Zee Entertainment’s net profit dropped by 91.9% YoY to Rs 24.31 crore

Zee Entertainment Enterprises Ltd (ZEEL) has reported a significant year-on-year (YoY) decline in net profit for the third quarter that ended December 31, 2022. The company’s net profit dropped 91.9% YoY to Rs 24.31 crore ($3.3 million), down from Rs 298.7 crore ($40.3 million) during the corresponding period last year. 

ZEEL’s total revenue stood at Rs 2,111.2 crore ($284.6 million) during the period under review, up 0.1% against Rs 2,112.6 crore ($284.7 million) in the corresponding period of the preceding fiscal. 

The company’s EBITDA (earnings before interest, tax, depreciation, and amortization) also decreased by 27.5% to Rs 343.8 crore ($46.3 million) in the third quarter of this fiscal over Rs 479 crore ($64.7 million) in the corresponding period of the previous fiscal. EBITDA margin stood at 16.3% in the reporting quarter, as compared to 22.7% in the corresponding period of the previous fiscal.

ZEE’s revenue from operations remained flat at around Rs 2,111 crore ($284.6 million), down 0.1% YoY, according to the company’s exchange filing. Advertising revenue fell to Rs 1,063 crore ($143.6 million) from Rs 1,261 crore ($170.3 million) in Q3 FY22.

The company’s operating profit took a hit due to slower growth in revenue and elevated investments in content, marketing, and tech. “Network share gains in the South cluster were offset by soft performance in Marathi and seasonal dip in Hindi movies,” said the company in its earnings presentation.

ZEEL’s exceptional items, such as provisions for Zee Learn’s insolvency case and receivables from Siti Networks, as well as a one-time bonus as part of a talent retention plan, dragged down the bottom line. Exceptional items aggregated to Rs 169 crore ($22.8 million).

EBITDA margins shrunk to 16% in the December quarter against 23% a year ago. The company said in a statement that theatrical performance continues to be soft. Operating costs, including programming and tech costs, increased over the previous year due to higher content costs in movies and linear and continued investment in Zee5.

Subscription revenue rose 11% YoY, aided by underlying organic growth in Zee5 and Zee Music and by the recognition of subscription revenue from the Siti network. Other sales and services revenue gained by a massive 148% YoY, mainly due to higher syndication revenue.

In contrast, domestic advertising revenues came in at Rs 1,015 crore ($137.1 million) during the quarter, down 16% YoY, mainly impacted due to FTA withdrawal (Zee Anmol) and a slowdown in FMCG spending due to the challenging macroeconomic environment.