BENGALURU: Subhash Chandra-led Zee Entertainment Enterprises Ltd (Zeel) reported higher operating profit (EBITDA) for the year and quarter ended 31 March 2018 (FY 2018, the year under review; Q4 2018, the quarter under review) as compared with the corresponding periods of the previous year (FY 2017, Q4 2017). Profit after tax (PAT) for the quarter and year under review was, however, lower due to higher tax and lower extraordinary/exceptional items as against the previous year. The Zeel board of directors has recommended an equity dividend of 290 per cent per share of face value of Re 1.
Zeel’s EBITDA for FY-2018 increased by 7.7 per cent to Rs 2,076.14 crore (31.1 per cent margin) from Rs 1,926.86 crore (29.9 per cent margin) in fiscal 2017. EBITDA for Q4 2018 rose by 8 per cent to Rs 506.20 crore (29.3 per cent margin) from Rs 468.70 crore (30.7 per cent margin). PAT for FY 2018 declined 33.4 per cent to Rs 1,477.75 crore from Rs 2,220.11 crore.
Zeel’s operating revenue for FY 2018 was 3.9 per cent higher at Rs 6,685.68 crore than the Rs 6,434.13 crore in FY 2017. Operating revenue for Q4 2018 grew by 12.9 per cent year-on-year (yoy) to Rs 1,725.31 crore from Rs 1,527.95 crore. Total revenue for FY 2018 increased by seven per cent to Rs 7,126.30 crore from Rs 6,658.17 crore in the previous year. Total revenue for the quarter grew by 14.6 per cent yoy to Rs 1,813.43 crore from Rs 1,582.89 crore. Revenue growth during both periods can be attributed to growth in advertising revenue partly offset by a decline in subscription revenue.
Advertising revenue in FY 2018 increased by 14.5 per cent to Rs 4,204.76 crore from Rs 3,673.50 crore in the previous year. The company said in its earnings release that on a comparable basis— excluding sports, RBNL and Indian Web Portal Pvt Ltd (IWPL)—domestic advertising revenue grew by 15.9 per cent to Rs 3,848.88 crore. International advertising revenue increased by 26.2 per cent in FY 2018 to Rs 214.3 crore. International business revenue in Q4 2018 was Rs 66.2 crore.
Subscription revenue during the year under review declined by 10.3 per cent to Rs 2,028.73 crore from Rs 2,262.91 crore in FY 2017. The company said in its release that adjusted for sale of Zeel’s sports business, subscription revenue actually grew by 11.8 per cent. The company also said that subscription revenue growth for the year was slightly impacted by the delay in phase-III monetisation due to the uncertainty regarding TRAI’s tariff order. Domestic and international subscription revenue for Q4 2018 declined by 0.7 per cent yoy and eight per cent yoy, respectively, primarily on account of the sale of the sports business. Subscription revenue in Q4 2018 decreased by two per cent yoy to Rs 546.52 crore from Rs 557.92 crore. International business subscription revenue in Q4 2018 declined to Rs 94.4 crore.
Zeel’s other sales and services include revenue from its movie production business, content syndication, music label and commission on sales. Other sales and services revenue decreased by 9.1 per cent in FY 2018 to Rs 452.19 crore from Rs 497.72 crore in the previous fiscal. For Q4 2018, other sales and services revenue increased by five per cent yoy to Rs 129.24 crore from Rs 123.09 crore in Q4 2017. Other sales and services revenue from the international business in Q4 2018 was Rs 53.7 crore.
Other income, during the year under review, soared by 96.5 per cent to Rs 440.35 crore from Rs 224.04 crore whereas, during the quarter, increased by 60.4 per cent to Rs 88.12 crore from Rs 54.94 crore.
For FY 2018, total costs increased by 2.3 per cent to Rs 4,609.50 crore. The underlying increase was higher but offset by the sale of the sports business. On a like-to-like basis, programming cost increased due to higher original content hours across the network and higher movie amortisation cost while the reported programming cost declined due to the sale of the sports business. Advertising, publicity and other expenses increased by 25.6 per cent to Rs. 1,416.4 crore on account of brand refresh, launch of ZEE5 and costs related to silver jubilee events.
Zeel’s total expenditure in Q4 2018 at Rs 1,219.1 crore was higher by 15.1 per cent as againt Q4 2017. Programming cost for the quarter at Rs 689.3 crore increased by 6.7 per cent yoy. This increase was driven by higher original programming hours in regional channels, higher movie amortisation costs and content cost for ZEE5. Advertising, publicity and other expenses for the quarter grew by 44 per cent yoy to Rs 3,66 crore on account of the ZEE5 launch expense and increased marketing activities for new properties. Additionally, the expense base for Q4 2017 was lower as some marketing and promotion events were held back due to demonetisation, the release stated.
Zeel chairman Subhash Chandra said, “Looking at our performance one might not realise that the first half of the year was not as smooth, which is a testimony to the strength of our team. Being the number one TV entertainment network is a result of our strategy and the consistent hard work we have put in over the years. With the launch of ZEE5, we have taken a major leap towards our preparation for the future and we are confident that like TV business we will be in the leadership position in the digital space as well.”
Zeel CEO and managing director Punit Goenka said, "We launched our new digital platform ZEE5 with over 100,000 hours of content across 11 languages. We are happy with the initial response and are confident that the sheer depth and breadth of our content offering will enable it to become the number one digital entertainment platform in India. We have also focused on the peculiarities of Indian market and designed technological features to improve the user experience. Unlike most of the existing apps which are either focused on the English-speaking segment or the youth audience, ZEE5's vast content catalogue is designed with an objective to cater to all sections of video viewing audience.”
Goenka added, “We are delighted with the strong operating and financial performance during the quarter. Domestic ad revenue growth of 24 per cent is driven by broad based recovery in advertising spends. With high visibility of product campaigns, improving consumer demand and GST related benefits trickling down to ad spends, we are confident of continued traction in advertising spending. The full-year domestic subscription revenue growth of 12 per cent is a tad lower than our initial expectations due to some unforeseen events. However, there is no change in our medium-term outlook for the same."
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