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Zee Entertainment – recovery seen albeit lags peer

News: Zee Entertainment reported weaker than expected operating performance with decline in subscription revenues and lower than expected margins. Overall revenues came in at Rs.1,979 crore, up 14.9% YoY with ad revenues up 20.7% YoY (yet weaker than Sun TV which saw 40% growth) to Rs.1089 crore, on favourable base of Q2FY21 (decline by ~26%) with recovery largely seen in the second half of the quarter. EBITDA came in at Rs.412 crore , up 31.1% YoY basis on depressed base with margins at 20.8% (up 262 bps YoY), albeit lower than our expectations of 22%, due to higher marketing costs. The company reported PAT of Rs.270 crore, lower than estimated PAT of Rs.282 crore, impacted by one-off provision of Rs.14 crore against receivables from Siti Networks.

Views: Going ahead, market share recovery of Marathi/Tamil along with flagship Hindi channels where relative performance remained muted, will be the major thing to watch out for. Furthermore, key shareholder - Invesco Oppenheimer’s legal battle with current promoters will also be a key monitorable.