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Expecting moderate growth in FY21 subscription revenue: Zee Entertainment

Media firm Zee Entertainment Enterprises expects a moderate growth in its subscription revenue although its overall ad revenue is likely to fall this fiscal, according to the company's annual report

ZEE Entertainment, ZEE, TV

Press Trust of India New Delhi

Media firm Zee Entertainment Enterprises Ltd (ZEEL) expects a moderate growth in its subscription revenue although its overall advertising revenue is likely to fall this fiscal, according to the company's annual report.

The company expects the subscription revenue from its OTT(over-the-top) platform ZEE5 to scale up faster as it is investing in original content.

"After a step jump in FY20 and due to uncertainty relating to implementation of (New tariff Amendment Order) NTO 2.0, television subscription revenue growth will moderate this year. However, ZEE5 subscription revenue should scale up faster as it continues its investments in original content and further expands the partnership network," ZEEL CFO Rohit Gupta said in the annual report for 2019-20.

 

ZEE5, which has reported a good growth, would continue to release higher number of original shows and movies than any other OTT platform in the country, ZEEL said.

"It is also developing new use cases like short-videos which will enable it to grow faster. We are clear that we want to invest in content, technology and marketing for ZEE5 which will help it to become the leading OTT platform in the country," Gupta said.

In 2019-20, domestic subscription revenues witnessed a growth of 33 per cent led by better monetisation of TV viewership after implementation of NTO and growth in the subscriber base of ZEE5.

According to Gupta, all new businesses of the company digital, movies and music, live events are scaling up well and heading in the planned direction.

"That said, peak investments in inventory is behind us and the working capital intensity will start reducing from FY21 itself, and the company will witness improvement in cash generation. Our endeavour is to improve cash generation to the best standards in the industry," said Gupta.

However, as far as advertising revenue is concerned, though advertisers are coming back, it is still far from recovery and the revenue is expected to decline in 2020-21, the company said.

Although advertising revenue is witnessing a significant spike in both TV and digital platforms, ad monetisation has gone down sharply, ZEEL said.

The company believes that in the coming festive season, brands will come back with full force and by the end of this fiscal the ad growth could return to its normal trajectory.

"In the first quarter (April-June), lockdown and absence of fresh content led to a sharp decline in advertising revenue. Though things are improving sequentially, the loss of revenue in the first half will lead to de-growth in the advertising revenue for the year, said Gupta.

According to ZEEL, private consumption growth in the country was tepid during 2019-20 which forced marketers to reduce their advertising spends.

"With the wheels of the economy back in motion and resumption of fresh content on our channels, we are seeing advertisers coming back and increasing their spends," he said.

Gupta further said, "However, we are still far from complete recovery. We believe that the festive season will see brands come back with full force and by the end of this fiscal the ad growth could return to its normal trajectory.

"Our estimate is that the advertising revenue for the entertainment industry could decline by 25-30 per cent during FY21," he added.

In 2019-20, ZEEL's advertising revenues declined by 7 per cent largely due to the "macro-economic slowdown, fall in FTA revenue and loss of viewership" in certain markets.

ZEEL in March 2019 converted two of its popular free-to-air channels into pay channels and pulled them out from DD FreeDish.

This had a significant impact on their viewership and affected the revenue of the network, he added.

On the cost front, ZEEL has initiated an exercise to take a relook at every cost item, across businesses and functions, resorting to zero-based budgeting.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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First Published: Aug 27 2020 | 8:47 PM IST

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