Is Zee Entertainment Enterprises Ltd exiting sports? It might well turn out that way? ZEE managing director Punit Goenka, speaking at an investors’ call after the network announced its Q3 financial results, has outlined the future course for the Indian media major in the wake of the collapse of its planned $10 billion merger with Culver Max Entertainment (aka Sony Pictures Networks India).
Goenka said the firm was targeting an 18 to 20 per cent EBITDA margin with 8-10 per cent CAGR revenue growth. The measures that will be taken to achieve this, he said, will include “cutting spends, reducing the number of new content properties, and a complete re-evaluation of the firm’s sports portfolio”.
The company reported a 140 percent increase in profit at Rs 58.5 crore ($7.04 million) in the December quarter of FY24, up from Rs 24.32 crore during the same period a year ago.
“Tightening our belt on manpower will be part of the plan going forward as we talk about frugality,” Goenka said. “I am not saying that there’s going to be large levels of layoffs, but we will have to see which are the overlaps,” Goenka added.
“Over the last three decades, Zee has been recognised for its fiscal prudence across the industry, and going forward, there will be a sharper emphasis on frugality, with a crystal-clear focus on quality and output,” he stressed.
Goenka, however, steered clear from queries related to the failed merger with Sony, citing the matter to be sub-judice.
While Goenka’s plan included recalibration of cost structure for businesses like OTT (ZEE5) or the implementation of content and tech strategies to drive revenues certain outputs of the firm will also need to be curtailed in the attempt to improve revenues and margins.
“In Q3FY24, overall operating costs declined by 12.8 percent quarter-on-quarter (QoQ) due to lower content costs, fewer movie releases and continuous cost optimization in Zee5. Given our business has high operating leverage, despite effective cost management, EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) margins has declined to 10.2 percent. Net profit for the quarter and year was impacted by merger expenses related exceptional items which came to about Rs 60.3 crore during the quarter,” said Chief Financial Officer (CFO) Rohit Gupta.
(Exchange rate: $1m = Rs 8.31 cr)
