Zee's sports biz to turnaround by FY'14

MUMBAI: Zee Entertainment Enterprises Ltd. (Zeel) expects its sports broadcasting business to break-even by the middle of FY‘14 and has no plans to raise capital to fund its expansion.

Subscription revenue will drive the business to profitability while advertising will be event-led.

"Given our growth trajectory and contracts, the sports business should break-even in two years. In the worst case scenario, we should be able to turn it around by the middle of FY?14," Zeel managing director and chief executive officer Punit Goenka said in an interview with Indiantelevision.com.

Zeel‘s sports losses for FY‘11 stood at Rs 2.08 billion on a revenue of Rs 4.4 billion (excluding a one-time revenue gain of Rs 700 million as one-time fee for the pre-mature termination of rights for AIFF). For the full-fiscal ended March 2012, the company expects to limit the operating loss to a maximum of Rs 1 billion.

The eight-year Cricket South Africa (CSA) television rights for $180 million has been a valuable purchase. The earlier five-year rights had gone for $75 million.

"The price is in our comfort zone. It is an inflationary rise and has been one of the most valuable boards for us. By having one of the strategic boards under our belt for a longer term, we are under less pressure," said Goenka.

Zeel will be able to give its sports business maximum firepower when it is able to retain the telecast rights for the other three boards ? Sri Lanka, Pakistan and West Indies. The company is understood to have pocketed the Zimbabwe board rights for $20 million, which had earlier gone for $6 million for four years.

"We have not yet signed with the Zimbabwe board, so I cant comment on that. The other three boards are up for renewal during FY?12 and FY?13. We have done our calculations and will not bid recklessly for these rights. There are boards outside these which are also coming up for grabs," said Goenka. 

Is Zeel looking at hiving off the sports business to raise capital by offloading equity?

"We have no capital-raising plans. Zeel will continue to fund the sports business till it turns around. We have taken a long term call and sports broadcasting is a strategic business for us," averred Goenka.

Zeel is awaiting government approval for the launch of the golf channel."We are ready to launch it within 60 days of obtaining the regulatory clearances," said Goenka.

Will Comcast be a partner for the channel? "Earlier Taj Television (which Zeel later acquired) had some sort of an agreement with Comcast for the golf channel.We will do it ourselves and completely own it," Goenka stated.

By adding a full-fledged HD channel, Zeel will have four sports channels by this month-end. "We have acquired a slew of properties across different sports such as football and tennis.This has enabled us to launch three different channels and post strong subscription growth. Advertising revenue is heavily dependent on cricket.Within that segment, it is India cricket. While advertising revenue is cyclical, subscription income is consistent throughout the year," Goenka said.