MUMBAI: The folks at Zee Entertainment Enterprise Ltd (Zeel) have been working with a lot of zeal, it would seem. Especially if one looks at its latest Q4-2013 financials and also its results for the financial year ended 31 March 2013. A big upward tick of 21.6 per cent in its net profit to Rs 718.2 crore on 31 March 2013 over the previous year’s Rs 591 crore is a hallmark of the Zeel performance.
As far as its Q4-FY-2013 results were concerned they were in line with various analysts’ bullish expectations. Commanding an astounding 670 million plus viewers worldwide, a scale of operations across 169 countries with 32 channels and over 100,000 hours of programming to its credit, it has maintained its leading position in most of its major business operations including television broadcasting, cable distribution, DTH services etc.
Says Zeel chairman Subhash Chandra: “FY 2013 was a defining year for the media sector in many ways. The biggest transformation was the implementation of DAS in 42 cities nationally. There were 33 million DTH subscribers and 16 digital cable TV homes as fiscal 2013 ended as against 29 million DTH and 4 million DAS homes in the previous year. We believe we can continue to return meaningful amount of capital even as we strengthen our business and invest in the growth of our businesses. We will continue to pursue growth opportunities which would enhance long term shareholder value.’
“DAS phase 2 has been implemented across the country. Industry ARPUs on DTH seem to be growing with exciting consumer offers being provided by operators on premium channel subscriptions,” adds Zeel managing director and chief executive officer Punit Goenka. “We believe similar effort by digital cable operators will ensure a robust growth of the industry for all stakeholders. The improving economic outlook augurs well for the media and entertainment sector. We are hopeful that a steady growth in ratings will help Zee deliver better performance in the coming quarters. Our content focus approach combined with better monetisation of subscription revenues, especailly from digital markets, will contribute to the company delivering steady and sustainable returns in the year ahead.”
Let us look at the consolidated Q4-2013 financials as against the corresponding Q4-2012
The Q4-2013 financials report a fair positive trend with the operating revenues for the quarter standing at Rs 964.3 crore, an increase of 11 per cent from the previous year’s corresponding quarter’s (Q4-2012) which stood at Rs 869 crore. Q4-2013 ad revenues at 479.2 crore are up 15.5 per cent over Q4-2012’s Rs 415 crore. Subscription revenues have surged to Rs 454.5 crore as against Q4-2012’s Rs 402.1 crore, a 13 per cent increase, courtesy the spread of digitisation and the fact that it was able to draw further benefits of its distribution joint venture with Star India – MediaPro. Of this, domestic subscription revenues rose to Rs 337.4 crore in Q4 2013 (its accounting treatment for MediaPro changed in Q4 2012 hence it says the figures can’t be compared with Q4 2012). International subscription revenues climbed 11.7 per cent to Rs 117.2 crore in Q4 2013.
Zeel has managed to tighten the screws on its total expenses, allowing these to rise by only 2.2 per cent over the previous corresponding quarter. As a result, its EBITDA skyrocketed 51 per cent to Rs 242.3 crore as against Rs 160 crore in the last corresponding fiscal quarter. At those numbers, its EBITDA margin is a fat 25.1 per cent. Even its PAT numbers are looking good. They are up 10.7 per cent in Q4-2013to Rs 180.35 crore as against the corresponding last Q4-2012’s Rs 163 crore.
On the business front, Zeel’s flagship Zee TV, the flagship Zeel channel had an average of 220 GRPs in Q4 and a 19 per cent market share, and was placed among the top six Hindi GECs.
As far as its regional language offerings are concerned, all its channels including Zee Marathi, Zee Bangla, Zee Telegu and Zee Kannada have reported good growths in average GRPs.
While the sports business has yet to breakeven, an improving and promising trend is anticipated with various events and leagues lined up for telecast. The sports business revenues for the quarter stood at Rs 107.2 crore. Dish TV, the largest DTH service provider reported an ARPU of over Rs 159, significantly higher than its peers in the segment.
Let us look at the consolidated results for FY-2013
Thanks to the sharp rise in net profit in the full fiscal year and its net margin of 19.4 per cent, its earnings per share (EPS) too climbed up to a handsome Rs 7.51 as against last fiscal’s Rs 6.08.
Zeel’s total income for the year to 31 March 2013 (advertising sales and subscription revenues) registered healthy growth with FY-2013’s total revenues standing at Rs 3669.57 crore, up by 19.7 per cent from last year’s Rs 3040.56 crore.
Its full year domestic subscription revenues were up to Rs 116.48 crore, and international subscription revenues were Rs 458.6 crore, a growth of 26.3 per cent and 14 per cent respectively, over the previous fiscal year’s revenues. Overall ad revenues for the full year have shown a double digit growth of 24 per cent to Rs 1963.9 crore from the last fiscal’s Rs 1584 crore.
The YOY expenses have sharply risen 19.4 per cent, with FY-2013’s expenses standing at Rs 2785.18 crore. This increase is majorly contributed by a 21.5 per cent increase in its operating cost and its employee benefit expenses rising over 19 per cent. The latter cost is justified for a conglomerate commanding an employee base of over 2050 employees.
Zeel’s EBITDA (operating profit) for the full year FY-2013 stands at Rs 954.3 crore, growing 29 per cent YoY as against Rs 739.6 crore in FY 2012.
With this fiscal year marking the 20 years of Brand Zee in the industry, the Board has recommended a cash dividend of Rs 2 on a face value of Re 1 per share. In addition to this the board has also announced a distribution Rs 2,000 crore through a bonus issue of redeemable preference shares.
The company’s share is currently being traded at Rs 241. Many analysts have predicted that the stock will cross Rs 270, as it starts deriving more and more subscription revenues courtesy cable TV digitisation.
The outlook for the media conglomerate is extremely bright. It has a loyal viewer base for its GEC channels, it has a presence in cable TV through Siticable, then its DTH operation DishTV has a huge subscriber base of 13-14 million. It recently announced it would take a stab at the movies through its subsidiary Zee Motion Pictures which plans a couple of film launches in the near future. In the television space, Zee reported a decent market-share for the full year FY-2013, while revenues significantly poured in from its international operations, especially with the launch of Zee TV across several networks in Canada. Zee TV and Zee Cinema did well in the UAE and were the No 1 TV channel among south Asians for the March 2013 quarter.
Meanwhile, Zeel’s board has said it would be approaching shareholders to approve its plan to increase the FII investment limit in the company to beyond the existing 49 per cent and to the maximum allowed under the government’s FDI norms for the media sector.
