Sharp rise in inflation and macroeconomic and geopolitical factors which had hit ad spends in Q4FY22, continues to impact advertising revenue, said broadcaster Zee Entertainment which posted its Q1 FY23 results on August 12.
The company reported domestic advertising revenue of Rs 925.7 crore, a year-on-year (YoY) growth of 5.8 percent but de-grew 14 percent quarter-on-quarter (QoQ).
"First quarter has been filled with opportunity and challenges for the media and entertainment sector as the entire sector faced macro-economic challenges on the backdrop of heightened inflation. We saw ad revenue was impacted throughout the industry primarily of the FMCG clients," Rohit Gupta, chief financial officer, Zee Entertainment, told Moneycontrol.
He added, "All the four major broadcasters decided to pull their flagship channels from FTA (Free-to-Air) on April 1 and that accentuated ad rev drop."
Zee Anmol and other channels including Star Utsav, Sony Pal, and Colors Rishtey were removed from DD Free Dish a few months back. Analysts note that this was done to address the falling pay direct-to-home (DTH) subscribers.
In the Q3 FY22 conference call, ZEEL MD and CEO Punit Goenka noted that the Pay TV market saw an erosion of 4.6 million households that moved to FTA services and this led to a de-growth in subscriptions.
However, subscription revenue continued to remain impacted as it was down 5.1 percent YOY and 10 percent QoQ. Growth in subscription revenue remains affected due to delayed implementation of NTO 2.0, or the new tariff order from the Telecom Regulatory Authority of India.
The company reported a consolidated profit of Rs 106.60 crore for the quarter ended June FY23, down 49 percent compared to the year-ago period. The decline in profit was due to weak operating performance and moderate top-line growth. Profit in the corresponding period of last fiscal stood at Rs 208.8 crore. The sequential decline in profit was 41.4 percent.
Consolidated revenue for the June FY23 quarter grew by 4 percent to Rs 1,845.74 crore compared to the year-ago period, while on a quarter-on-quarter basis, there was a 20.5 percent fall in revenue, the company said in its BSE filing.
Along with subscription revenue, ad revenue will continue to remain under pressure in the coming few months due to the rise in inflation.
"There is a marginal recovery (currently). By end of Q2 we will be able to give a better picture," said Gupta.
He expects a good monsoon and festive period will help bring back growth in ad revenue.
While the scenario was challenging in the TV space in Q1 FY23, the story was good on the ZEE5 front, said the CFO. ZEE5's Q1 revenues stood at Rs 159.7 crore, up 43 percent sequentially.
"ZEE5 reported 103.3 million global MAUs (Monthly Active Users), 23 million up YoY, and 11.3 million global DAUs (Daily Active Users), 4.2 million up YoY. These are the highest DAUs. The ratio of MAUs and DAUs is increasing and that reflects the stickiness of users," he said.
The streaming platform launched 38 shows and movies including eight originals during Q1 FY23. Gupta said that they will continue to similar number of content launches in the following quarters.
When it comes to the company's movies business, the quarter was muted, said Gupta. "Last quarter (Q4 FY22) we had a good run with The Kashmir Files, Valimai. But this quarter (Q1) has been muted," he said.
Zee Studios' two Hindi releases including Kangana Ranaut-starrer Dhaakad and Janhit Mein Jaari reported weak theatrical performance. Made on a budget of around Rs 93 crore, Dhaakad earned Rs 2.3 crore at the box office whereas Janhit Mein Jaari collected over Rs 4 crore with a budget of around Rs 20 crore.
Gupta said that they have a strong lineup of movies in the following quarter. "We released six movies in this quarter and we just released Raksha Bandhan (starring Akshay Kumar) recently. So, we will have a similar number of movies releasing in subsequent quarters, he added.The recently released Raksha Bandhan (August 11) had a slow start with a box office collection of Rs 12 crore. Film trade analysts expect the film to pick up the pace during the long weekend.