Zee Entertainment Enterprises Limited (NSE: ZEEL) Q3 FY23 Earnings Concall dated Feb. 13, 2023
Corporate Participants:
Mahesh Pratap Singh — Investor Relations
Punit Goenka — Chief Executive Officer
Rohit Gupta — Chief Financial Officer
Analysts:
Abneesh Roy — Nuvama Institutional Equities — Analyst
Vivekanand S — Ambit Private Limited — Analyst
Jinesh Joshi — Prabhudas Lilladher — Analyst
Arun Prasad — Avendus Spark — Analyst
Kunal Vora — BNP Paribas — Analyst
Ankur Periwal — Axis Capital — Analyst
Abhishek Kumar — JM Financial — Analyst
Aditya Chandrasekar — UBS — Analyst
Pulkit Chawla — Emkay Global — Analyst
Kshitij Saraf — Tusk Investments — Analyst
Sameer Deshpande — Fairdeal Investments — Analyst
Satish Jain — — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Q3 FY ’23 Earnings Conference Call of Zee Entertainment Enterprises Limited. As a reminder, all participant lines will be in listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. Mahesh Pratap Singh, Head of Investor Relations, Zee Entertainment Enterprises Limited. Thank you and over to you sir.
Mahesh Pratap Singh — Investor Relations
Thank you, Yashasvi. Hi, everyone. Welcome to our Q3 FY ’23 Earnings discussion. We have with us today, our Managing Director and CEO, Mr. Punit Goenka along with senior management team. We will start with opening remarks from Mr. Goenka, followed by commentary on operating and financial performance by Mr. Rohit Gupta, our Chief Financial Officer.
We will subsequently open the floor for a question and answer secession. Before we get started, I’d like to remind everyone that some of the statements made or discussed on today’s conference call will be forward-looking in nature and must be viewed in conjunction with the risks and uncertainties we face. The company does not undertake to update any of these forward-looking statements publicly.
With that, I now hand the call over to Mr. Goenka, for the opening remarks.
Punit Goenka — Chief Executive Officer
Okay, thank you, Mahesh. Good evening, everyone. I hope all of you are doing well and I’m glad to connect with you all this evening. As always, I will share a brief outline on the company’s performance indicators, post which our CFO, Rohit Gupta, will take you through the financial and operating metrics in detail. Before we begin, I would like to advise you on the progress of the proposed merger between Zee and Sony. As you are aware, we have received approvals from the stock exchanges Competition Commission of India and the company’s equity shareholders.
The teams at both ends are focused on completing all the required legal and regulatory processes mandated as per law. Our focus remains on concluding these processes in the most appropriate and timely manner and we stay committed to building a value-generating execution for all our stakeholders.
Speaking about the industry at large during the third-quarter the M&A sector continued to display immense potential and several growth opportunities across key segments. Keeping pace with momentum. The company has also continued to make-good progress with healthy growth in the digital business and share gains and some of the key channels during the quarter.
This mirrors the success of the team’s concerted efforts to strengthen our offering across markets and we continue to maintain sharp focus on delivering a robust content slate to consumer. Our recent reentering in the sports business with the inaugural edition of the IL T20 has augured well for the company and has drawn a positive initial response from the viewers and advertisers alike. We aim to further build on this momentum and elevate excitement, viewership, and economic muscle for the sports business.
Even as the structural growth continued scenario appears positive in the mid to long term, we remain cautiously optimistic on the near-term advertising revenue outlook. The overall sentiments continue to be soft this quarter as well, which has resulted in muted advertising revenue growth across the sector. While the macroeconomic environment and inflationary headwinds are gradually easing. Key brands and advertisers across categories restrain their spending. Given the fact that we have relative high exposure to FMCG, advertisers and Tier II, Tier III audiences our advertising revenue sensitivity to rural demand and consumption is more pronounced. We remain hopeful that the steps announced by Honorable Finance Minister in the budget 2023 as per broad-based demand and lead to a quicker recovery in the overall ad environment.
On the subscription front, the long standstill on the new tariff order has leading [Phonetic] growth and impacting our profitability. That said, NPO 3.0 [Phonetic] being implemented from 1st February 2023, we look-forward to driving subscription revenue growth post-implementation in the most effective manner. At Zee we continue to focus our energies on building a future-ready portfolio which is well-poised and diversified to capitalize on the opportunities as the overall market sentiments improved.
On that note, I would like to hand over the session to Rohit to share final details on the company’s performance during the quarter. I look forward to interacting with you all during the question-and-answer session. Thank you, over to you Rohit.
Rohit Gupta — Chief Financial Officer
Thank you, Punit. Hello, everyone, and welcome to our Q3 FY ’23 Earnings Call. I will briefly touch upon financial performance and outlook. Starting from an operating environment perspective we’ve continued to see curtailed spending by FMCG brands during the quarter. While October, this peak a very brief pick-up due to festive season, subsequently, spends have continued to taper off. We believe this is a cyclical slowdown and as demand recovers, we will see a pick-up in TV advertising.
