Last updated: 03 Nov, 2020 | 12:09 pm
Profit still to recover: Zee Entertainment Enterprises has reported a 77% on-year drop in consolidated net profit in Q2FY21 to ₹94 crore, on the back of fall in advertisement revenues. Analysts had earlier estimated a net profit of about ₹200 crore.
Revenues decline: Zee Entertainment's revenue fell 18.8% over the year-ago period to Rs 1,722.1 crore in the three months through September. The fall was mainly on account of decline in ad revenues (fall of 27% on-year to ₹902.8 crore). This is lower than the 66% on-year decline seen in the previous month. Zee Entertainment said that rebound in demand across most consumer segments bodes well for advertising revenues in H2.
Margins down: High advertising and marketing spends due to comeback campaigns hurt operating margin, as EBITDA fell 55% to ₹313.6 crore.. Content costs for TV, however, were lower as production resumes in a staggered manner after lockdown curbs were eased.
Subscription revenues rise: The firm has reported a robust rise in subscription revenues, as consumers subscribed to its streaming service Zee5 in the quarter. Subscription revenue rose 10.6% on year to ₹800.29 crore, and includes revenues from its music business. On a like-to-like basis, domestic subscription grew 2.3% YoY, primarily driven by growth in ZEE5 subscription revenues.
Zee5 breakeven pushed further: Zee Entertainment pushed back the breakeven target for its Zee5 platform by one year. The firm is now expecting Zee5 to breakeven by FY24.
Default by Siti hurts: Zee Entertainment has provisioned for ₹81.2 crore outstanding against Siti Networks. While the company has received payments till September, it has not received any outstanding in October. Siti had informed the exchanges that due to Covid-19 and pressure from lenders they are not able to pay the outstanding amount to Zee. As a result, Zee Entertainment has also reported an exceptional item of ₹97.1 crore as loan guarantee to Siti.
While there has been a decline on an yearly basis, Zee Entertainment has seen a rebound in its revenues, as compared to the previous quarter. The default by Siti Networks has impacted the firm's balance sheet. However, the cash flows have seen an improvement, and are expected to recover further, as the economy recovers. Advertising revenue for broadcasters had been drying up due to a sustained economic slowdown over the last year. Further, lack of new shows due to the lockdown further impacted the overall revenues. Zee Ltd said that the group has taken various steps aimed at augmenting liquidity, conserving cash including various cost saving initiatives, and sale of non-core and other assets.