Can see redistribution of ad revenues ahead: Zee Ent

Zee Entertainment reported its earnings for the first quarter ended June 30, 2013 earlier today. It posted 42.04 percent increase in consolidated net profit to Rs 224.64 crore. According to Atul Das chief strategy officer of the company this quarter has been another good performance from Zee Entertainment.

He told CNBC-TV18 that the company has outperformed overall ad revenue growth in the industry, it was up18.5 percent at Rs 530 crore year-on-year. He further informed that there are chances to see redistribution of ad revenues going forward. Below is the verbatim transcript of his interview to CNBC-TV18 Q: How have ad revenues and subscription revenues faired in this quarter? A: This quarter has been another good performance from Zee Entertainment. The ad revenues they have grown 18.5 percent year-on-year (YoY) to Rs 530 crore for the quarter. If you consider the fact that print as well as television has not grown that much, we have outperformed overall ad revenue growth in the industry. As far as subscription is concerned our growth has been about 16.5 percent y-o-y. The numbers are Rs 424 crore for the quarter, which also is extremely strong growth coming from domestic subscription revenues. The domestic subscription revenues on a YoY basis is expanded 26.5 percent to Rs 316.8 crore. As far as the international revenues are concerned we have seen some softening on the revenues there with revenues of Rs 107 crore recorded during the quarter. So, overall consolidated revenues for the company have grown 15.5 percent to Rs 973 crore for the quarter. Q: What is your expectation from margins going ahead and what growth or what sort of guidance would you be working on in terms of the ad as well as in terms of the subscription revenue in FY14? A: We don’t comment on quarter wise performance but overall from a FY14 perspective we are looking forward to a reasonable strong growth as far as our existing businesses are concerned. So, we should see expansion of margins from our continuing business but depending on the number of opportunities that we scale up for new businesses, margins may have some impact there. So, overall we do anticipate that margins should be closer to last year levels. If we decide or we get into new product launches then some impact of that could also be there. Q: What is the impact and are you seeing any kind of impact post Telecom Regulatory Authority of India (TRAIs) move to limit the ads to around 12 minutes per hour? A: Right now there is not any impact and we do not anticipate any impact coming forward because of that. What we do anticipate is that because of the limits coming down in terms of the number of minutes that you can advertise in clock hour we will be able to increase the rates commensurately to make up for those losses. So, for the businesses in television which are strong and which have leading market shares we don’t foresee much of an impact. Of course weaker channels or channels which don’t have relevant market share may definitely get impacted because there would be redistribution of ad revenues probably within the industry segments. We will have to wait and watch but as far as Zee is concerned we do not anticipate any major problems on account of that. Q: How did the sports business do this quarter? A: It is very difficult to precisely pin-point the deviations or changes from expectations as far as quarter-on-quarter (Q-o-Q) basis is concerned. However, we do expect or anticipate losses to continue in sports for this fiscal and that is what I can comment on which has in fact got even more negatively impacted because of the rupee factor. So, obviously the sports business will see losses in FY14.