TV still remains the most relevant smart media brand-building revenue with unparalleled reach. We are utilizing this period to strengthen our business to capitalize on the opportunity at the [Indecipherable]. On linear business, we’ve continued to be India’s strong number two TV entertainment network and our viewership share for quarter three, FY ’23 what at 16.2%, marginally lower by 20 bps quarter-on-quarter. We have gained share in several key markets including Zee Tamil, which has been a consistent growth story over last couple of quarters.
Zee Marathi’s performance still remains subdued. Our team is focused on stabilizing and rebuilding our network share there in the coming quarters. On the digital side, Zee5 has posted yet another quarter of growth across financial and operating metrics. Our quarter three FY ’23 DAUs are highest-ever at 11.5 million. Original confidence is being well-received and Zee5 app user experience has seen significant improvement. All of these are strong affirmations of our investment in content, technology, and marketing.
Zee5 clocked a revenue growth of 33% year-on-year, during quarter three FY ’23 reflecting healthy traction and adoption. Now specifically coming to the financial performance total revenues for quarter three FY ’23, are up 4.1% quarter-on-quarter and were flat year-on-year. Our ads revenue for the quarter grew by 5% quarter-on-quarter. It is by steps season spending but are lower by 16% year-on-year. On year-on-year ad revenue, in addition to the macroeconomic factors previous year Q3 also had a stronger festive season and Zee Anmol FTA ad revenue, which we would view from 1st April 2022.
Subscription revenue for the quarter was up by 13% year-on-year and 9% quarter-on-quarter. Quarter three FY ’23, subscription revenue was aided by underlying organic growth in Zee5 and recognition of the INR59 crores among from Citi network, including INR10 crores of GST the net revenue of INR49 crores. On depletion [Phonetic] of subscription revenues from Siti Networks while we have recognized revenue as a consecutive factors, we have also provided, INR59 crores amount receivable, including GST, an exceptional item to be consistent with our cash-and-carry approach.
Zee Music Company saw 246% year-on-year growth in video view highlighting strength of ZMC music catalogs and [Indecipherable]. YouTube subscriber base of ZMC increased INR92 million from INR80 million a year-ago. ZMC continues to be number two music channel and has a very young and new age catalogue, with very-high consumption. ZMC also continues to acquire 50% of new Hindi movie titles. Coming to the movie business during the quarter Zee studios released nine movies, five Hindi and four original. While the content performance remains a top syndication revenues were healthy, driving a 148% year-on-year growth in quarter three FY ’23 in other sales and services revenues albeit, on a lower base of quarterly FY ’22. During the quarter, our content inventory and advances was largely stable at INR79.5 billion. We have a strong 2023 pipeline of movies under difference stages of production.
Now moving to costs, and profitability during quarter three FY ’23 excluding exceptional items our EBITDA margin came in at 16% quarter-on-quarter improvement — improvement of 135 bps, but still lower by 668 bps year-on-year. We continued to be focused on prudent cost management across the business and I’m hopeful that when the macroeconomic environment and as that improves, our margins will recover from these levels. Zee5 EBITDA losses for the quarter stand at INR2,820 million largely stable compared to Q2 FY ’23. From an outlook perspective, we will continue to invest in strengthening our Zee5 value proposition in line with our investment strategy and expert Zee5 to be in investment mode for the next few years.
Also quickly touching upon that is receivables on DISH outstanding has substantially reduced INR5.8 billion as of March 20, to INR1.06 billion in December ’22. PAT for the quarter came in at INR243 million. Net profit for the quarter was impacted by exceptional items aggregating to the INR169 crores. In addition to provision for the Siti subscription revenues, we have accounted for INR68.9 crores for merger-related expenses, INR25.5 crores provisioning for principal outstanding from Zee Learn entities, and INR16.2 crore provision towards [Technical Issues].
The cash and treasury investments of the company as of December ’22 standard INR6.7 billion. The cash [Indecipherable] investment includes cash balance of INR4.6 billion and fixed deposits of INR2.1 billion.
To sum up, while Q3 first seasonality hasn’t been strong, we have shown some sequential improvement in a challenging backdrop, which is encouraging. Ad revenue growth — ad revenue growth revival is our key focus and we are hopeful of this gradual improvement in this pending [Phonetic] environment. Back to you, Mahesh.
Mahesh Pratap Singh — Investor Relations
Thanks, Rohit. Yashasvi we will open the Q&A session.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] We have our first question from the line of Abneesh Roy from Nuvama Institutional Equities. Please go ahead.
Abneesh Roy — Nuvama Institutional Equities — Analyst
Yeah, thanks. I have well, first question on the P&L and balance sheet. So firstly on the P&L there is exceptional item of around INR166 crores odd. I wanted to understand the three a bit more in detail why now? Second is your cash and investments is down in the nine months from around INR1,297 crores to around INR672 crores, almost half. So where does this go from here? I understand the slowdown in advertising and your upfront investments across many of your channels and OTT. But from here on next one year, where do you see your cash and investments?
