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Sale of library to ATL boosts Zee’s turnover, profits - Views on News from Equitymaster
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  • May 9, 2000

    Sale of library to ATL boosts Zee’s turnover, profits

    Zee TV sold a part of its film and television programme library to its subsidiary ATL during the fourth quarter. The library has been valued at Rs. 26.34 bn by an international consulting firm. (However, the company has not mentioned both the name of the consulting firm and what part of the library has been sold.)

    (Rs m) FY1999 FY2000 Change
    Sales 2,262 4,759 110.4%
    Other Income 56 101 81.3%
    Expenditure 1,411 1,870 32.5%
    Operating Profit (EBDIT) 851 2,889 239.7%
    Operating Profit Margin (%) 37.6% 60.7%  
    Interest 81 84 3.5%
    Depreciation 18 25 35.3%
    Profit before Tax 807 2,881 257.1%
    Other Adjustments     #DIV/0!
    Tax 196 210 7.4%
    Profit after Tax/(Loss) 611 2,671 336.9%
    Net profit margin (%) 27.0% 56.1%  
    Earnings per share 32.75 6.5  

    This part sale contributed Rs 1.89 bn almost 40% to its annual turnover and 77% of its fourth quarter turnover. Since the costs of building this content has been written off over the years the operating profit has increased by 1.86 bn i.e. the profit from the sale of the library has contributed more than 64% of the operating profit in the current year.

    For the record, Zee’s turnover has shot up by 110% and the net profit has more than quadrupled. One fact that must be kept in mind however, that the results of last year are strictly not comparable since Zee was a content provider, not a broadcaster till last year.

    (Rs m) Revenues PAT
      FY2000 FY1999 FY2000 FY1999
    Siticable 590 460 10 10
    PATCO 260 220 50 10
    Asia Today Ltd. (ATL) 5,200 4,140 840 590
    Asia TV UK 1,090 1,060 110 100
    Zee TV USA 350 90 10 (50)
    Asia TV Africa 170 130 20 (20)
    Zee International 80 70 50 60
    Expand Feet Holdings Intl 150 90 (90) (30)
    Software Supplies Intl Ltd. 70 30 10 -
    Total 7,940 6,290 1,010 670
    Start up costs written off        
    Alpha TV channels in EFHL     260  
    Digitalisation and new channels in UK and USA 90  
    Total after write off 7,940 6,290 660 670

    This is due to the fact that during the year the company took over Winterheath Ltd. (the holding company of Asia Today Ltd.), Zee Multimedia Ltd and Siticable. What has been done now is that profits have been transferred from the books of ATL to the books of Zee TV.

    The Rs 1 face value stock quotes at Rs 705, which implies an earning multiple of 108 times This is at the higher end of the earnings multiple range over the past three years. The stock has come off from its highs of Rs 1,630, which it touched in February 2000 (52–week range Rs 1630/551).



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    Aug 24, 2017 12:46 PM


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