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Subhash Chandra defines ZEEL’s value proposition as ‘A to Zee of content leadership’
MUMBAI: Zee Entertainment Enterprises Ltd (ZEEL) chairman Subhash Chandra defines the value proposition of the company as the ‘A to Zee of content leadership’.
A testimony to Chandra’s assertion is that the company’s revenue and EBITDA have grown by 16% and 21% CAGR respectively over the last five years. Revenue has grown to Rs 6,434.2 crore in FY17 while EBITDA margin is at 29.9%.
“ZEEL sees its primary role as a creator, aggregator and disseminator of quality content that resonates across demographics and geographies. Our experience and focus on understanding viewers’ preferences has allowed us to grow ahead of the industry,” says Chandra.
ZEEL has more than 240,000 hours of television content, offered through 32 domestic and 39 international channels. The company houses the world’s largest Hindi film library and holds the rights to more than 4,200 movie titles across various languages. It has also produced several movies for theatrical release and is the fastest-growing music label in India.
As part of its expansion plan, ZEEL will launch channels in more languages. The company is currently present across 10 Indian and nine non-Indian languages. “We are consistently adding more languages to our portfolio, both organically and inorganically, to grow our relevance around the world. We are trying to create content in more languages that will further cement our position as an entertainer of choice,” the company said.
After a quarter century of private satellite television, Chandra realises that the sector stands at the cusp of another generational shift in the way entertainment is consumed. “We continue to be at the forefront of shaping that change. We have invested in becoming a provider of superior entertainment content across genres, languages and geographies, reaching consumers through television, digital, movies, music and live entertainment,” says Chandra.
The chairman is excited about the growth opportunities for the industry and the company. “As digitisation of analogue subscribers is nearing completion, it will improve monetisation of our viewership in newly digitised areas. This, coupled with effective implementation of TRAI’s tariff order, could lead to acceleration in ARPU growth for the industry, which has been lagging for several years. Strong economic growth and increasing share of formal sector bode well for ad spend growth. Our new businesses are also scaling up well and have a strong growth potential,” states Chandra in the company’s latest annual report.
ZEEL’s revenues have grown at 16.2% CAGR over the last five years on the back of improvement in network viewership share and digitisation of analogue subscriber base. During FY17, revenue growth was lower at 10.7%, primarily due to demonetisation impact in the second half. Advertising revenue growth of 9.2% was better than the industry average and subscription business grew by 13.5% adjusted for the sale of sports business to Sony Pictures Networks.
ZEEL’s EBITDA CAGR of 21.1% over the last five years has been better than its revenue growth. EBITDA margins improved from 24.3% in FY12 to 29.9% in FY17. This improvement in margins is driven by operating leverage.
On the back of strong revenue growth and better margins, profit before tax (PBT) has grown at 14.8% CAGR over the past five years. During FY17, PBT (before exceptional items) increased by 19.3% year-on-year (YoY).
ZEEL’s return on capital employed (ROCE) remained healthy at 24% during FY17. EBIT margins (excluding exceptional gain) increased sharply from 25% in FY16 to 28% in FY17. This improvement did not translate into equivalent improvement in ROCE because exceptional gain from sale of sports business led to higher networth.
In FY17, ZEEL’s net worth increased by 39%. Besides profit from operations, gain from sale of sports business was a key contributor to this increase.
ZEEL will continue to focus on five segments—broadcasting, movies, music, live entertainment and digital businesses, both within India and overseas.
While content will be the main focus, the drive will be to also expand its reach through different distribution platforms. Profitability will stay at the heart of the company’s ambition to grow. “We will continue to focus on sustainable profitable growth,” says Chandra.
ZEEL has presence in over 172 countries and reaches more than a billion people around the globe.