Zee Entertainment Enterprises has declared its results for the quarter ended December 2010. It has reported a 23% growth in its Q3FY11 net profit, which came in at Rs 155.5 crore as against Rs 126.3 crore in the previous quarter. Revenue jumped 16% to Rs 825 crore from Rs 711.6 crore on a quarter-on-quarter basis. Adjusted revenue was up 6% to Rs 755 crore versus Rs 712 crore. Operating profit margin (OPM) improved at 27.2% in Q3 versus 26.5% in Q2FY11. Adjusted OPM declined at 20.4% versus 26.5%.
Sports business revenue stood at Rs 166.5 crore and EBITDA loss came in at Rs 32.5 crore. In an interview with CNBC-TV18, Atul Das, Zee Entertainment gave his perspective on the quarter gone by and the road ahead. Below is a verbatim transcript. Also watch the accompanying video. Q: Could you just comment on that Rs 60 crore income that you have got for the premature termination of the sporting event? What is the nature of this income? Any potential loss in revenue on account of the early termination? A: See, actually the figure is Rs 70 crore. So we had a one-time. It is an operational income, but it is a non recurring item because we have terminated some of the rights prematurely and therefore we have got a compensation which is all reflected in this quarter Rs 70 crore, and therefore it is a non recurring nature of item. So, that is something because of which we will actually save costs as we go forward because originally if we had showcased those rights. There would have been some costs and obviously there would have been some revenues. The reason why we have prematurely terminated those rights is because we felt that the value is not being created through those rights. Therefore, a fair expectation from our side would be that the cost structure would get reduced more than the potential revenue structure. So we look at it that way. Our sports business performance has not been up to the mark in this quarter and has pulled down the performance of the company during this quarter. That's only the only incremental variation which has happened in our performance during this quarter. So if you look at our non-sports businesses, which is every business including entertainment, regional, English language, niche channels, all of that put together, that is excluding sports, we have had good strong performance both on the revenue front, as well as on the operating margin front. We have seen a 39% operating margin on our non-sports business which is comparable to the third quarter last year margins of 39% that we made excluding sports. On a like-to-like basis, despite a fair amount of competition in the entertainment television segment, we have maintained our margins and we have continued to generate strong growth. Where we are definitely disappointed is on the sports business and a large part of the incremental cost that you see in our business during this quarter is on account of incremental sports rights that we have had this quarter. Q: Just wanted to check, this termination of the sporting events rights, could you confirm for us whether it is the All India Football Federation matches which have been terminated prematurely. The second part, any sort of one time cost which is corresponding in the PNL with this one time cost of Rs 70 crore? A: No. There is no corresponding cost in the P&L. It is only the revenues that have been booked. And I am not at liberty to talk about specifics of the rights that were terminated. So I leave it at that. Q: Let us just focus on the sporting business, you said it was sluggish this quarter. WhatDiscover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
