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ZEEL FY15 consolidated net up 9.6% in year of Hindi GEC launch

MUMBAI: Zee Entertainment Enterprises Ltd (ZEEL) has posted a 9.6 per cent increase in its consolidated net profit for the financial year ended 31 March 2015.

This is despite expenses going up by almost Rs 430 crore (Rs 4.30 billion) or 13.2 per cent. The spurt in expenses could be attributed to the launch of Hindi general entertainment channel &TV in March. Revenues saw a 10.4 per cent increase over the previous fiscal.

For FY15, consolidated net profit was at Rs 977.5 crore (Rs 9.77 billion), compared to Rs 892.08 crore (Rs 8.92 billion) in FY14.

ZEE FY15 snapshot

Operating profit (EBITDA) saw a marginal 4.1 per cent increase to Rs 1,253.7 crore (Rs 12.54 billion), compared to Rs 1,204.3 crore (Rs 12.04 billion) in FY14. EBITDA margin also was at 25.7 per cent, down from 27.2 per cent reported in the previous fiscal.

ZEEL’s operating revenue for the fiscal stood at Rs 4,883.65 crore (Rs 48.8 billion), compared to Rs 4,421.7 crore (Rs 44.22 billion) a year ago. Total expenses were up to Rs 3,697.27 crore (Rs 36.97 billion), from Rs 3,267.54 crore (Rs 32.67 billion). Advertising, distribution, and sales expenses saw a 50 per cent jump to Rs 372.2 crore (Rs 3.72 billion) during the quarter.

Talking to analysts, ZEEL MD and CEO Punit Goenka said that a large part of cost increase was due to &TV launch expenses. He added that the total investment in &TV will be similar to any mainstream GEC and the channel will take away Rs 1,000 crore (Rs 10 billion) of peak investment as was planned earlier, before it breaks even. The company is eyeing breakeven in 3–5 years and will try to stick to near end of spectrum.

He added that existing channels continue to improve on margins and part or full of &TV impact will get normalised.

Revenue

ZEEL said that the financial results of the quarter and full year are reflective of the change in accounting treatment of domestic and international subscription revenues. The change in accounting treatment of domestic subscription has been necessitated by the change in TRAI’s content aggregator regulation and the change in accounting treatment of international subscription revenue has been due to a change in arrangement with various operators across international territories.

“This has had an effect on the reported growth of subscription revenues. For the full year on a like-to-like basis, domestic subscription has grown in low teens, while the international subscription revenue has grown in mid-single digits in rupee terms,” the company said.

There is no effect of this accounting change on the bottom line.

The company has net cash of Rs 2,048 crore (Rs 20.48 billion) as of 31 March.

Quarterly snapshot

For the fourth quarter of the fiscal ended 31 March 2015, net profit was up 7.4 per cent, while revenues and expenditure witnessed a jump of 16.3 per cent and 27 per cent respectively.

EBITDA slumped 13.1 per cent to Rs 270.8 crore (Rs 2.71 billion), compared to Rs 311.5 crore (Rs 3.11 billion) in the corresponding quarter of the previous fiscal.

ZEE FY QoQ

Commenting on the performance, ZEEL chairperson Subhash Chandra said, “Our performance in this quarter is reflective of the investments we are making to further enhance our market position. We continue to pursue opportunities in existing and new markets that will yield long-term growth. Since financially we are in a sound position, we are confident that we will benefit from exploring such growth opportunities in the coming year.”

Goenka added, “This quarter, our performance has been satisfactory. As expected, advertising spends increased during the quarter, backed by consistent performance of our channels. We also witnessed a sustainable growth in our subscription revenues in this period and with the implementation of digitisation in Phases III and IV, we expect to see our subscription revenues grow further in future.”

Commenting on the launch of &TV, Goenka said, “&TV saw the best ever launch of a Hindi GEC channel. We aim to better this performance in future with new and innovative programming. We have taken the channel to select international territories as well.”

During the quarter, ZEEL also launched two international channels, Zee World, dubbed and subtitled English GEC offering for South Africa, and Zee Hiburan, a localised GEC with content dubbed or subtitled in Bahasa for the Indonesian market.

Business performance

Zee TV: During the quarter, Zee TV recorded a relative share of 18.2 per cent among the top six Hindi GECs. The market share was even better in the primetime band where Zee TV recorded a relative share of 21 per cent.

