Punit Goenka-led Zee Entertainment Enterprises Limited (ZEEL) felt the impact of demonetisation as its advertising revenue saw a slowdown in growth. The entertainment network saw domestic advertising revenue grow at 8.1 per cent in Q4FY17 (quarter ended March 31, 2017) at Rs 794.4 crore. In the past, Zee's domestic advertising revenue for the fourth quarter of the fiscal has seen double-digit growth. The total advertising revenue for the quarter stood at Rs 846.9 crore, remaining flat as compared to the same quarter last fiscal.
International advertising revenues were impacted by country-specific issues and the fact that Q4FY16 revenue was a significantly higher base on account of the telecast of major cricket tournaments in Pakistan during the period. International advertising revenue for ZEEL almost halved in Q4FY17 at Rs 52.5 crore, compared to Rs 112 crore in Q4FY16.
Total revenue for the quarter, however, saw a marginal growth (0.4 per cent) from Rs 1512.8 crore last year to Rs 1,528 crore in Q4FY17. Subscription revenue for the quarter also saw a slight decline of 2.8 per cent at Rs 558 crore (Q4FY16 subscription revenue was Rs 594.4 crore). This was the result of a higher base in Q4FY16 and the consolidation of sports business to only two months in the quarter (since Zee sold its sports business to Sony Pictures Network India effective March 2017).
EBITDA for the quarter showed 14 per cent growth year on year at Rs 468.7 crore, and EBITDA margin was 30.7 per cent. PAT for Q4FY17 stood at Rs 1514 crore, which includes Rs 1,223.4 crore derived from the sale of the sports business. Profit before tax and exception items (revenue from the sale of sports business) grew by 13.9 per cent year on year at Rs 437.2 crore.
Punit Goenka, MD and CEO, ZEEL, said, "We are happy to deliver yet another quarter of strong financial performance despite the difficult economic environment. Our domestic advertising revenue grew by 8.1 per cent despite the impact of demonetization. After a couple of quarters of weakness, advertising growth appears to be back on track. The GST roll-out could boost advertising spends as a part of potential tax savings might be reinvested."
"We have completed the first phase of the sale of sports business during the quarter. While this had an impact on revenues, our focus is to strengthen national and regional channel portfolio, along with growing new businesses. We are exploring ways to extinguish preference share liability using the proceeds from the sale of sports business," he added.
For the fiscal ended March 31, 2017, ZEEL reported topline growth of 10.7 per cent, lower than the growth registered in the preceding years, mainly due to weaker performance in the Q3 and Q4. However, thanks to controlled costs, the EBITDA for the fiscal grew 27.3 per cent while EBITDA margin for the year was 29.9 per cent. Profit before tax and exceptional items for the fiscal grew at 19.3 per cent to Rs 1677.5 crore. PAT including exceptional items was Rs 2220.5 crore, significantly higher than FY16's PAT of Rs 823.7 crore.
Advertising revenue for the fiscal grew at 9.2 per cent to Rs 3,673.5 crore, again heavily impacted by the slowdown due to demonetisation in the second half of the fiscal. Subscription revenue, however, grew by 10 per cent from Rs 2,057.9 crore in FY16 to Rs 2,262.9 crore in FY17. Domestic subscription revenue grew by 11.2 per cent to Rs 1,822.6 crore. On a comparable basis, adjusted for sale of sports, the domestic subscription growth was 13.5per cent while international subscription revenue grew by 3 per cent to Rs 440.3 crore.
