Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Zee Tele: Attempting to regain glory - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Jun 22, 2002

    Zee Tele: Attempting to regain glory

    There was a time when Zee TV was holding the top position in TRP ratings. But Star and Sony entered the entertainment market with vengeance and Zee lost the battle. The Zee Network is currently fervently working with its restructuring strategies to gain back its score. The channel, which reaches to 225 m viewers globally in 80 countries, is in a revamp mode and is eyeing the Pay TV market to offset the sluggish ad revenue growth.

    The channel has been in a transition phase since the last one year. The network’s large number of subsidiaries is the primary concern, which it has realized and aims to bring down the subsidiaries to 12 by 3QFY03 from the current 23. This exercise will not only make it simpler to understand its structure but it will also bring in advantages of operational efficiencies. The subsidiaries, which are likely to be merged with the company, include E-Connect India, PATCO, Elzee, Kaveri Entertainment, Dakshin Media, Zee Multimedia Worldwide and its foreign subsidiaries. Reducing the number of subsidiaries would also aid Zee in attracting potential strategic investors.

    On the content front, Zee has been constantly trying to make changes but its efforts are yet to pay off. It launched several new soaps and serials on prime time on its flagship channel Zee TV. Some of the new launches include Ramayana, Saanjhi and Jeena Isi Ka Naam Hai (JIKNH). It also took initiatives in simplifying the programming menu and bringing in more interactivity. In April 2002, it launched three major shows. These include, Khelo Number Khelo, Sa Re Ga Ma Pa and Kitne Kool Hain Hum (comedy show from Balaji). However, according to Tam Media research, for the week ended May 18, while JIKNH scored 4.3 amongst all the programmes aired on Zee, it ranked the 48th amongst the top 100 programmes across channels. Star Plus dominated the top 20 programmes with its family soaps (Kyunki Saas Bhi Kabi Bahu Thi and Kahaani Ghar Ghar Ki) with TRPs of 16.6 and 15.9 respectively.

    Nevertheless, Zee has not given up. It has started India’s first online lottery show, which has been created by chatterbox, UK. The game show has been interlinked with Playwin, Superlotto. In a move to improve its TRP ratings, the company aims to leverage on this online lottery show. It has launched a slew of programs woven around the lottery show timings and hopes to garner higher viewer ship out of the live telecast of the lottery draws. Playwin is reported to be selling over 9-10 m tickets a week, which effectively means a captive audience of about 7-8 m households. Zee’s strategies to attract viewer looks attractive. However, it depends on the long-term success of the online lottery business, which is relatively new in India.

    Also, considering Zee’s recent failure, it would be tough to comment if the channel will be successful in snatching away some market share from Star and Sony. Zee had earlier pulled out two of its interactive shows, Aap Jo Bolein Hain tho Hain, Aap Jo Bolein Na tho Na and romance adventure Aap aur Hum, from its channel. It had expected these high-profile shows to attract good viewer ship. The shows however, failed to attract high television rating points, as interactive shows are yet to take off in India. Also, strategy of revamping its entire programming bouquet and launching 24 new shows at a stretch in August 2001 had done little to improve ad revenues.

    Among other new developments, the company has started uplinking some of its channels from India including Zee News and channels under the 'Alpha' brand. This will help the company in adding revenues and lowering of cost due to better operating efficiencies. Its operating margins have already shown a sharp rise to 30% during the fourth quarter of FY02 from 19% in the comparable previous quarter. The margins would rise further once the company implements corporate restructuring plans. Ad revenues on the other hand, are likely to suffer in the short term amidst lacklustre response of its new launches. Zee has already indicated a difficult year ahead for this stream of revenue, which account for 60% of its total revenues.

    Zee Telefilms (Consolidated)
    Revenue mix 4QFY01 4QFY02 Growth* FY01 FY02 Growth
    Advertisement 70.2% 64.4% -7.3% 70.9% 60.3% -7.5%
    Subscription 16.4% 32.7% 101.7% 20.8% 31.7% 65.5%
    Other sales & services 13.4% 2.9% -78.1% 8.3% 7.9% 4.1%
    Total 100.0% 100.0% 1.1% 100.0% 100.0% 8.7%
    * Growth in revenues

    As if the competitive pressure was not enough, the new concern for the channel has come up with the proposal to implement conditional access system (CAS). The channel could be forced to go free-to-air in the short term, which could impact ad revenues.

    With advertisement revenues not showing signs of improvement, Zee is depending on converting its driver channels (Zee TV and Zee News) into pay mode. Its pay revenues recorded a growth of 225% in FY02 to Rs 987 m, accounting for 9% of total revenues. In the coming year, the company plans to focus on regional channels under the brand 'Alpha' to tap the full potential of the pay market.

    While, in the domestic market, Zee is sailing in rough waters, its overseas business has shown satisfactory growth. Its international subsidiaries recorded a 9% rise in revenues in FY02 with operating profits of Rs 223 m (FY01 Rs 18 m). Revenues from US are increasing while in Africa and UK the channel’s response remained sluggish. In April 2002, Zee has also started a separate encrypted broadcast beam for ‘Zee TV’ in Middle East, Pakistan, Bangladesh and Nepal to strengthen its advertisement revenues and enhance pay revenues. The advantage of separate beam is that it allows the company to tailor content to coincide with prime time in different markets.

