ZEEL Q2 net profit tanks 38.2% despite double digit rev growth
MUMBAI: Media conglomerate ZEEL’s net profit for the quarter ended 30 September has plunged 38.2% to Rs 386.7 crore compared to Rs 625.5 crore in the same quarter previous fiscal.
The fall in net profit can be attributed to the 71% drop in other income to Rs 58.9 crore from Rs 203.1 crore. In Q2 FY18, ZEEL’s other income income had zoomed to Rs 203.1 crore from Rs 43.2 crore due to a notional gain of Rs 160.9 crore on re-measurement of previously held equity interests in India Webportal and Fly By Wire International to its acquisition date fair value.
The company’s EBITDA jumped 37.6% to Rs 675.7 crore compared to Rs 491.2 crore. ZEEL’s operating revenue for the quarter has increased 24.9% to Rs 1975.9 crore as against Rs 1582.1 crore. Expenditure was up 19.2% to Rs 1300 crore from Rs 1090.9 crore.
Ad revenue registered a growth 22.7% to Rs 1210.6 crore while subscription revenue was up 21.3% to Rs 608.2 crore. Other sales and services grew 67.3% to Rs 157.1 crore.
Domestic ad revenue grew by 23.3% YoY to Rs 1152.6 crore. International advertising revenue for the quarter was Rs. 580 million.
ZEEL MD and CEO Punit Goenka said that the company’s broadcast portfolio has the potential to further increase its market share. He also noted that the launch of Zee Keralam will aid the ad and market share growth. “The advertising and subscription revenue growth will be aided by the scaling-up of digital business and the growth outlook for both remains strong. This robust performance also gives us room to increase our investments in digital, if required,” he added.
ZEEL said that the domestic ad revenue growth, while aided by a softer base, was driven by the robust demand across key categories for TV advertising and ZEE5’s contribution to advertising revenue.
It further stated that the TV advertising revenue growth was led by the continuous increase in our network market share over the last few quarters, ZEE5’s growing user base and time-spent will aid the overall growth.
Similarly, the domestic subscription revenue for the quarter increased by 26% YoY whereas international subscription revenue increased by 1.9% YoY.
The higher than normal domestic subscription revenue growth was driven by early closure of some of the distribution contracts as compared to last year and monetisation of phase-III subscribers.
For the TRAI tariff order, the company has already started discussions with our distribution partners for seamless transition to the new regime.
During the quarter, ZEEL’s International business revenue was Rs. 202.6 crore. The advertising revenue grew by 14.6% on a comparable basis (In Q2FY18, Rs. 1.5 crore of advertising revenue pertaining to sports business was part of International ad revenue) to Rs 58 crore while the subscription revenue grew by 1.9% to Rs 98.9 crore. Other sales and services stood at Rs. 45.7 crore.
In terms of expenditure, the programming cost for the quarter increased by 25.5% YoY to Rs 726.3 crore. This increase was driven by content cost for ZEE5, movie production costs and elevated movie amortisation costs for the broadcast business. Advertising, publicity and other expenses for the quarter grew 22.5% YoY to Rs 405.1 crore due to higher marketing and promotion costs for ZEE5 and movies released during the quarter.
ZEEL continued to increase its viewership share while maintaining its position as the top network in the non-sports entertainment segment with an all-India viewership share of 19.9%. The increase in viewership was driven by gains in several regional language markets and Hindi movie cluster.
ZEEL also noted that its digital entertainment platform ZEE5 has become the #2 platform in India with 41.3 mn monthly active users (MAU) in September. The average time spent on the platform is 31 minutes per day.
The platform has so far released 29 original content, including finite-format fiction shows, reality shows, original movies and short movies. Along with digital original content and movie premieres, ZEE5 brings more than 55 hours of new TV content in 8 languages daily to its users.
“ZEE5 is the fastest growing entertainment platform in the country. In a little over six months, it has become the second most popular OTT platform. With a monthly active user base of 41 million and an average daily time spend of 31 minutes, it is growing faster than our expectations. Despite the strong initial performance, I believe it is just the beginning of a long digital journey for us. With a strong pipeline of original content and partnerships with key players in the digital eco-system, we are confident that ZEE5 will become the default entertainment platform for digital audience,” Goenka said.