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Growth slowdown hits Zee’s Q3 profit: Key takeaways

Mumbai: Media firm Zee Entertainment Enterprises on Tuesday posted a steeper-than-expected decline in its third quarter consolidated profit as advertising revenues dropped sharply.

The company’s profit plunged 37.9 per cent to Rs 349.4 crore. Analysts in an ET NOW poll had projected the number at Rs 429 crore.

Ahead of the earnings announcement, Zee Entertainment’s shares closed 4.86 per cent higher at Rs 283.95.

Here are the key takeaways:

Revenues drop: Total revenue dropped 5.5 per cent to Rs 2,048.7 crore, while advertising revenue dropped 15.8 per cent to Rs 1,230.8 crore. Zee Entertainment’s subscription revenue was at Rs 713.7 crore, a growth of 15.4 per cent year-on-year (YoY). Domestic subscription revenue grew 21.7 per cent to Rs 631.7 crore.

Management commentary: “Third quarter is normally a strong growth period for us, however, tough macroeconomic environment led to a decline in our ad revenues,” said Puneet Goenka, MD & CEO.

He added that most of the company’s advertisers were going through a slow-growth period, which led to a cut in advertising spends.

“I believe that the worst phase is behind us and we will start seeing an improvement from the next quarter. The proposed changes to the tariff order by TRAI are being challenged in the court and we are awaiting the final verdict. However, I am confident that our strong portfolio of channel across markets will enable us to navigate any regulatory changes in the most efficient manner,” Goenka said.

Ebitda declines: The figure for the quarter declined 25 per cent to Rs 565.8 crore and margins came in at 27.6 per cent.

Domestic broadcasting business: The company’s television network had an all-India viewership share of 18.2 per cent. While its regional portfolio increased viewership share, share in Hindi speaking markets declined. Zee TV maintained its weekday primetime leadership, but lost weekend prime time share and was the Number 3 channel in the pay Hindi GEC segment during the quarter. Its Hindi movie cluster continued to be the Number 1 movie portfolio in pay Hindi movie genre.

Digital business: ZEE5, the digital entertainment platform, recorded a peak DAU (daily active users) base of 11.4 million in December. ZEE5 users watched an average of 140 minutes of content every month on the platform during the quarter.

International business: Zee’s international business revenue stood at Rs 166.5 crore. Advertising and subscription revenue declined 18.6 per cent year-on-year (YoY) and 17.4 per cent year-on-year, respectively.

Movies & Music units: Zee Studios, the movie production and distribution business, distributed two movies in India and five movies in the international territories during the quarter. Zee Music Company continued with the library expansion of both Bollywood and regional music. The music label registered around 7.3 billion views on YouTube in the third quarter.
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