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Zee Ent June qtr net falls on higher costs, soft ad rev

Zee Ent June qtr net falls on higher costs, soft ad rev
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First Published: Thu, Jul 21 2011. 02 41 PM IST
Updated: Thu, Jul 21 2011. 02 41 PM IST
Mumbai: Zee Entertainment Enterprises Ltd on Thursday reported a 13% drop in April-June consolidated net profit, hurt by an increase in expenses and muted advertising revenue growth.
Total expenditure, which includes programming and operating costs, staff costs, selling, administrative and other expenses, and depreciation, rose 11% to Rs 551 crore.
Advertising revenue, which accounted for 54% of total revenue, rose just about half a%age point to Rs 379 crore.
“My sense is that spending from FMCG companies has been muted and FMCG forms a major part of advertising revenue,” said a local analyst, who did not wish to be named as she is not allowed to speak to the media.
“Zee TV (the flagship channel) has also been lagging behind in viewership ratings. It is a distant No. 3 now, so may be that has also been affecting the yields,” she said. “Overall, results are bad.”
Star India and Viacom 18’s Colours occupy the first two positions among Hindi general entertainment broadcasters in television rating points, as per data compiled by TAM India for the week ending 9 July, according to media news portal indiantelevision.com.
Managing director Punit Goenka, in a statement, acknowledged advertising spends during the quarter have been weak, but said normalcy should resume with the onset of the festive season.
In May, Goenka had told Reuters the general entertainment broadcaster was in talks with clients to hike advertising rates by an average of 10-12%, effective next quarter.
Rival Star had hiked its advertising tariffs by 20% effective 26 April in response to rising cost of talent, increased investments in technology and a jump in production costs.
Zee Entertainment reported a consolidated April-June net profit of 1.3 billion rupees compared with Rs 150 crore a year ago.
Revenue inched up 3% to Rs 698 crore, helped by a healthy rise in income from subscription, which rose 16.7%.
“Zee has peaked out in international subscription revenue and even in domestic subscription. It is only the revenue from direct-to-home service providers is on the rise,” the analyst quoted earlier said. “That will continue to rise as the subscriber base of direct-to-home service providers increases.”
The company subscription revenue is also likely to improve going forward pushed by an increase in digitisation and a recent distribution joint venture with unlisted rival Star India Pvt Ltd, a unit of Rupert Murdoch’s News Corp .
The joint venture, Media Pro Enterprise India, will distribute the companies’ television channels in the domestic market, incentivise digitisation and tackle piracy, a major source of leakage in distribution revenue.
Zee Entertainment owns channels such as Zee TV, Zee Cinema, Zee Cafe, Zee Khana Khazana and Zing, among others.
Shares of the Mumbai-based company, which the market values at $2.74 billion, were up about 1.8% at Rs 126.35 in a flat Mumbai market.
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First Published: Thu, Jul 21 2011. 02 41 PM IST