MUMBAI: Zee Entertainment Enterprises Limited (Zeel) has posted a third-quarter consolidated net profit of Rs 1.38 billion, down 11.5 per cent over the year-ago period, as advertising revenue slipped and could not quite make up for the gains in subscription.

Ad revenue slid 10.1 per cent, impacted by a softening in spends and a loss in market share. "Overall, advertising revenues on non-sports business have declined, though marginally. This is reflective of the overall weakness in advertising spends combined with some market share loss," the company said.

Zeel posted a consolidated operating income of Rs 7.55 billion, down 8.5 per cent from the earlier year. The company said that as the revenue in the Q3 FY?11 included Rs 700 million as one time fees for pre-mature termination of rights for All India Football Federation (AIFF), the results were not comparable.

For the three-month period ended 31 December, Zeel?s operating profit (Ebitda) was at Rs 2.16 billion, down marginally (3.6 per cent), over the year-ago period.

Ebitda margin for the quarter was 28.6 per cent, which has gone up from 27.2 per cent in the corresponding quarter last fiscal. Zeel said that excluding sports business, the Ebitda margin stood at a healthy 34 per cent.

Zeel chairman Subhash Chandra said, "While the world economy goes through another round of upheaval, the Indian economy continues to grow, even though at a lower pace. The slowdown brings its own set of challenges in all spheres of business activity. Advertising trend continues to be slower than expected. However, the television economy continues to grow on the back of higher subscriber growth and increasing digitisation."

Zeel?s advertising revenues for the quarter stood at Rs 3.95 billion, showing a decline of 10.1 per cent over the earlier year. Zee said that it had more cricket properties in sports which resulted in better advertising revenues.

Zeel MD and CEO Punit Goenka said, "Zee Entertainment?s wide portfolio of television channels had some gains and some losses in market shares during the quarter. We are confident that we would regain the market share losses through our planned content lineup and continue to grow our business profitability in a sustained manner. During the quarter, we have been able to maintain healthy operating margins, partly due to lower sports losses and partly due to better cost efficiency measures.

Advertising spends are flat sequentially, and the overall trends also remain subdued.

Zeel made substantial gains in subscription income. The total subscription revenue for the quarter stood at Rs 3.26 billion, registering an increase of 15.7 per cent over the corresponding quarter last fiscal. "While subscription revenues have recorded a bigger increase, the reported subscription revenues reflect a growth of only 15.7 per cent y-o-y, because of the change in accounting treatment of domestic subscription revenues, which are now being reported net of expenses," Zeel explained.

During the current quarter, domestic subscription revenue stood at Rs 2.22 billion, up 13.85 per cent over the preceding quarter.

International subscription income was at Rs 1.04 billion, up 2.7 per cent compared to the earlier year and 8.24 per cent over the trailing quarter. It obviously gained from the rupee depreciation.

Meanwhile, other sales and services include syndication sales, play out & transmission services, facility usage income among others.During the third quarter, other sales and services stood at Rs 332 million. The company had recorded revenue of Rs 1.03 billion under this head during the corresponding period last fiscal, including a non-recurring one time fees of Rs 700 million.

Overall, programming and operating cost in the quarter was Rs 3.4 billion as compared to Rs 4.15 billion in the corresponding period last fiscal, a reduction of 17.6 per cent. The major reason for the reduction is that the corresponding quarter last fiscal had more sports properties as compared to this quarter.

Employee cost increased by 6.5 per cent over the corresponding period last fiscal. Selling & other expenses in the quarter were at Rs 1.24 billion, as compared to Rs 1.17 billion in the corresponding period last fiscal. Total cost incurred by the company in third-quarter was Rs 5.39 billion, showing a reduction of 10.3 per cent over the corresponding period last fiscal.

MUMBAI: Joy Chakraborthy, who grew in the television broadcasting space as a revenue specialist, nursed ambitions of becoming a chief executive officer.

Subhash Chandra-promoted Zee Entertainment Enterprises Limited (Zeel) gave him that operational role as head of niche channels while he continued to look after the revenue of the entire network and news daily DNA, but the playing field was too small.

Groomed in National Defence Academy and later as a trainee pilot, Chakraborthy had bigger dreams. He wanted to lead an attack that would dig deep into the enemy territory and expand his area of operations.

In an era of consolidations and partnerships, the 44-year-old found an opportunity when he met India Today Group CEO Ashish Bagga while discussing about a possible strategic sales alliance between DNA and Mail Today, a joint venture between India Today Group and British newspaper Daily Mail.

Founder-promoter Aroon Purie was at that time scouting for a CEO for TV Today Network after the exit of G Krishnan.

"It was a warm meeting with Bagga and we later met Group CFO Dinesh Bhatia. It was like buddies at work. The meeting with Purie was very fruitful," recalls Chakraborthy.

Chakraborthy will take up his new role as TV Today Network CEO from 1 December, ending his six-and-a-half-year stint at Zeel.

"I have accepted his resignation with a heavy heart. He did lead a strong team at Zeel that will continue to be part of our family," says Zeel MD and CEO Punit Goenka.

As he steps into his new shoes, Chakraborthy will face many challenges. He will, indeed, be moving into a much low-sized revenue company. Zeel ended last fiscal with a revenue of Rs 30 billion, dwarfing that of TV Today?s turnover of Rs 2.9 billion.

