Zee Entertainment Enterprises Limited Q3 FY23 Earnings Conference Call Insights

Key highlights from Zee Entertainment Enterprises Limited (ZEEL) Q3 FY23 Earnings Concall

Q&A Highlights:

• [00:13:19] Abneesh Roy from Nuvama asked about cash and investments being down almost half for 9 months and its outlook. Rohit Gupta CFO answered that 3Q23’s exceptional item includes recognized revenue of Siti, impairment of entities from Zee Learn, merger-related costs, and a provision for Dasara. Cash flow is affected by dividend payout and free-cash flow over the last nine months due to debt and advertising revenues. In future, investments will be made in Zee5 in content, technology, and marketing.

• [00:17:20] Abneesh Roy from Nuvama also asked about the current strategy for Zee Anmol in light of the advertising cuts and new approvals from NTO-2.  Punit Goenka CEO said ZEEL is not thinking about the FPA strategy because it could hamper the potential growth for [pay-TV] that will come back with NTO-3 implementation in three years.

• [00:20:17] Vivekanand S at Ambit asked about the investment made in Zee Learn NCDs. Rohit Gupta CFO answered that Zee Learn NCDs were guaranteed by Zee. Zee took over the NCDs in 2020 and payments from Zee Learn have come down from INR45 crores to INR25 crores. In the past few months, payments stopped coming in, so a call was taken to provide for them because of insolvency remittance.

• [00:24:48] Jinesh Joshi of Prabhudas Lilladher asked about any data and response to the response with inaugural IL-T20 league. Rohit Gupta CFO answered that the IL-T20 inaugural session has been well received. Advertising uptake for the league has been good and it is within budget, but it may take a few years to become profitable.

• [00:26:16] Arun Prasad from Avendus Spark asked what can be inferred from the divergence of trends in MAUs, DAUs, watch time, and revenue in Zee5 over the last 9 months, and it’s outlook. Punit Goenka CEO replied that MAUs and DAUs have increased over the last 9 months, with DAUs going from 7-8 million to 11.5 million. However, this is an aberration and expected to stabilize back to levels of 180-200 seen for the last three quarters.

• [00:33:26] Kunal Vora from BNP Paribas enquired about ad revenue growth, subscription revenue growth and margins in FY24. Punit Goenka CEO said ZEEL is not giving guidance for FY24 yet, but subscription revenues will see single-digit growth when NTO 3.0 is implemented.

• [00:34:03] Kunal Vora from BNP Paribas asked that on ads, if ZEEL is seeing any signs of recovery. Punit Goenka CEO replied that headwinds on the inflation side and the rural thing hopefully will bounce-back soon enough for consumption to again pick up and therefore advertising should come back.

• [00:34:29] Kunal Vora from BNP Paribas also asked about the reason for sharp decline in avg. viewership minutes in digital. Punit Goenka CEO said it due to new users whose consumption is generally lower in the beginning months. It’s only once they get used to the platform that they can view more.

• [00:37:34] Ankur Periwal from Axis Capital enquired about the one-off, if the merger cost is all done. Punit Goenka CEO answered that the merger is not yet done, so it will continue.

• [00:42:34] Aditya Chandrasekar from UBS asked if the subscription revenue growth from Siti Cable in 3Q a cumulative catch-up from prior quarters. Rohit Gupta CFO clarified that it’s entirely catch-up.

• [00:46:54] Pulkit Chawla from Emkay Global asked about drivers of market share decline in 3Q23 again. Punit Goenka CEO said it’s immaterial as it’s not happened in any one given channel. It happens every quarter; there is gain in some and decline in some.

• [00:51:37] Satish Jain at Money First Capital asked about the investment in the movie business and the revenue and profitability from it. Punit Goenka CEO said ZEEL has a decent slate for 2023 that’s already signed. The movie business have been profitable for ZEEL but details cannot be given.