Zee TV was the No. 3 channel in the genre during the quarter. The channel delivered a weekly average of 10 shows among top 50 shows during the quarter led by the top-rated shows like ‘Kumkum Bhagya’, ‘Jamai Raja’ and ‘Qubool Hai’. New shows launched during the quarter were ‘Hello Pratibha’, ‘Maharakshak Devi’, ‘Servicewali Bahu’ and ‘DID Super Moms 2’.

Hindi movie cluster: Zee Cinema, &Pictures, Zee Classic, Zee Premiere, and Zee Action led the genre with a relative share of 32.9 per cent. The key properties on Zee Cinema during the quarter were ‘Lage Raho’, ‘Shanivaar Ki Raat Sitaron Ke Saath’ and ‘Cinema Hall’. Q4 saw the premieres of ‘Happy New Year’ on Zee Cinema, and ‘SkyFall’ and ‘LunchBox’ on &Pictures.

English cluster: The network operates two channels in the English entertainment and movies genre—Zee Café and Zee Studio. Zee Café was the No. 2 channel in its genre with a relative share of 18.3 per cent and delivered a weekly average of 11 shows in top 50 during the quarter.

The top shows on Zee Café were ‘The Big Bang Theory’, ‘Desperate Housewives’, and ‘America’s Funniest Home Videos’. The key shows launched in the quarter were ‘House of Cards’, ‘Mentalist 7’ and ‘Grey’s Anatomy’.

The top performing properties on Zee Studio were ‘The Avengers’, ‘Wild Hogs’, and ‘MegaMind’.

Zee Khana Khazana, the premium lifestyle channel from ZEE, continues to be at the top of ratings chart with a relative share of 39.3 per cent in the food and lifestyle genre.

Zee Marathi extended its lead as No. 1 channel in its genre. The channel recorded a relative share of 54.5 per cent among all Marathi GECs. It delivered a weekly average of eight shows among top 10 led by ‘Jai Malhar’, ‘Honar Soon Me Hya Gharchi’ and ‘Ka Re Durava’, ‘Chala Hava Yeun Dya’ and ‘Home Minister’.

Zee Bangla is one of the leading players in the Bangla GEC genre. During the quarter, the channel increased its relative share to 36.6 per cent and led the non-fiction genre with 75 per cent market share. The channel was the slot leader in seven out of 14 primetime bands during the quarter led by the top-rated fiction shows like ‘Raage Anuraage’, ‘Rajyotak’, and ‘Diragaman’ and non-fiction shows like ‘Dadagiri Unlimited 5’, ‘Happy Parents Day’ and ‘Didi No. 1’.

Zee Telugu recorded a relative channel share of 22.8 per cent. Overall, the channel is a close No. 3 in the Telugu GEC space. The top fiction shows on the channel during the quarter were ‘Varudhini Parinayam’, ‘Mangamma Gari Manavaralu’, and ‘Mudda Mandaram’. Key shows launched during the quarter were ‘Iddaru Amayilu’, ‘3 2 1 Go’, and ‘Super Mom’.

Zee Kannada recorded a relative share of 14.2 per cent during the quarter. Top-rated shows on the channel were ‘Life SuperGuru’, ‘Jothe Jotheyali’, and ‘Srirastu Subhamastu’. This quarter saw new launches of shows like ‘Mr & Mrs Range Gowda’, ‘Onduralli Raja Rani’, ‘Divided’, and ‘Love Lavike’.

Zee Tamil recorded a relative share of 5.9 per cent during the quarter. The top-rated shows on the channel included ‘Solluvathellam Unmai’ and ‘Luckka Kickka 2’.

International operations

In Americas, Zee TV continues its dominance among South Asian networks. Zee TV HD and Zee Bollywood HD were launched on additional platforms.

Lamhe and Zing currently rank among the top 10 South Asian Channels in the UK.

Zee TV Middle East’s locally produced drama series ‘Parwaaz’ recorded the highest ratings ever recorded among South Asians for the month of January 2015.

Zee TV and Zee Cinema continued to be the No. 1 South Asian channels in their respective genres in the UAE.

Zee Aflam retained its ranking as the No. 3 movie channel in Saudi Arabia.

Within a month of its launch Zee World became the second best performing GEC among its target audience in South Africa.

In APAC, Zee Variasi garnered its two-year highest viewership among the Malay TG. Recent launches in this territory, Zee Bioskop and Zee Nung, have gained popularity within a short period of time and are available on multiple platforms. The newly launched channel Zee Hiburan in Indonesia has been received well and is expected to gain popularity in the coming months.

ZEEL FY15 scrip

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