Sports biz to get lucrative post digitisation: Zee Ent

Below is the verbatim transcript of Atul Das's interview with CNBC-TV18’s Sonia Shenoy and Anuj Singhal.

Sonia: It was a big jump that you saw in your ad revenues this time, almost 34 percent, just take us through the ad revenues and the subscription revenues what you witnessed during the quarter and are you seeing any increase in ad spends on account of the election season ahead?

Das: I don’t think we are saying that there is an uptick in advertising revenues overall. In fact, there has been a fairly lackluster growth in advertising, the whole fiscal. We are seeing a growth of about 9-10 percent in this 9 month period so far which is in no way a normal growth rate and that has impacted because of the slowdown in the economy.

As far as going forward is concerned, we believe that a growth rate of 9-10 percent going forward would be more reasonable to estimate unless things improve for the better or go worse. But given the situation I think that is more likely an expectation.

Sonia: What kind of contribution did you witness on account of your entertainment and sports business, can you throw some light on the kind of cost incurred towards the same and when do you see the sports business turn profitable?

Das: We all know that sports is a business, which is still not profitable for the entire industry and even during this quarter, we have seen significant losses increasing in the sports business because we had a very heavy sports calendar in this quarter.

It is very difficult to give a timeline to when it will become profitable. We are very hopeful that in the next couple of years, we should see the improvement in the sports business and the main reason for driving the improvement would be largely completion of digitisation, which will help price the sports subscription revenues better which will help grow the revenues.

Anuj: Let us continue with the subscription revenue because you have seen increase in international subscription revenues as well. Can you tell us what was the reason for that? Was it purely because of rupee depreciation or was there any other factor as well?

Das: Yes, in fact the growth rate of about 9.4 percent in the subscription revenues from the international markets is largely aided by the rupee depreciation and in fact on dollar-to-dollar revenue growth it has been a marginal decline on international subscription front. So it is because of the rupee depreciation and not on an organic basis.

Our international business from the subscription front has been a little lackluster in growth. It has been rather muted and we do expect that it will remain flattish as far as dollar terms growth is concerned. But to the extent that it has been aided by rupee depreciation it has seen a growth.

Anuj: What about the other lever, digitisation, what kind of benefits did you see from the phase II rollout and what would be your expectation for phase III?

Das: The beauty of our business model is that for digitisation, Zee is not making any investment. We have made all the investments in the last 20-21 years of our existence and unfortunately the subscription revenues were not flowing through to the broadcasters. But now with digitisation taking place, the way it is currently, those benefits are started to accrue to the broadcasters and therefore without any incremental investments, we will get revenues which were due to us which should have been available to the broadcasters long back but they are coming late. So therefore from an investment perspective, it is not great for broadcasters but we are definitely seeing a fair amount of growth coming through on digitisation.

If you look at our subscription revenue growth, where earlier we used to get low single digit growth on subscription revenues from the domestic market, today we have been recording anywhere in the double digit number from 11-12 percent to maybe 15-17 percent growth in different quarters.