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Zee Entertainment’s March quarter results indicate a significant recovery after facing the twin challenges of note-ban and the introduction of the GST last year.
While revenues increased at a robust pace, profits were disappointing and were below market expectations.
The domestic advertisement revenue grew 24.6 per cent y-o-y (excluding the sports business) to ₹938 crore in March quarter 2018. The company’s strong penetration in regional languages through channels such as Zee Cinema, Zee TV and Zee Marathi along with other GEC (General Entertainment Channels) has helped. The Launch of new shows has further strengthened its position in the regional languages as well. Over 60 per cent of the company’s revenue is generated from advertisement and the popularity of weekly shows such as Kum Kum Bhagya adds to this growth.
Domestic subscription revenue, on the other hand, has increased by 18 per cent y-o-y to ₹452 crore (excluding the sports business) mainly attributed to the early closure of deals with cable/DTH operators. Also, Zee’s content in channels such as Zee Marathi, Zee Bangla and Zee Telugu has witnessed good viewership during the quarter. However, according to the management, the delay in TRAI’s tariff order slightly impacted the subscription revenue growth, despite contract renewals.
Movie and Music, another lucrative segment for Zee, has witnessed consistent improvement. The company’s movie production division, Zee Studio, released two Marathi movies during the March quarter which was well received at the box office. Zee Music has expanded its music collection and registered about 3.4 billion views on YouTube in the fourth quarter.
However, the company’s profit declined to ₹231 crore in March quarter 2018 from ₹1,515 crore for the same period last year. This fall is mainly due to the increase in operating cost (advertisement and publicity expenses) which grew about 24 per cent y-o-y and increase in programming cost (about 7 per cent y-o-y) in the fourth quarter FY18. Increase in original programming hours in regional channels and increase in content cost for ZEE5 (a mobile application) have driven the increase in expenditure for the company. Thus, to that extent, the margins also declined 2 percentage points to 29 per cent y-o-y.
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