- 26 May 2023
- ICICIdirect Research
Zee reports washout performance; merger consummation key ahead
ZEEL - 139 Change: -2.80 (-1.98 %)News: Zee Entertainment reported a weak operating performance with ad revenues decline (amid weak ad spends), higher movie content and Zee5 costs impacting margins and one-off charges further exacerbating the bottomline pain. The ad revenues declined 10.2% YoY to Rs 1006 crore, with domestic ad decline of ~10.2% YoY. We highlight that ad revenues have declined owing to weak ad spending by key segment (FMCG), impact of exit from free to air and pullout from few cable networks amid NTO 3 (New Tariff Order) standoff in February for couple of weeks. The overall subscription revenues were down ~1% YoY to Rs 847 crore. EBITDA came in at Rs 152 crore, decline of 68.8% YoY basis, with margins at 7.2% (down 882 bps QoQ), owing to high content cost from movie releases along with higher content cost for Zee5. Adjusted loss was at Rs 8.5 crore
View: The performance was weak on all fronts. Going ahead, market share recovery in Marathi/Tamil along with flagship Hindi channels (important for ad growth) where relative performance has been muted, will be the key monitorable. Likely merger consummation, remain key triggers (NCLAT meeting slated for May 26 for the company’s appeal)
Impact: Negative