Zee Entertainment's FY'13 outlook

MUMBAI: Zee Entertainment Enteprises Ltd (Zeel) expects its advertising revenue to improve this fiscal despite trends of a softening due to market share gains of its channels, including flagship channel Zee TV.

The Subhash Chandra-promoted company forecasts industry to grow at 8-10 per cent due to a weakness in overall ad spends while its own progress this fiscal would be faster. Since there is an uptick in ratings, this should get reflected in more ad revenues this year.

Zeel?s ad revenues in FY?12 degrew 6.8 per cent to Rs 15.84 billion compared to Rs 17.01 billion a year ago.

The company?s subscription revenue will continue to see strong growth, aided by Media Pro, the joint venture channel distribution company between Zee-Turner and Star Den. Zeel is looking at subscription income growth in the mid-tweens without factoring in digitisation in the four metros of Delhi, Mumbai, Kolkata and Chennai.

After the formation of Media Pro, most of the distribution deals with cable TV operators and DTH service providers will come up for renewal this year.

Domestic subscription for FY?12 was Rs 9.22 billion, up 28.4 per cent up from Rs Rs 7.18 billion a year ago.This is, however, not comparable because Q4 FY?12 numbers include an amount of Rs 506 million representing 50 per cent share of net revenues of MediaPro when consolidated under joint venture accounting. This amount of Rs 506 million considered in this quarter pertains to nine month period from July 2011 to March 2012.

Zeel is planning to launch a new Arabic language channel so that it can tap advertising revenues in that market. It already runs Zee Aflam in the Middle East.

The company has got landing rights in China. It will continue to follow a localisation of content strategy in many geographies across the world so that it can monetise ad revenues. Earlier, Zeel had a subscription revenue model in international markets.

Zee TV plans to increase its original hours of programming to 35 hours within six months, even if the ad market doesn?t improve. The content and marketing costs will, thus, continue to show an upward trend.

Zeel sees an opportunity to ramp up investments in Tamil Nadu after Sun Group has lost its stranglehold with the Jayalalithaa-government floating the state-owned Arasu Cable. The company plans to relaunch its Tamil channel, Zee Tamizh.

Zeel does not plan to launch a second Hindi movie channel, like rival Star has done. After a period of lull, the company was aggressive in movie acquisitions in FY?12. As there are not many current year new releases available for purchase, it will continue to invest in acquiring future movie projects.