ZEEL’s Punit Goenka on ad rev growth, programming hours, digital and regional expansion

MUMBAI: Media conglomerate ZEEL expects ad revenue growth to be in the mid-teens in the second half of the financial year 2017-18.

ZEEL’s domestic advertising revenue grew by only 5.8% excluding sports, RBNL and India Webportal as advertisers pulled-back due to Goods and Services Tax (GST) implementation.

Talking to analysts, ZEEL MD and CEO said that the FMCG category, which is the biggest advertiser on TV, has started spending heavily. E-commerce is also increasing its ad spends.

“So in terms of spending by the FMCG categories, we are seeing that on our network at least, they have come back with strong force. We have just renewed our deal with HUL on 1st September itself, which is known to all of you. Apart from that, e-commerce itself has also emerged as a good advertising category for the sector. So, I am pretty confident that in H2, we will have healthy growth in the mid-teens,” Goenka said.

He also noted that the company will enter Kerala and Punjab markets with regional entertainment channels. “On the regional side, I do not see from where I am today any opportunity for consolidation currently in the markets that I pointed out, which is Kerala and Punjab. I believe those both will have to be Greenfield,” he added.

Goenka also said that the programming hours on flagship GEC will be expended to 30 hours by Q3 and 32 hours by Q4. Currently, it stands at 27.5 hours.

On &TV, Goenka said the channel is on track to break-even by Q4. &TV currently has 24 hours of content a week which will remain at the same in Q3 as well. The broadcaster will evaluate increasing programming hours on the channel closer to Q3 end.

Talking about the impact of Jio launch on TV broadcasters, Goenka said that there has been no impact of 4G on TV consumption as most of the consumption on digital happens out of home.

“So if you look at even when Reliance Jio was giving data free, vis-à-vis what they are doing, now that they are charging, even in the free environment, the TV consumption which stood at 158 minutes is still intact. It has not moved at all. Therefore, I don’t see it impacting television in a big way,” he noted.

Goenka further stated that the company will monetise digital platform in a big way going forward.

Talking about the company’s new digital content platform Z5, Goenka said that the new platform will subsume dittoTV and OZEE and the customers of these platforms will get an automatic upgrade.

The new platform will have both revenue models – advertising and subscription, however, market to market, the proportion of what drives how much revenue and how much is from advertising and how much is from subscription will vary, Goenka stated.

“In terms of content, for now, I can tell you it will offer unrivaled amount of content that we will put on the platform, which no other OTT platform will be able to match,” he asserted.

ZEEL’s movie acquisition strategy has changed from being Hindi centric to also getting aggressive in regional markets and digital. The need to get aggressive in the regional market stems from the fact that the company is looking at movie genre. It had launched a Telugu movie channel in 2016.

With films forming a significant part of its digital strategy, ZEEL is also acquiring digital rights along with the satellite rights.

“Our film acquisition strategy was driven largely on Hindi side. We were not looking at the regional markets in a very aggressive manner because we were predominantly running only GEC products. Now, having our strategy to expand into other genres, we need to be aggressive in buying films in the regional markets as well. So that is also a large function of the cost or the inventory is going up,” Goenka explained.

“Secondly, we also now are consolidating digital rights as part of our acquisitions. So while they may reflect only satellite, a large part of that inventory also carries digital rights along with it. So it is a consistent strategy for us. It will be lopsided in the next 18-24 months maximum and then it should plateau out.”

Goenka also said that the EBITDA margin guidance remains unchanged despite investments in digital and regional markets. The company expects Tamil GEC to deliver 30% plus margin for the full year.

The broadcaster produces 15-18% of content in-house across the network.

Goenka also admitted that international subscription revenues for the South Asian business will be stagnant or will start de-growing in the future and digital will be the answer for that going forward.

On Reliance Jio’s JioPhone that allows users to connect it to TV through a cable wire, Goenka said that the current content license deal is only for streaming on their mobile handsets or mobile devices. “The cable that they have launched, we have not provided them rights for that for streaming to television as of now,” he stated.

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