    Performance of International subsidiaries
    Revenues (Rs m) 1QFY02 2QFY02 3QFY02 4QFY02 FY01 FY02
    Zee Tele International 8 9 33 21 174 72
    Asia TV, UK 230 233 274 304 965 1,041
    Asia TV, Africa 18 21 19 22 138 80
    Zee TV, US 193 238 252 245 663 929
    Software Supplies Int. 6 9 28 45 83 88
    Total 455 511 606 637 2,023 2,209
    Operating margins 1QFY02 2QFY02 3QFY02 4QFY02 FY01 FY02
    Zee Tele International 56.3% 65.6% 84.8% 69.0% 92.9% 74.4%
    Asia TV, UK 5.0% 3.4% 4.4% 10.2% -21.7% 6.0%
    Asia TV, Africa 4.4% 0.0% -43.1% 75.4% 10.1% 12.0%
    Zee TV, US 13.2% 20.4% 17.7% -11.3% 7.3% 9.8%
    Software Supplies Int. 8.5% 4.3% 9.7% 7.3% 4.6% 7.9%
    Total 9.4% 12.3% 13.1% 6.0% 0.9% 10.1%

    Its recent acquisitions of ETC Network and Padmalaya Tele (PTL) are also not reflected in its financial performance. Zee acquired a 57% stake in ETC for Rs 250 m to increase its presence in hindi music genres. Although, Zee has no plans to merger the two channels, ETC Music and ETC Punjabi, it aims to convert them into pay mode during the current fiscal.

    PTL on the other hand, has diversified revenue model with TV software and distribution being the major contributors. It is one of India’s leading entertainment software houses having library of 300 movie rights and over 1,500 hours of television software. The company has recently received commitment from Europe for US$ 80,000 per episode for its animation project, Jataka Tales to the tune of 52 episodes. PTL is expected to get a 50% share in US$ 60,000 profits per episode. Considering Zee’s 63.3% stake in the company, it will add gains of about Rs 49 m to Zee’s bottomline. This is just considering the European region. PTL is in the process of marketing the same in US and expects commitment to the tune of US$ 100,000 per episode. Since the animation products are age-less projects, if the Jataka Tales becomes a hit in the international markets, the opportunities can be huge. With PTL in Zee’s stable, the company aims to develop world-class animation capabilities in the next 3-5 years

    Zee’s constant endeavour to improve content quality and consequently its ratings, has failed to bring back audience from Star and Sony. This is likely to keep its ad revenues growth restricted. However, Zee’s restructuring efforts (reduction in number of subsidiaries), coupled with good potential for subscription fee growth and its recent acquisitions could bring back a smile on the face.



    Equitymaster requests your view! Post a comment on "Zee Tele: Attempting to regain glory ". Click here!


    More Views on News

    Zee Ent: Advertising drives revenues (Quarterly Results Update - Detailed)

    Aug 1, 2016

    Zee Entertainment has announced its results for the first quarter of the financial year 2016-17 (1QFY17). The company has reported 18.5% YoY growth in sales and a 13.7% YoY growth in profit after tax.

    Zee Ent: Operating Margins Continue Expansion (Quarterly Results Update - Detailed)

    Jun 9, 2016

    Zee Entertainment has announced its results for the fourth quarter of the financial year 2015-16 (4QFY16). The company has reported 14% YoY growth in sales and a 13% YoY growth in profit after tax.

    Zee Ent: Taxes, lower other income mar bottomline (Quarterly Results Update - Detailed)

    Feb 3, 2016

    Zee Entertainment has announced the third quarter results of financial year 2015-2016 (3QFY16). While the topline grew by 17% YoY, bottomline fell 11% YoY during the quarter.

    Zee Ent.: Margins take a beating (Quarterly Results Update - Detailed)

    Nov 13, 2015

    Equitymaster presents the results analysis of ZEEEnt Ltd. for the quarter of 2QFY16, which shows that the company has reported 24% YoY growth in sales and a 9% YoY growth in profit after tax.

    Zee Ent.: Revenues swell while margins fall (Quarterly Results Update - Detailed)

    Jul 20, 2015

    Equitymaster presents the results analysis of ZEE Ent Ltd. for the quarter of 1QFY16, which saw the company grow its revenues and profits by 27% YoY and 16% YoY respectively.

    More Views on News

    Most Popular

    Our Private Class with India's Value Investing Guru(The 5 Minute Wrapup)

    Apr 19, 2017

    Rohan and Kunal present you the discussions with professor Sanjay Bakshi in his virtual classroom.

    HDFC Bank: The Solid Outperformer(Chart Of The Day)

    Apr 22, 2017

    Why HDFC Bank beat the Sensex by nearly 3 times.

    Aur Bhi Dukh Hain Zamane Main Stock Market Ke Siva...(Vivek Kaul's Diary)

    Apr 13, 2017

    The link between the Indian economy and the stock market is weak, and the stock market is not a reflection of the Indian economy.

    The Real Reason Indiabulls Real Estate Jumped 42%(Daily Profit Hunter)

    Apr 19, 2017

    An elephant and six blind men will tell you more about the markets than any financial newspaper or channel.

    7 Benefits Of Creating A CAN(Outside View)

    Apr 13, 2017

    The MFU platform offers ease, convenience, and speed of transacting in various mutual fund schemes.

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-6143 4055. Fax: +91-22-2202 8550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407


    Apr 25, 2017 10:04 AM


    • Track your investment in ZEE ENTERTAINMENT with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks



    Detailed Quarterly Results With Charts