Zee profit up 28.5% on strong ad show

India's leading entertainment company Zee Entertainment Enterprises Ltd (Zeel) reported a 28.5% year-on-year growth in profit after tax at Rs 322.2 crore for the third quarter ended December. The growth came on the back of strong advertising revenues that rose 25.8% year on year to Rs 1,202 crore.

Dr Subhash Chandra, chairman, Zeel, said that it is very heartening to see the rebound in the economy after four quarters. "The initiatives taken by the government had some short-term impact on the growth but these measures will strengthen the economy in the long run. Indian media and entertainment (M&E) sector will be a beneficiary of this growth story as people spend more time and money on consuming entertainment content. Zeel, with its strong portfolio of entertainment offerings, is well positioned to capitalise on this opportunity," he said.

Consolidated operating revenues at Rs 1,838.1 crore grew 12.1% on year for the period under consideration. Earnings before interest, tax, depreciation and amortisation (Ebitda) stood at Rs 594.4 crore, with Ebitda margin at 32.3%.

Punit Goenka, managing director and chief executive officer, Zeel, said, "The slower growth in the last four quarters was due to specific events which required advertisers to recalibrate spends. As the impact of these factors is now behind us, ad spends have bounced back strongly and the outlook remains encouraging. The recent cut in goods and services tax (GST) rates across a wide category of products should aid the growth."

Goenka added that the domestic ad revenue growth of 26% is a testimony to the fact that television continues to remain the most effective medium for brand building. "With a dominant time-share along with an increasing reach, television will remain an important medium for advertisers in the foreseeable future. On top of this, digital platforms are driving incremental video consumption which represents another growth opportunity for content monetisation. Our new digital platform, Zee5, scheduled to be launched in February, will enable us to capture this growth," he said.

The domestic subscription growth for the quarter was at 7.5%. "The growth so far has been lower than what we had last year as the content deals with our distribution partners are taking slightly longer to conclude due to litigation regarding the Telecom Regulatory Authority of India (Trai) tariff regulation. Last year we had closed a majority of these deals in the second and third quarter. However, this does not have any significant impact on our full-year outlook for subscription growth," said Goenka.