MUMBAI: Zee Telefilms has reported a 17.4 per cent decline in net profit to Rs 317 million for the quarter ended 31 December 2005, as compared to Rs 384.2 million a year ago.
Total income, however, rose 34.09 per cent to Rs 2.40 billion, up from Rs 1.79 billion.
Zee Group’s consolidated net profit saw a 64.1 per cent dip to Rs 310.3 million for the third quarter of the current fiscal, as compared to Rs 865.5 million a year ago. Total Income, though, grew 18.6 per cent to Rs 4.03 billion, up from Rs 3.40 billion.
The group’s consolidated operating profit fell by 66.5 per cent to Rs 365 million over the same period last year. “The decline is caused by initial investments in new activities Zee Telugu, Zee Smile, Zee Sports and others, amounting to Rs 597 million,” the company said in a release.
Q3 FY2006 – Highlights
Advertisement revenue was Rs 1,698 million for the third quarter ended 31 Dec 2005, an increase of 12.3% as compared to the corresponding period last fiscal.
Subscription revenue was Rs 1,751 million for the third quarter ended 31 Dec, 2005, an increase of 7.8% as compared to the corresponding period last fiscal.
Domestic subscription revenue was Rs 716 million for the third quarter ended 31 December, 2005.
Consolidated operating profits of continuing businesses recorded a 11.8 per cent decline to Rs 962 million as compared to the corresponding quarter last year, mainly due to investments in programming and marketing focused on long term buildup of mainline channels.
Commenting on the results, ZTL chairman Subhash Chandra said, “Over the last few quarters, we gave focused attention to Zee TV, the flagship channel and invested across genres of programming including soaps, musical shows and comedy shows. During the past few months, we have been updating you on our investments in new businesses. The third quarter saw additional investments particularly on account of Zee Sports which showcased two important properties, AIFF football and India Sri Lanka Test Cricket. Along with other properties, the Board of Zee has consciously decided to invest in new properties to strengthen long term business prospects of your company.”
Added ZTL CEO Pradeep Guha, “We have gained significant traction on Zee TV, the flagship channel, which is now firmly the No. 2 general entertainment channel. Currently, gross ratings of Zee TV are almost 50 per cent higher than the next general entertainment channel competitor and this lead is progressively widening. Our properties Saat Phere, Sa Re Ga Ma Pa Challenge 2005 and Sinndoor Tere Naam Ka are doing extremely well. Zee Cinema has shown continued strength as the undisputed No. 1 movie channel. We are also strengthening our English and other language offerings which would show positive results in the near future.”
The numbers as published, are after consolidating the financials of ETC Networks Limited (ETC) for the third quarter of FY2006. Since Zee has divested its stake in Padmalaya, for a like to like comparison, the result has excluded the financials of Padmalaya from Q3 FY2005.
The Board of Directors in its meeting held today, has taken on record the unaudited consolidated financial results of Zee Telefilms Limited and its subsidiaries for the quarter ended December 31, 2005.
REVENUE STREAMS: Zee’s advertising revenues increased to Rs 1.7 billion, a 12.3 per cent growth as compared to the corresponding quarter last fiscal. “The growth in advertising revenues was a result of higher average rates on most of the network channels,” the company said.
Overall subscription revenues at Rs 1.75 billion, registered an increase of 7.8 per cent over the corresponding quarter last fiscal. Domestic pay revenues stood at Rs 716 million. Other sales and services grew to Rs 328 million. From Q2 FY2006, ZTL is recording the net income component of the trading of set top boxes as part of other income.
EXPENDITURE: Overall, Zee’s cost of goods and operations went up 59.5 per cent compared to the corresponding period last year, mainly due to investments made in new channels like Zee Sports, Zee Smile, Zee Telugu and Zee Jagran. “During the third quarter, there was particularly heavy investment in Zee Sports which showcased the India Sri Lanka Test Cricket series. 
The first test in this series was washed out due to rains in Chennai. Additionally, there were two football (AIFF) tournaments – Santosh Trophy in Cochin and Federation Cup in Goa,” the company clarified.
Other costs, particularly marketing costs have increased by 70.5 per cent. As a result, total expenses were higher by 59.9 per cent. During Q3 FY2006, finance cost has gone up to Rs 120 million, up from Rs 79 million in the corresponding quarter last year.
From FY2006, the company has accelerated its investments in the development and expansion of its network through substantial marketing and content improvement initiatives and new channel launches. “Zee is in a phase in which the initial investments have been made and expensed fully, while the corresponding revenue build-up is to be realised in the next several quarters. The immediate impact is lowering of operating profits, which Zee hopes to recover in successive quarters through increasing revenues and progressive reduction in costs,” the release states.