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Zee’s Q4 profit up by 33%

Zee’s Q4 profit up by 33%
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First Published: Wed, Apr 21 2010. 10 24 PM IST
Updated: Wed, Apr 21 2010. 10 24 PM IST
Mumbai: India’s leading listed television broadcaster Zee Entertainment Enterprises Ltd on Wednesday posted an increase of 33% in the fourth quarter net profit to Rs128.8 crore, benefiting from increased subscription and advertising revenue.
Revenue rose 26% to Rs649.3 crore in the three months ended 31 March from a year ago, said the company, which had on Tuesday announced that it had won board approval to acquire 9X, a general entertainment channel run by INX Media Pvt. Ltd.
Advertising revenue increased by 54% year-on-year to Rs351.7 crore. Subscription revenue from direct-to-home TV customers rose 79% to Rs68.3 crore. Operating profit was up 28.3% to Rs183.6 crore.
“The number of TV households continued to grow at a healthy pace,” chairman Subhash Chandra said. “More importantly, there are close to 21 million direct-to-home digital pay TV homes in the country, up from 12 million in March 2009.”
Chandra said TV advertising was under-priced in India as were average revenue per user for pay television.
“As an industry, we have to continue to work towards bringing corrections and I am hopeful of improvement in the coming years,” he said.
According to him, Zee has repaid most of its debt and now has net cash on its balance sheet. Zee’s board approved a special dividend of Rs2 per share, given the company’s “strong financial position”.
“As has been our stated intent, our first priority is to invest surplus cash in projects which would potentially earn higher returns for the company. If we do not find suitable opportunities, we would return cash to shareholders,” Chandra said.
Angel Broking Ltd analyst Anand Shah said revenue was “decent”, and noted that Zee had consolidated the accounts of regional entertainment channel businesses acquired from Zee News Ltd.
“Major portion of the growth in their results is coming from the regional channels, for instance the 54% growth in ad revenues,” he said. “On a like-to-like basis, the ad revenue growth would be just about 11%.”
Shah said the growth in direct-to-home subscriptions was being countered by “de-growth in cable and international subscriptions”.
Atul Das, executive vice-president (corporate strategy and business development) at Zee, added that while international subscriptions had seen a slight decline, cable subscriptions remained flat. He said the 9X deal wasn’t final yet.
Zee said in a note to the stock exchanges on Tuesday that its board had given it in-principle approval to acquire 9X. The board will meet again on 29 April to consider the terms of the deal.
Angel Broking’s Shah said the accumulated losses of 9X would give Zee tax benefits. “It’s obviously a strategy to run a flanker second channel to their existing GEC (general entertainment channel), the same way Zee Next was. 9X would have some library of accumulated content, which would be better for them, since they want to start a second channel. It’s certainly better than starting from scratch.”
Shashi Sinha, chief executive of media buying agency Lodestar Universal Pvt. Ltd, said Zee’s results were encouraging.
“In any case, their channel Zee TV has been performing exceedingly well, and has mostly been in the No. 2 position in general entertainment,” he said. “Regional channels, especially their Marathi channel, have also shown growth. They are able to leverage their position more effectively as a network.”
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First Published: Wed, Apr 21 2010. 10 24 PM IST
More Topics: Zee Entertainment | Profit | Q4 | 9X | INX Media |