revenue of Rs 7,933.30 crore for the fiscal under review, which was 18.7 percent higher than the Rs 6,685.68 crore for the previous year. Consolidated advertisement revenue for FY 2019 increased 19.8 percent to Rs 5,036.66 crore from Rs 4,204.76 crore in FY 2018. The company says that domestic advertising revenue grew by 20.9 percent YoY to Rs 4,769 crore. International advertising revenue was Rs 267.7 crore.

Consolidated subscription revenue increased 13.9 percent in FY 2019 to Rs 2,310.54 crore from Rs 2,028.73 crore in the previous fiscal. Consolidated total revenue increased 14.9 percent in the year under review to Rs 8,185.35 crore from Rs 7,126.03 crore in FY 2018. Domestic subscription revenue grew by 17.4 percent to Rs 1,923.2 crore. International subscription revenue was Rs 387.3 crore.

Further, the company says that in March 2019, its digital platform Zee5 had a total of 6.15 crore monthly active users who spent an average of 31 minutes per day on the platform. After the soft launch across the globe, ZEE5 commenced the roll-out in priority markets of Bangladesh, Sri Lanka, Malaysia, Singapore and Australia during Q4 2019.

Zeel’s consolidated EBITDA in FY 2019 increased 23.5 percent to Rs 2,563.94 crore (32.3 percent margin of operating revenue) from Rs 2,076.14 crore (31.1 percent margin of operating revenue) in FY 2018. Consolidated profit after tax (PAT) in the fiscal increased 6.1 percent to Rs 1,567.24 crore from Rs 1,477.75 crore in the previous fiscal. Consolidated total comprehensive income for FY 2019 increased 18.0 percent to Rs 1,696.88 crore from Rs 1,437.82 crore in FY 2018.

International Revenue

The company says in its financial release that during Q4 2019, ZEEL’s international business revenue was Rs 222.5 crore. International advertising revenue declined by 9.4 percent y-o-y while international subscription revenue grew by 1.4 percent y-o-y. Break-down of international business revenues for the first quarter is as below:

Advertisement revenue of Rs 60 crore

Subscription revenue of Rs 95.7 crore

Other sales and services of Rs 66.8 crore

Company speak

Zeel chairman Chandra said, “This has been another year of robust performance and we have ended the year on a strong footing. With the elections behind us, I expect the economic growth to accelerate. Our M&E industry has grown tremendously over the last few years, but I believe that it is just the beginning. Entertainment content is becoming increasingly personalised and that journey will continue with the new TRAI regulation and emergence of digital medium placing consumer at the centre. This will further motivate all the content producers to create better quality content.”

Zeel MD and CEO Punit Goenka commented, “We have delivered another quarter of strong operating performance which is commendable given the challenges the industry is facing in implementing the TRAI tariff order. As I had indicated earlier, the implementation of this new regulation has led to short-term disruptions, which is understandable given the size of our pay TV market. Based on the initial signs, I do believe that the changes that this regulation will bring in will be positive for us.”

Goenka informed, “The subscription and advertising revenues for the fourth quarter were impacted due to the tariff order. However, our medium-term growth outlook for the business remains unchanged. While the advertisers have been circumspect to spend due to the uncertainty caused by the regulation and some moderation in the consumer demand, we believe that this is temporary. The tariff order should settle down on the ground soon and the new government’s primary objective will be to stimulate the consumer demand, both of which will inspire confidence in the advertisers. The new subscription regime would be beneficial for all the stakeholders in the value chain.”

Goenka further revealed, “ZEE5 has completed one year of operations and has become one of the leading digital entertainment platforms in the country. We have significantly stepped up the pace of our new launches and the content pipeline for the next one year is firmed up. Over the last three months, ZEE5 further expanded its telecom partnerships and is now available on all the major telecom networks. We will continue to scale up ZEE5 on the three pillars of content, technology and partnerships.”

Let us look at the other numbers reported by Zeel

Zeel’s consolidated total expenditure for FY 2019 was up 19.5 percent at Rs 5,731.48 crore as compared to Rs 4,943.16 crore in FY 2018. Consolidated operating costs were up 21.7 percent in FY 2019 at Rs 3,075.79 crore as compared to Rs 2,27.52 crore in the previous year. Consolidated employee benefit expenses in FY 2019 at Rs 724.94 crore were up 8.9 percent as compared to Rs 665.66 crore in FY 2018. Consolidated finance costs in the period under review declined 9.9 percent up to Rs 130.43 crore from Rs 144.78 crore in the previous year. Consolidated advertisement and publicity expenses in FY 2019 were up 2.1 percent at Rs 699.27 crore as compared to Rs 577.32 crore in FY 2018. Consolidated other Expenses in FY 2019 were up 3.7 percent to Rs 869.96 crore from Rs 839.09 crore in FY 2018.

Zeel board recommends dividend

In the notes to its standalone financial statement, the company says that the Zeel board of directors have recommended an equity dividend of Rs 3.50 per equity share of face value or Re 1 and the record date for the dividend as well as the date for the AGM of the company has been fixed as 16 July 2019.

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