Zee Entertainment should cut costs in profit pursuit, says panel

(This March 26 story has been corrected to remove incorrect reference of Zee being a loss making company, in paragraph 2)

India's Zee Entertainment should substantially reduce losses in its businesses, including its English TV channels, and cut costs in other areas to meet a key profit target, according to a company-formed review panel, the broadcaster said Tuesday.

The move - coming on the heels of a failed $10 billion merger with Sony India and the collapse of a $1.4 billion cricket broadcasting deal over a missed payment - is aimed at helping the company hit key performance targets, Zee said.

That includes a 20% earnings before interest, taxes, depreciation, and amortisation (EBITDA) margin target proposed by CEO Punit Goenka, Zee said. Its margin was 10.2% in the December quarter.

Zee's business has struggled over the years, with advertising revenue falling to $488 million for in 2022-23 from around $600 million five years earlier. Cash reserves also dropped about 25% in that period.

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The committee - comprising company chairman R. Gopalan and audit committee chairman Prakash Agarwal - has identified five businesses, including its English television channels, the Hindi channel 'Zindagi' and communication technology-maker Margo Networks, where losses need to be substantially reduced, Zee said.

Margo Networks lost 1.17 billion rupees in the year ended March 31, 2023. Zee did not provide details on the performance of the other businesses or respond to requests for comment.

The committee has also advised halving the costs at Zee's technology and innovation centre in fiscal 2025, from the 6 billion rupees ($72 million) a year back, Zee said.

Zee, besides being locked in legal battles over the failed Sony and cricket deals, has to also contend with new competition after Disney and Reliance merged their Indian media assets to create an $8.5 billion media behemoth.