X

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 Ent.: SWOT Analysis - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Oct 10, 2007

    Zee Ent.: SWOT Analysis

    In the previous article we had a look at the demerger process of the erstwhile entity Zee Telefilms and the value unlocked from it. In this article we shall do a SWOT analysis of Zee Entertainment.

    Strengths

    • High viewership ratings: The channels of Zee Entertainment provide good content to the viewers and consequently enjoy high TRP ratings. Its flagship channel Zee TV (a general entertainment channel) had on an average approximately 20 shows in the Top 50 and 30 shows in the Top 100 across the GEC in the first quarter of FY08. It has an average channel share of 34%. The gap between Zee TV and the broadcasting leader Star Plus has been narrowing considerably with the improvement in the gross rating points (GRPs) of the latter. This has enabled the company to hike ad rates leading to a 31% YoY increase in advertisement rates. This also increases its bargaining power with the MSOs and DTH players.

    • Complete bouquet of channels: Zee Entertainment offers a complete bouquet of channels to the viewers and MSOs and the DTH players. Besides its flagship channel 'Zee TV' which is a general entertainment channel, the company has offerings in news, comedy, music, sports and fashion. Further the other group company Zee News has a basket of regional channels and news channels. All these channels enjoy high viewership ratings, which make it necessary for the MSOs and the DTH players to offer them. Other broadcasters such as TV 18, NDTV are at present not offering a complete bouquet of channels, which reduces their bargaining power with the MSOs and the DTH players.

    • High subscription revenues: Zee enjoys high subscription revenues from international as well as domestic subscribers. It is one of the few broadcasters enjoying such high subscription revenues, which cushions it from any slowdown in advertisement revenues. The company's broadcasting services reach out to more than 500 m people across the globe. The company beams its channels to over 120 countries through various distribution platforms. Zee generally receives subscription or licensing fees from the local cable operators and the DTH operators and it retains the advertising revenue it sells on its channels. Zee's principal broadcasting operations are, apart from India, in the USA, Canada, Caribbean, UK, Europe, Africa, Middle East and other parts of South Asia.

    Weaknesses

    • Lagging behind Star Plus: Its flagship channel 'Zee TV' is the number two channel lagging behind Star Plus though the gap between the two has narrowed down considerably. In the 10 pm to 11 pm slot Zee' s TRPs are less than that of Star Plus while Zee is the clear leader in the 5.00 pm to 8.30 pm time slot and 9 pm to 10 pm time slot. Zee is finding it difficult to garner more viewership ratings in the 10 pm to 11 pm time slot as Star's programmes telecast at this time are very popular. In the media industry the leader gets a disproportionate share of revenues and thus the there is a wide gap between the ad rates of Star Plus and Zee TV.

    • Problem of attrition: The attrition rate in the company has increased. NDTV, UTV, INX Media, TV 18- Viacom combine are planning to enter the Hindi General Entertainment space. Ashvini Yardi, Senior Vice President (Programming), resigned to join competitor Viacom TV 18 combine.

    • Increase in operating costs: The content costs are increasing which is reflected by the fact that Balaji's realizations per hour are increasing even though its TRPs are falling. Besides this the employee costs are also increasing.

    Opportunities:

    • Benefit from the robust growth of the Entertainment and Media sector: The future of the entertainment industry will be decided on the interplay of a number of factors like consumerism, advertising spend, content, pricing, technology and regulation. According to the FICCI-PWC report on the entertainment and media industry it is estimated that the entertainment and the media industry is set to grow at a CAGR of 18% to reach an estimated size of Rs 1 trillion in 2011. The television industry revenues are expected to grow from the present size of Rs 191 bn to Rs 519 bn by 2011, implying a 22% CAGR over the next five years.

    • Digitisation (rollout of CAS and DTH) means that cable penetration will increase from 70 m homes in 2006 to around 113 m homes by 2011. Subscription revenues are projected to be the key growth driver for the Indian television industry over the next five years. Subscription revenues will increase both from the number of pay TV homes as well as increased subscription rates. India's robust economic growth has an attractive proxy in its advertising industry. The ad spend is a mere 0.4% of the GDP compared to 1.4% in the U S. Advertising revenue of the television industry is projected to grow from Rs 66 bn in 2006 to Rs 123 bn by 2011. Thus Zee Entertainment has the opportunity to benefit from the projected robust growth of the media and entertainment industry.

    Threats:

    • Slowdown in India's economic growth: Any slowdown in India's economic growth will reduce the demand for the advertiser's products, which may lead to a cut in their ad budgets. This will have a negative impact on its advertising revenues.

    • Increased competition: The Hindi General Entertainment space will become very competitive with the entry of the TV 18 group, UTV, NDTV, INX Media. All these players though initially would make losses but are adequately funded and have a good management team at the helm to cause a potential dent in Zee's market share. A fall in Zee's TRP's will lead to a decline in its advertisement and subscription revenues.

    • Slow rollout of CAS: The government may delay the rollout of CAS. The consumers may show some hesitation in opting for paid channels and many viewers may opt only for FTA channels. Both these factors may cause a dent in the subscription revenues of Zee TV.

    • Declining viewership and revenue share of GEC channels: Zee Entertainment derives majority of its revenues and profits from the flagship channel 'Zee TV' which is a general entertainment channel. However the viewership and revenue share of GEC channels are seen on a declining trend while that of niche channels is increasing.

    % Share of viewership Share of revenues
    Channel genre 2003 2004 2005 2003 2004 2005
    GEC 42 33 34 53 47 39
    Regional 42 41 36 16 20 24
    Niches 16 26 30 31 33 37
    English Entetainment 2 2 1 3 5 4
    Child infotainment 2 3 4 1 2 3
    Hindi movies 4 5 8 7 4 6
    Music/ Lifestyle 1 2 2 2 2 3
    News 2 5 7 13 10 12
    Sports 5 9 8 5 10 9
    Total 100 100 100 100 100 100

    Source: PWC report on Indian Media and Entertainment Industry 2006

     

     

    Equitymaster requests your view! Post a comment on "Zee Ent.: SWOT Analysis". Click here!

      
     

    More Views on News

    Zee Ent: GST Short term Negative but Long term Positive (Quarterly Results Update - Detailed)

    Aug 14, 2017

    The management believes that GST will aid the advertising spends in the long-run.

    S Chand and Company Ltd. (IPO)

    Apr 26, 2017

    Should you subscribe to the IPO of S Chand and Company Limited?

    GTPL Hathway Ltd. (IPO)

    Jun 21, 2017

    Should one subscribe to the IPO of GTPL Hathway Ltd?

    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: 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.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    Proxy Plays: A Smart Way to Bet on 'Off Limits' Companies(The 5 Minute Wrapup)

    Aug 4, 2017

    The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    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: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    S&P BSE TECK


    Aug 16, 2017 (Close)

    S&P BSE TECK 5-YR ANALYSIS

    COMPARE COMPANY

    MARKET STATS