Zee Entertainment Enterprises (ZEEL) held a conference call to discuss results for the fourth quarter ended March 31, 2009. Mr Subhash Chandra, Chairman addressed the call.
Highlights of the call
- For FY10, the management is not giving any revenue guidance on the back of current challenging environment. However, the management is confident of bottomline growth 10-15% on the back of cost cutting measures and lower spent on programming and channels.
- The all channel share of ZEEL was 19.5% for the quarter.
- ‘Zee TV‘ clocked 208 gross rating points (GRPs) against 201 gross rating points (GRPs) in sequential quarter. The GRPs are increasing constantly month on month from 204 in January 2009 to 235 in April 2009. For the quarter, in market share, Zee Cinema 35% with 158 GRPs against 34% in the sequential quarter. Zee Cinema ranked 4 across all channels in Hindi Speaking Markets of India. Zee had 32 (31 in sequential quarter) programmes in Top 100.
- The management expects Zee Next to have minimal to no loss in FY10. For FY09, the channel has incurred loss of about Rs 55-60 crore.
- The Company has planned to change its model for Zee Entertainment Studio (ZES) from studio mode to normal production model. It becomes costly to continue with studio model if the number of movies produced is reduced.
- The DTH revenues have increased by 103% on y-o-y basis and 35% on q-o-q basis to Rs 38.1 crore. Of the revenues, Rs 3 crore is arrears received. The management believes that the DTH revenues would grow going forward faster than cable subscription revenues. At the end of the quarter there were about 12 million subscribers. The Company is paid for about 5.5 million subscribers with ARPU of 21-22.
- In comparison to ad-rates of Zee TV, Star Plus would be 25-30% higher and Colors would be same or lower.
- Cash in books is about Rs 194 crore and debt of Rs 576 crore (Cash Rs 67.85 crore and Debt Rs 625 crore at the end of sequential quarter). Debtors outstanding are at 107 days down from 114 days at the end of sequential quarter.
- Regarding the cancellation of Indo-Pak tour, the Company is in talks with Pakistan Cricket Board for refund of advance paid of about US$ 12 million.
- With the repayment of FCCBs in April 2009, the forex loss on translation would not occur.
- Advances at the end of the quarter stood at Rs 1370 crore: Advances to WWIL/Dish TV – Rs 486 crore, Within the group (interest earning) – Rs 296 crore, advances for treasury operations – Rs 121 crore and other trade advances – Rs 465 crore.
- Capex for FY10 would be about Rs 60-70 crore, the normal maintenance capex. The Company has cut back on any further capex and plans to stop programmes which are loss making.
- On sequential basis, operating revenues were down 6% at Rs 513.74 crore with advertising revenues down 15%, subscription revenues were up 3% on account of higher domestic subscription up 9% (DTH revenues up 35%) and international subscription down 2.8%. Other sales & services increased 2% at Rs 50.82 crore. OPM improved 140bps at 23.4% on the back of cost cutting measures initiated by management and the consolidated net profit before EO was down 20% at Rs 75.7 crore. Reported net profit was up 17% at Rs 96.47 crore.
- Other sales and services down 30% at Rs 50.82 crore include revenues from education segment of Rs 7.41 crore down 58% and revenues from Film Production & Distribution segment of Rs 8.08 crore.
- The sports business had revenues of Rs 76.7 crore growth of 46% over corresponding quarter last year and 34% lower than in the sequential quarter. EBITDA was up 962% at Rs 13.8 crore and down 25% in the sequential quarter.
- Of the subscription revenues, domestic revenues grew 25% at Rs 123 crore and international revenues grew 3% at Rs 111.5 crore whereas DTH revenues were at Rs 38.1 crore up 103% included in domestic revenues.
- During the year Asia Today Limited (ATL) a subsidiary of the company has divested its 48.44% holding in Broadcast South Asia Limited (BSA) under a buyback arrangement for US$ 30.9 million making profit of Rs 19.48 crore and has increased its 60% shareholding in its subsidiary Asia Business Broadcasting Limited (ABBML) to 100% by an additional investment of US$ 56 million.