New Delhi: Media and entertainment company Zee Entertainment Enterprises Ltd is charting a three-pronged approach – cutting costs, reducing overlaps between businesses, and enhancing quality to regain margins – after its merger with Sony Pictures Entertainment collapsed, managing director and CEO Punit Goenka said in an earnings call on Tuesday.
“Going forward, there will be a sharper emphasis on frugality, with a crystal-clear focus on quality and output. Across verticals – including technology, content and marketing – we are implementing steps to optimise spends and enhance the return on investments. A sound recalibration of the OTT cost structure will be an integral part of this process,” Goenka said. The company also aims to improve synergies and reduce overlaps between businesses, he added.
“On the revenue side, we will take steps to increase value delivery to our advertisers, apart from exploring alternative content monetisation avenues. This also includes leveraging the strength and reach of our platforms,” Goenka said. He emphasised that a gradual recovery in margins was expected to reflect in earnings from the second half of FY25 and Zee was targeting 18% to 20% EBITDA margin by FY26.
On Tuesday the company said its net profit dipped by 6.4% to ₹53.4 crore in the third quarter of FY24 from ₹57 crore in the same period a year ago. Operating revenue stood at ₹2,045.7 crore, compared to ₹2,108.8 crore a year ago.
Domestic ad revenues came in at ₹986.7 crore, up by 4.9% quarter-on-quarter, but down 2.7% year-on-year. Domestic ad revenue was boosted by cricket during the third quarter and while the period saw a seasonal uptick, the recovery in advertising continues to be slow, the company said. Revenue from other sales and services was down 36% year-on-year owing to fewer movie releases during the quarter, it added.
On 22 January, Sony Pictures Entertainment formally terminated its merger agreement with Zee Entertainment after months of debate on the appointment of a chief executive for the merged entity.
Under the terms of the original deal, signed two years ago, Punit Goenka, the managing director and CEO of Zee, was to head the merged entity. However, on 25 April 2023, the Securities and Exchange Board of India accused Chandra and his son Goenka of diverting at least ₹200 crore from Zee via certain promoter-group firms. Goenka challenged the order before the Securities Appellate Tribunal, which set aside the order pending the completion of Sebi’s probe.
The Japanese media giant, on the other hand, wanted its India head NP Singh to be CEO of the merged entity. Goenka was against this, but said he wanted the merger to go through. “In line with this aspiration, we even took several steps towards divestment or closure of profitable businesses in the domestic and international markets. I personally offered several proposals and solutions to Sony, to address their demands, but unfortunately they remained unaccepted,” he said during the call on Tuesday.
Zee’s stock closed at ₹189.50 on Tuesday.
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Published: 13 Feb 2024, 07:55 PM IST