In an interview to CNBC-TV18 Mihir Modi, Chief Finance and Strategy Officer, ZEE shared his views on the financial performance of the company in Q2FY15 and the road ahead. Zee Entertainment announced a mixed set of earnings. Lower subscription revenue and sports losses impacted the media company’s bottom-line negatively.
Its consolidated net profit fell 3.7 percent to Rs 227.6 crore in second quarter of current financial year 2014-15 due to lower subscription revenue and sports division losses. Profit in the year-ago period was Rs 236.3 crore.
Below is the verbatim transcript of Mihir Modi’s interview with CNBC-TV18's Ushang Sheth.
Q: Can you take us through the quarterly performance and how was the sport business for the quarter gone by and did it continue to be an overhang on the numbers?
A: We have reported a top line of Rs 11.17 billion this quarter at a reported growth of 1.5 percent over the same quarter last year and a margin of 28.7 percent reported. But the one thing I would like to bring to your attention is that this quarter has onetime accounting change items which are depressing the quarter’s top line. If we correct for those which are around Rs 58 crore then the growth will come to 7 percent.
Essentially sports is pulling the top line down. So if we exclude sports our top line growth is in low teens and above the market growth for this quarter. The sports business given that it is event based and we do not have any India cricket this quarter has indeed depleted our top line there.
Q: What about the ad revenues for the quarter gone by they have gone up by 7.5 percent but at the same time the subscription revenues fell by around 78.5 percent. So what are you reading over here and what will be the reasons you will attribute the same to?
A: The ad revenue has grown 7 percent but the non-sports ad revenue has grown in lower teens. The subscription revenues reported have fallen by 7 percent, but like I mentioned there is Rs 58 crore worth of onetime accounting adjustment that has happened. That has impact only on the subscription line and the cost line. So the EBITDA is not affected. So if we correct for that Rs 58 crore our subscription top line is around 5-6 percent growth. And from that if we take out the international subscription which has remained flattish for us in the recent past the domestic subscription is growing at 7-8 percent.
Q: So in terms of the contribution what kind of actual contribution are you seeing from the elections and at the same time are you seeing any kind of impact on your business mainly led by the postponement of the digitisation phase-III?
A: Election does have some impact but it was negligible for us. Going forward on the subscription side, yes, the delay in DAS implementation has indeed pushed the up take which was expected out by another 12 months. So, for the next 12-18 months we will see mutish growth on the subscription side, but as soon as the DAS kicks in then we will start seeing good growth again.
Q: In previous interviews you have mentioned that there are certain investments lined up. So can you shed some light on the same how what are you looking at going ahead and at the same time also explain to us what kind of cash on books do you have in current point of time?
A: Though we have not officially announced it, so I don’t know the exact dates yet that I can share with you but we will likely have a new channel launch in the fourth quarter of this year. The exact dates will be communicated as soon as we are ready to talk about it.
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