Zeel's bearish outlook on ad market in FY'12

Ravi budhwar

21 Apr 2011
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Zee Entertainment Enterprises Ltd (Zeel) expects ad revenue growth to stay muted this fiscal but a cut in costs will protect the Indian broadcasting company’s profitability.

The company’s expenses outside sports will be up 15 per cent but overall spending will be lower. The losses from sports will stay within the guidance of Rs 1 billion, down from Rs 2.08 billion in the earlier fiscal.

“We do not expect a big bounce back in ad revenues. The environment is less predictable,” said Zeel president corporate strategy and business development Atul Das.

Zeel’s ad revenues are under pressure, both in terms of volumes and ad rates. Besides a slowdown in the advertising economy, the company’s flagship channel Zee TV and regional channel Zee Marathi have lost market share.

The company posted a 4.2 per cent drop in ad revenue to Rs 3.95 billion for the three-month period ended September 2011.

"If you take out the sports business, we have actually posted a growth in ad revenue over the same quarter last year. In the second quarter of the previous fiscal, we had bigger cricketing events. But the ad climate will stay weak this fiscal," said Das.

Zee TV, which is now fourth in the Hindi GEC pecking order, will not make any dramatic shift in its programming strategy. The programming hours will increase from 29 hours per week to 33 hours. The thrust, though, will be to fix the primary slots before launching original shows in the ancillary time bands.

"We had chalked out a strategy of upping the original programming hours much before we lost market share. Our investments are independent of the loss in share," averred Das.

The sports business loss for the first half of this fiscal stands at Rs 792 million. "We are confident of meeting our earlier guidance of maximum loss of Rs 1 billion from the sports business this fiscal," said Das.

Zee has rights for South Africa-Australia and Pakistan-Sri Lanka cricket series in the second half of FY'12.

Zeel has a net cash of Rs 11.1 billion. The company has gone slow on its buyback programme, having spend Rs 1.65 billion so far.

"We had said we could go up to Rs 7 billion. We have spent Rs 1.65 billion so far, but have time till March 2012," said Das.
source:indian television
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