Mumabi: Zee Entertainment Enterprises Ltd on Friday posted a 6% rise in December-quarter profit, fuelled largely by last year’s acquisitions, but a sequentially flattish advertising revenue in a seasonally strong quarter left investors disappointed.
Reacting to the earnings, shares of the general entertainment broadcaster fell as much as 17% to Rs 108.40, their lowest since September 2009. At 3.09 pm, they were down 9.62% at Rs7.9.
“My biggest concern is that advertising revenue was flattish quarter on quarter, when it should have been better for the company because of all the festivals,” K.R. Choksey analyst Rohit Maheshwari said, adding he would not advise entering the stock at current levels.
Advertising revenue swelled 62% from the year-ago quarter to Rs4,400 crore, but inched up only about 7% sequentially.
The December-quarter is expected to be the strongest quarter for media companies so far this year, as the Indian festival season, which generally falls between August and October, started with a delay of almost a month in 2010, spurring revenue growth in the third quarter.
Zee Entertainment posted a consolidated profit of Rs155 crore on revenue of Rs825 crore, compared with a profit of Rs146 crore on revenue of Rs531.
Last January, the company had acquired the regional general entertainment channel business from Zee News Ltd.
In March, the 9x business of 9x Media Pvt. Ltd and ETC Networks Ltd were also merged with the company, while the education business, Zee Learn, was hived off into a separate company.
In a separate statement, Zee Entertainment said its board has approved merging two wholly owned overseas units, ZES Holdings Ltd Mauritius and ZEE Multimedia Worldwide Ltd, BVI, with the company in February.
“I feel all this restructuring could have been avoided,” Maheshwari said. “If I want any exposure in the broadcast space, I think Sun TV Network is a better option because it has better margins and no threat of competition.”
“Zee is not growing at the pace that it should,” he added.