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Ad revenues spur Zee Entertainment

K. Venkatasubramanian BL Research Bureau | Updated on April 19, 2011 Published on April 19, 2011

Zee Entertainment has managed to exceed market expectations by delivering a robust set of numbers for the March quarter.

This was made possible largely by a strong growth of 36.4 per cent in advertising revenues compared with the same period last year. Subscription too has grown at a healthy pace.

For the March quarter, Zee saw its revenues grow by 22.9 per cent to Rs 798 crore, while net profits expanded by 49 per cent over the previous year to Rs 191.8 crore. What must be heartening for the company is the growth managed in advertising revenues (which contributes nearly 60 per cent to the kitty) despite the ICC World Cup. This can be attributed to the strong bouquet of regional general entertainment channels (RGEC) in addition to its top ones – Zee TV and Zee Cinema.

Regional strength

RGECs Zee Marathi and Zee Bangla are among the most viewed channels in those languages. This drives regional advertising revenues, aided by the several mega serials and realty shows. Regional advertising holds the key as it is resilient compared to national advertising and is also growing at a faster clip due to the boom in Tier-II cities and towns.

For Zee, these channels complement the strength of its national channels Zee TV and Zee Classic. Even southern channels Zee Kannada and Zee Telugu are among the top third or fourth most viewed channels in those languages. The company's sports channel, Ten Sports, has tie-ups with several boards for telecasting cricket matches and the hugely popular European football games. This has helped the division gain traction in terms of robust revenue contribution, though it would take more time to break-even.

Apart from advertising, Zee, riding on the impressive growth in the DTH market, has seen subscription revenues grow by an impressive 23.9 per cent during the quarter. The television subscription business has a healthy mix, with Indian subscription accounting for two-thirds of the pie, and the rest coming from international viewership.

Almost 90 per cent of its domestic subscription comes through the DTH medium. With one million subscribers being added each month, latching on this mode of transmission has helped the company drive revenues substantially and minimise revenue leakage.

The stock reacted strongly to the results and closed over 8 per cent higher in Tuesday's trade at Rs 135.

Published on April 19, 2011
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