The business strategies of the two companies are also different. While Zee has a presence across all segments of the media business, the India Today Group is a news-focused company.

The TV news genre itself is under stress and strain. Revenue growth is slowing while staff and distribution costs are climbing.

So is Chakraborthy, who will be shifting to New Delhi, kicked about joining a news outfit that will give him power?
 
"Professionally, I see myself diversifying. I am excited about getting into a more dynamic and competitive genre which is news. I will also be experiencing radio, a new medium for me after having done print and TV. And I am joining one of the largest news media companies," says Chakraborthy.

Critics say Chakraborthy will be challenged and will have to develop new skill sets. "It will be a far tougher road for a man who has done ad sales most of his life, be it at Times of India or Star or Zee. TV news business is highly cluttered, plagued with distribution costs and revenue growth issues," a senior TV executive observes.

An optimist and highly self-motivated, Chakraborthy is not disturbed. "I have learnt a lot during my stint at Zee. We have operated in a cost-tight environment and focused on being profitable. I have been given the opportunity to explore and broaden my experience in diversified functions including distribution. And news is not new to me as I have handled sales for Star News during my earlier stint in Star India," he says.

MUMBAI: Zee Entertainment Enterprises Ltd. (Zeel) expects its sports broadcasting business to break-even by the middle of FY‘14 and has no plans to raise capital to fund its expansion.

Subscription revenue will drive the business to profitability while advertising will be event-led.

"Given our growth trajectory and contracts, the sports business should break-even in two years. In the worst case scenario, we should be able to turn it around by the middle of FY?14," Zeel managing director and chief executive officer Punit Goenka said in an interview with Indiantelevision.com.

Zeel‘s sports losses for FY‘11 stood at Rs 2.08 billion on a revenue of Rs 4.4 billion (excluding a one-time revenue gain of Rs 700 million as one-time fee for the pre-mature termination of rights for AIFF). For the full-fiscal ended March 2012, the company expects to limit the operating loss to a maximum of Rs 1 billion.

The eight-year Cricket South Africa (CSA) television rights for $180 million has been a valuable purchase. The earlier five-year rights had gone for $75 million.

"The price is in our comfort zone. It is an inflationary rise and has been one of the most valuable boards for us. By having one of the strategic boards under our belt for a longer term, we are under less pressure," said Goenka.

Zeel will be able to give its sports business maximum firepower when it is able to retain the telecast rights for the other three boards ? Sri Lanka, Pakistan and West Indies. The company is understood to have pocketed the Zimbabwe board rights for $20 million, which had earlier gone for $6 million for four years.

"We have not yet signed with the Zimbabwe board, so I cant comment on that. The other three boards are up for renewal during FY?12 and FY?13. We have done our calculations and will not bid recklessly for these rights. There are boards outside these which are also coming up for grabs," said Goenka. 

Is Zeel looking at hiving off the sports business to raise capital by offloading equity?

"We have no capital-raising plans. Zeel will continue to fund the sports business till it turns around. We have taken a long term call and sports broadcasting is a strategic business for us," averred Goenka.

Zeel is awaiting government approval for the launch of the golf channel."We are ready to launch it within 60 days of obtaining the regulatory clearances," said Goenka.

Will Comcast be a partner for the channel? "Earlier Taj Television (which Zeel later acquired) had some sort of an agreement with Comcast for the golf channel.We will do it ourselves and completely own it," Goenka stated.

By adding a full-fledged HD channel, Zeel will have four sports channels by this month-end. "We have acquired a slew of properties across different sports such as football and tennis.This has enabled us to launch three different channels and post strong subscription growth. Advertising revenue is heavily dependent on cricket.Within that segment, it is India cricket. While advertising revenue is cyclical, subscription income is consistent throughout the year," Goenka said.
 

NEW DELHI: Star India chief executive officer Uday Shankar has been re-elected president of the Indian Broadcasting Foundation (IBF) for the second term.

Zee Entertainment Enterprises Ltd MD and CEO Punit Goenka was elected treasurer. Times Television Network MD and CEO Sunil Lulla, who had been treasurer until now, was elected as the vice-president in the 12th Annual General Meeting.

The only change in the Board is that Madhavan of Asianet has been co-opted in place of G Krishnan, who had quit TV Today recently.

Earlier in the day, during the 12th Annual General Meeting, the following were elected as members of the Board of Directors for 2011-12:

1. Uday Shankar
2. Sunil Lulla

3. Punit Goenka
4. Network 18 Group CEO Haresh Chawla
5. Eenadu TV director I Venkat
6. Dish TV MD Jawahar Goel
7. MM TV director Jayant M. Mathew
8. NDTV executive vice chairman KVL Narayan Rao
9. Multi Screen Media CEO Man Jit Singh

10. Star CJ Network CEO Paritosh Joshi
11. India TV chairman Rajat Sharma
12. Siddharth Jain, Vice President & General Manager (Distribution & Business Operations), Turner International India & South Asia

In the subsequent Board meeting, the Board co-opted the following Directors to the IBF Board:

1. Asianet Communications MD K Madhavan
2. Sri Adhikari Bros. vice chairman & MD Markand Adhikari
3. Colors CEO Raj Nayak

It was decided that the following members would be special invitees in the IBF Board of Directors meetings:

1. Turner General Entertainment Network VP and GM Monica Tata

2. ESPN Star Sports MD Manu Sawhney