Mumbai: The Board of Directors in its meeting held today, has approved and taken on record the unaudited consolidated financial results of Zee Entertainment Enterprises Limited (ZEEL) and its subsidiaries for the quarter ended September 30, 2017.
Consolidated operating revenue for the second quarter of FY18 stood at Rs. 15,821 million, recording a decline of 6.7% on YoY basis. EBITDA for the quarter ended September 30, 2017 was Rs. 4,912 million, translating into EBITDA margin of 31.0%. Profit After Tax (PAT) for the quarter including exceptional gain from the sale of sports business was Rs. 5,912 million. The other income for the quarter includes notional gain of Rs 1,609 million on re-measurement of previously held equity interests in India Webportal Private Limited (IWPL) and Fly By Wire International Private Limited to its acquisition-date fair value.
ZEEL’s consolidated advertising revenue in Q2FY18 grew by 2.9% YoY to Rs. 9,867 million. Despite the adverse impact of GST on advertising, domestic advertising grew by 5.8% YoY, on a comparable basis (excluding sports, RBNL and IWPL) to Rs. 9,028 million.
Domestic and international subscription revenues for the quarter declined by 13.5% YoY and 16.1% YoY respectively, on account of sale of sports business. On a like to like basis, the domestic subscription revenue grew by 7.2%. Domestic subscription revenue for Q2FY17 had benefitted from early closure of content contracts with distributors, resulting in a high base.
Dr. Subhash Chandra, Chairman, ZEEL, commented, “We are now a 25 years old organization and it is with great satisfaction and pride that I look back at this journey and the numerous milestones we have achieved. Starting as India’s first private television channel, we have grown into a truly global entertainment content company with a worldwide footprint and a strong presence across all forms of entertainment. Indian M&E industry has grown by leaps and bounds but it is just the beginning. I am confident that we will continue to shape the entertainment industry, much like we have done over the last two and a half decades.”
Mr. Punit Goenka, Managing Director & Chief Executive Officer, ZEEL, commented, “At ZEEL, it has been exciting 25 years during which we significantly increased our viewership and expanded our regional as well as global presence. This was achieved while delivering a strong financial performance. It has been possible because of our ability to evolve our content offerings in line with changing consumer preferences. Another step in this evolution would be the launch of our new digital product, ‘Z5’, in the second half of this financial year. It will offer an unrivalled content catalogue appealing to all demographics and bring unique viewing experience to the consumer.
We are satisfied with our performance against the backdrop of tough macro-economic environment during the quarter. Our advertisers were negatively impacted during transition to GST which led to a temporary pull-back on their ad spends. Post the decline in the first half of the quarter, the growth recovered strongly and is back on track. Despite the adversity, our domestic ad revenue grew at 5.8% on a comparable basis.
The domestic subscription growth for the quarter was at 7.2%. As against the early closure of deals last year, content deals with distributors are taking slightly longer due to litigations regarding the TRAI tariff regulation. However, our full year outlook for subscription growth remains unaltered. Despite the loss of advertising revenue and elevated expenses during the quarter, we have been able to deliver a healthy margin of 31%.
The acquisition of 9X Media follows our stated strategy of expanding into regional markets and niche genres. 9X Media’s six music channels enjoy leading market shares in their respective
segments and will further strengthen our entertainment offering to the consumer. The channels will benefit immensely from our network’s strength to achieve higher growth potential and cost synergies.”
ZEEL’s total expenditure in Q2FY18 stood at Rs. 10,909 million, lower by 9.6% compared to Q2FY17. The sharp 25% reduction in operating cost in Q2FY18 is on account of sale of sports business.
During Q2 of FY 2017-18, the transaction for Sale of Sports Broadcasting business of the Company to Sony Pictures Networks India Private Limited and its Affiliates (SPNI) was consummated with remittance of the balance consideration by SPNI.
At the meeting held on October 6, 2017, the Board had approved acquisition of (a) 100% equity stake in 9X Media Private Limited and INX Music Private Limited at an aggregate consideration of INR 1,600 Million; and (b) balance 26% stake in Zee Turner Limited, a JV subsidiary, at a consideration of INR 0.26 Million.
In Q2FY18 Zeel also launched two HD channels Zee Tamil HD and &privé HD taking the count of HD channels to 11.
