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Zee Entertainment Enterprises (Zee) reported revenue of ₹1,572 crore for the June 2016 quarter, up 18.5 per cent from the comparable period last year. This is better than the year-on-year growth recorded in the preceding two quarters.
But unlike in the past, growth in advertising revenue, which accounts for around 55 per cent of the company’s income, was relatively lower.
Advertising revenue over the last few quarters has grown by close to (even over) 30 per cent. In contrast, during the latest quarter under review, the company recorded a lower 19 per cent (year-on-year) growth in advertising revenue. However, higher revenue from the company’s movie production business boosted its performance. This was thanks to the robust box office collections from hit Marathi movie Sairat , a home production. Subscription revenue growth of 14 per cent, too, remained healthy.
Ad revenue down According to Mihir Modi, Chief Finance and Strategy Officer, Zee, the company’s ad revenue growth has broadly been in line with the industry growth of 13 per cent, which has been slower than in the past.
Lower ad-spend by the FMCG sector – a big advertiser – has impacted growth. He, however, expects growth to inch up to 14-15 per cent in the coming quarters. Also, Zee’s ad revenue since the June 2015 quarter has included the revenue from ‘&TV’, a channel launched in March last year. The absence of a base effect in the June 2016 quarter has led to a relatively lower growth in this quarter.
Profit up The increase in revenue boosted the company’s operating profit to ₹453 crore, an increase of 44 per cent from the year-ago period. Net profit grew 22 per cent to ₹217 crore during this period. Higher taxes and a decline in the fair value of its listed redeemable preference shares impacted profit at the net level during the June quarter.
In adherence with Indian Accounting Standards, the company has started accounting for a change in the fair value of some of its investments.
Correction
The analysis was amended to correct the headline, which incorrectly said the ad revenue declined.
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