Zee reports weak performance in Q1FY23; ad recovery likely in H2ZEEL - 272 Change: 13.55 (5.25 %)
News: Zee reported domestic ad growth of ~6% YoY as it faced dual pressure of viewership softness due to Zee Anmol exit from Free to Air (FTA) and lower time spent per viewers) and input price pressure restricting the FMCG ad spend. Overall subscription revenues declined 5% YoY largely owing to ~7% decline in domestic subscription owing to pricing embargo impacting TV subscription growth along with some impact by timing of some B2B deals and renewals EBITDA margins at 12.8% was down 661 bps QoQ, due to lower revenues and higher marketing cost on a YoY basis, on account of new launches in linear business and continued investments in ZEE5.
View: The silver lining was that adjusted for FTA exit impact, viewership share was better QoQ. Despite near term headwinds, company expects QoQ improvement from Q2FY23 with major ad recovery from Q3FY23 led by festive season. Strong ad recovery from H2 and likely merger consummation (with Sony) with no visible impediment, remain key triggers in the medium term.