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Zee Entertainment reported better than expected results in the quarter ended September, with profits soaring more than four-fold to Rs 97 crore.

Strong trends in advertising income continued, while a turnaround in the sports business and a cut in operating costs significantly boosted operating margins and profits.

Advertising income grew 28 per cent during the quarter, leading revenue growth. Improving inventory utilisation, sales of higher yielding ad slots and advertising rate hikes drove revenue growth for this segment.

Zee TV’s channel ratings soared during the quarter. Gross rating points, a measure of a channel’s popularity, rose 24 per cent on a quarter-on-quarter basis. The company claims to have surpassed the market leader in the prime time slot. This event has been widely expected and priced into the stock.

An unexpectedly sharp cut of 31 per cent in “programming and operating costs” also drove operating margins, which expanded to 33 per cent during the quarter from about 6 per cent a year earlier.

Also, the sports business, which consolidates the operations of Zee Sports and Ten Sports (acquired in the second half of 2006), recorded a turnaround at the operating level.

The company had indicated earlier that it expected its sports business to turn profitable by the end of the year. Ten Sports is likely to have contributed significantly to this turnaround. Zee Sports, however, has reinforced its position in football with the telecast of the ONGC Nehru Football Tournament, which India won.

The sports business may, however, merit a close watch in the coming quarters, as Zee Sports will showcase the launch of the Essel-group promoted Indian Cricket League.

More Stories on : Stocks | Radio/TV | Zee Telefilms Ltd

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