Zeel's sports biz loss at Rs 1.4 bn in FY'12 to exceed guidance

MUMBAI: Zee Entertainment Enterprises Ltd?s sports losses will be around Rs 1.4 billion this fiscal due to new channel launches and a weakening rupee, upsetting its guidance of capping losses at Rs 1 billion.

Zeel?s target of break even in the next fiscal could also be derailed. Though it is too early to fix an amount to it, a source said losses could fall in the region of Rs 600-650 million.

Zeel?s sports losses for the earlier fiscal stood at Rs 2.08 billion on a revenue of Rs 4.4 billion.

"Zeel will post sports losses of Rs 400-500 million in the fourth quarter and Rs 1.3-1.4 billion this fiscal. This is due to the launch expenses of Ten HD and Ten Golf and payouts for broadcasting rights in dollars," the source said.

The key acquisitions included Cricket South Africa rights (2013-20) for $180 million, Zimbabwe Cricket rights for $20 million (2013-18) and Uefa Champions League rights (2012-15) for $10.5 million.

In an interview with Indiantelevision.com late last year, Zeel managing director and chief executive officer Punit Goenka had said that "given our growth trajectory and contracts, the sports business should break even in two years. In the worst case scenario, we should be able to turn it around by the middle of FY?14."

For the first nine months of FY?12, the sports losses stood at Rs 892 million.

"The sports losses will be higher than Rs 1 billion but I can?t say how much. The losses will substantially reduce in FY?13," said Zeel president corporate strategy and business development Atul Das.

Taj Television, the company owned by Zeel, runs Ten Cricket, Ten Action+ (with football as its focus), Ten Sports, Ten Golf and Ten HD.

"We make profit or break even from all other sports properties except cricket. The challenge is monetisation of cricket at a profit level. Affiliate revenues should grow. Digitisation is better for us in that sense," said Zee?s sports business CEO Atul Pande.

Zeel will increase the programming hours of its flagship channel, Zee TV, in the next fiscal, leading to a rise in content costs. This will put pressure on non-Sports margins. "The marketing expense on Ditto (Zeel?s OTT platform) will also be upped. The pressure on margins will last till the first half of next fiscal. It will pick up from the second half of FY?13," the source said.

Zeel launched this year the country?s first Over-The-Top TV distribution platform, Ditto TV, with an aim to offer TV channels and On-Demand video content to consumers on their mobile phones, tablets, laptops, desktops, entertainment boxes and connected TVs.

"We are planning a few channel launches in the next fiscal," said Atul Das, while declining to comment on the specifics or the financial terms.