Zee Entertainment second quarter net profits were up 6.9 percent at Rs Rs 413.20 crore for the quarter ended September 30, as the broadcaster moved to a new corporate tax structure, that was announced by the Finance Minister last month.

The revenue rose 7.4 per cent over last year to Rs 2,122 crore in the three months through September. The company’s advertising revenue rose 1.2 per cent to Rs 1,224.70 crore, while the subscription revenue rose 19 per cent to Rs 723.50 crore.

“Overall TV broadcast industry saw about 4 per cent de-growth in the quarter in terms of ad revenues and we still had about 2 percent growth despite two of our highly profitable FTA channels being switched off,” Punit Goenka, Managing Director and CEO, Zee Entertainment, said during an analyst call.

“Reach of all the pay channels had been impacted during the implementation of new tariff order. In the regional markets, there has been a strong revival of reach post the disruption in early days of the NTO, and in almost all these markets, recovery in reach has been better than competition,” he said.

The company's profitability was also impacted due to the delayed payments from related parties Dish TV and Siti Cable.

“The debtors have gone up this quarter on account of delayed payments from Dish and Siti Cable,” acknowledged Goenka. “We have received binding and definitive payment plan from both and expect to bring it down in Q3 and Q4.

Total receivables in the quarter stood at Rs 2,500 crore of which Rs 700 crore were related party.

The increase in profits were primarily driven by lower tax paid by the company in the quarter, adjusting for lower tax rates announced by the government recently.

“FM had announced reduction in corporate tax rate. We see that adjustment in the quarter. Tax rate has come down from 33 per cent to about 25 per cent now. We will see benefit in cash flow as well in the coming quarter. Hopefully, in next 2 quarters, our tax outgo should improve by 200-300 crore,” Goenka said.

Domestic ad revenues grew 1.4 per cent in the quarter, which was impacted by the tough macro-economic environment which had a negative effect on demand across categories, the company said. The impact on growth due to conversion of two channels from FTA to pay in March continued during the quarter. As the quarter progressed, advertising spends witnessed a gradual improvement helped by the onset of festive season.

Goenka said he remained bullish about the second half of the financial year and hopes the festive season will bring back cheer to the industry.

“Festive season will drive ad growth for the industry as well as for us. Given our network share and consolidated market positioning, it gives us far more leverage to negotiate better rates. So while the industry may still have a flat revenue growth in H2, we will continue to grow,” Goenka said.

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