Zee Entertainment net profit rises 26.3% on strong ad show

India's leading entertainment company Zee Entertainment Enterprises Ltd (ZEEL) reported a 26.3% year-on-year (YoY) increase in profit after tax (PAT) at Rs 291.7 crore for the January to March quarter of fiscal 2019. This came on the back of strong consolidated revenue growth of 17% at Rs 2,019 crore, driven by the strong performance of domestic broadcast, digital and movie businesses.

Earnings before interest, tax, depreciation and amortisation (Ebitda) was Rs 568.3 crore with an Ebitda margin of 28.1%.

Subhash Chandra, chairman, ZEEL, said this has been another year of robust performance and the year has ended on a strong footing. "With the elections behind us, I expect the economic growth to accelerate. Our media and entertainment (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 Telecom Regulatory Authority of India (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," said Chandra.

Consolidated revenue for fiscal 2019 was recorded at Rs 7,933.9 crore. Ebitda stood at Rs 2,564 crore and Ebitda margin at 32.3%. Profit after tax for the year was Rs 1,567.1 crore and the PAT margin at 19.8%.

Punit Goenka, managing director and chief executive officer, ZEEL, said the company has delivered another quarter of strong operating performance despite challenges faced due to implementation of 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," said Goenka.

Advertising revenue for the March 2019 quarter rose 16% year on year to Rs 1,217.5 crore. Domestic advertising revenue grew 17.7% on-year to Rs 1,157.5 crore. International advertising revenue for the quarter was Rs 60 crore.

While revenues from subscription and advertising for the March 2019 quarter were impacted due to the tariff order, the company's medium-term growth outlook for the business remains unchanged. The ZEEL management is of the view that though advertisers have been circumspect to spend due to the uncertainty caused by the regulation and some moderation in the consumer demand, 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," said Goenka.

The company's digital entertainment offering ZEE5 completed one year of operations and has become one of the leading such platforms in the country. It continued to grow and has reached 61.5 million monthly active users (MAUs) in the month of March.

"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," said Goenka, adding that the company has significantly stepped up the pace of its new launches while also firming up the content pipeline for the next one year.

CLICK BY CLICK

• Ebitda was Rs 568.3 crore in the fourth quarer with an Ebitda margin of 28.1%
   
• Consolidated revenue for fiscal 2019 was recorded at Rs 7,933.9 crore. Ebitda stood at Rs 2,564 crore