Zee thumps St with 41% profit growth

This story first appeared in DNA Money edition on Thursday, January 24, 2013.

Zee Entertainment Enterprises Ltd, India's leading media company, has reported a 40.5% year-on-year (yoy) growth in net profit for the third quarter at Rs 193.3 crore, lifted by a strong surge in advertising and subscription revenues.

Advertising and subscription revenues during October-December grew 28.8% and 25.6% yoy to Rs 509.4 crore and Rs 409.8 crore, respectively.
Subhash Chandra, chairman, Zee, said the first three quarters of this fiscal have been good for the company with strong performance relative to the industry and competition.

“With one quarter to go, we are looking forward to a strong growth this year. The highlight for this quarter is the strong growth momentum in advertising revenues, despite subdued spends. The performance illustrates that our investments in content are yielding good returns,” said Chandra.
The company’s consolidated operating revenues at Rs 938.8 crore for the third quarter rose 26.3% over the year-ago period.

Operating profit, or earnings before interest, tax, depreciation and amortisation (Ebitda), for the third quarter stood at Rs 261.1 crore. Ebitda margin for the quarter was 27.8%, while net profit margin stood at 20.6%.
With digitisation bringing in a transformational change in the Indian television industry, the company is of the opinion that it will benefit all stakeholders.

Punit Goenka, managing director and chief executive officer, Zee, said, “Our subscription revenues during the third quarter are the highest ever, and with digitisation rollout they will improve in the medium term.”
While the Zee network viewership witnessed a successful mix of new and returning shows, the management is confident of the next 12 months and will continue to invest in new content and channels.

“These investments will have an impact on our operating margins in the short term, but will enhance our performance in the medium term as well,” said Goenka.
The company trumped the overall industry, too.

Atul Das, chief strategy officer, Zee, said, “While the overall industry is estimated to have grown 9-10%, our performance in the first nine months has been 27% growth over the same period last year. The growth is also an indication of strong performance on viewership and better monetisation of our properties,” said Das.
The third quarter also saw Zee launch India’s first edutainment channel called ZeeQ aimed at children in the age group of 4 to 14 years.

Response to the channel has been very good, Das said, adding the company is keen on adding more pay TV properties.
Ankit Kedia, analyst with Centrum Broking, said the company will benefit from the Phase II and III of digitisation and margins will continue to be healthy at 26-27%.

With more than Rs 1,100 crore of cash, the company would look at new investment opportunities, he said, citing the new initiatives, including ZeeQ and Ditto TV