Zeel revenues: a tale of two trends

Rose Major

Zee Entertainment Enterprises (ZEEL), the Indian media group, has reported subscription DTH revenues up a whopping 88% in the three months to end-June 2009, compared with the same period the previous year, boosted by recovering some subscription arrears. But Zee has to take the bad with the good. Advertising revenues declined by 29%.

Subscription revenues from domestic DTH were Rs467 million during the quarter (up 23% on the previous quarter), with subscription revenues for the whole business up 12% to Rs2,410 million. Domestic subscription revenues (including DTH mentioned above) were Rs1,318 million with international subscription revenues at Rs1,092 million. Advertising revenues declined 29% to Rs1,980 million.

Subhash Chandra, Chairman, ZEEL, said: “Growth in digital television homes in the country augurs well for all pay broadcasters. Reflecting the strength of Zee channels, our revenues from the DTH segment have continued to grow, as anticipated. Over the next few years, our business model would undergo a shift in favour of a subscription led model, as is the case globally. Being the largest pay network of this country, Zee will be an integral part and beneficiary of this success story.”

But, he added: “This quarter posed a big challenge on the advertising revenue front. On one hand the macro advertising environment remained weak and on the other, two major sports events took away revenues from entertainment channels. Intense competition in the Hindi entertainment segment also had its impact. We do see early signs of recovery in advertising revenues though overall ad spends on television may not be as buoyant as they were in the last few years.”

Like many other broadcasters around the world, ZEEL has been focusing on cost-cutting, with total expenses down 10% to Rs3,589 million. Programminng and operating costs rose 1% to Rs2,392 million.

Operating profit stood at Rs1,170 million, pre-tax profit Rs1,329 million and profit after tax Rs913 million. Operating profit margin was 24.6%.

Flagship channel Zee TV made its way back to the top of the entertainment networks during the quarter, but is being pushed by newcomer Colors.