Punit Goenka — Chief Executive Officer
Rohit?
Rohit Gupta — Chief Financial Officer
Yeah. Thanks, Abneesh. Abneesh like I said, an exceptional item has four key elements to it. The first one is, as I said we have recognized revenue of Siti to the extent of INR59 crores including GST and we have also taken a similar provision, which has been reflected in our exceptional items. That is the first part.
The second is I mean there were entities from Zee Learn, we had impaired, which is about INR255 million. And then there is merger-related costs, which include legal, professional and other item, integration, etc., which is about INR689 million and then there is a provision for Dasara, which we have been doing in earlier quarters. And as in terms of the contractual agreements, we continue to provide for it. So that is about another INR163 million. So that is the breakup of the exceptional item.
As far as cash, so if you see in this quarter the cash primarily — [Indecipherable] cash is because there is a dividend payout that has happened — so that’s about INR300 crores. Quite frankly, this quarter there is a free-cash flow of INR100 crores plus that has happened, but over the last nine months, primarily because we have seen debt and advertising revenues and that is one reason why, of course, you know, it has impacted our profitability and our cash as well.
And like we said, you know the key is the turnaround of the advertising revenue. As the advertising revenues improved, our profitability will also improve and that will also have a positive impact on our cash. Having said that, we have been making investments in Zee5 in both — on the content side, and technology, and marketing. And that investment will continue because we see that as a growth area.
Abneesh Roy — Nuvama Institutional Equities — Analyst
Sure, one follow-up on that. The merger cost of INR68 crores feels quite high. What exactly is it? And merger cost and [Technical Issues] any more recurring item, because we had understood that anymore group level issues are mostly done. So why this fresh issue and can again more issues happen from group companies?
Punit Goenka — Chief Executive Officer
Yeah, Abneesh, on the second part because we are on cash-and-carry the billing has happened of the INR59 crores that Rohit talked about but because the cash is not received by us as long as it is parked in the court or it is in FDs [Phonetic] with the banks which are year mark for us, both prudent governances made us take the decision to provide for it. We learn as a one-off. There is no other outstanding against that, Rohit correct me if I’m wrong, and so there is not going to be anything else.
On the merger-related issues Abneesh, you can take it offline with Mahesh in detail.
Rohit Gupta — Chief Financial Officer
Yeah, so like I said, just to add to it this includes merger transaction integration planning several other functional workstream, specific to the merger and this is a big merger so these expenses look high, but in terms of the overall merger, this is what it is.
Abneesh Roy — Nuvama Institutional Equities — Analyst
Sure, that’s useful. My last question was on advertising. So when I see the FMCG ad spent in Q3, we have obviously not been a 15% cut in their advertising spend. There are other sectors, I do understand that. But what’s the strategy now on the Zee Anmol, because this is 6% to 7%% of advertising impact is clearly there, from there also. So you are now seeing improvement in our subscription revenue with the new approval etc. which have come in terms in NPO-2 also. So on Zee Anmol, any refurbished catagories [Phonetic] given the impact is quite high and rural slowdown we don’t know as of now still — it is still very early [Technical Issues] in that scenario, any rethink on the FPA strategy.
Punit Goenka — Chief Executive Officer
No, Abneesh, no think on the FPA strategy because since April 2022 when we went off free-to-air we have actually seen stabilization of the paid subscriber base on both cable and digital — sorry, satellite. So therefore, going back so soon would argue will be will hamper the potential growth for the pay, which is going to come back after three years with the NPO-3 implementation. So nothing as of now.
Abneesh Roy — Nuvama Institutional Equities — Analyst
Sure, okay, thanks. That’s all from me. Thanks.
Operator
Thank you. We have our next question from the line of Vivekanand S from Ambit Private Limited. Please go ahead.
Vivekanand S — Ambit Private Limited — Analyst
Hi, thank you so much for the opportunity. So in your consolidated notes to accounts, you mentioned that you have build subscription of INR68.49 crores from Siti and you had provision of INR58.4 crores. So does this mean that you received around INR10 odd crores from Siti during the quarter. I’m just trying to understand this note better.
Punit Goenka — Chief Executive Officer
Yeah, Rohit?
Rohit Gupta — Chief Financial Officer
Yeah, I’ll take this. So we have, it’s the total amount that was built was right about INR68.49 crores and the revenue that we recognized is actually based on the amount that Siti has either deposited in the court. All the fixed deposits that they have made which is earmarked for Zee. So based on that they have deposited the amount to which they have done is about INR59 crores, that is why we have taken revenue of INR59 crores and similar amount has been provided for [Technical Issues] which is an exceptional items.
Vivekanand S — Ambit Private Limited — Analyst
So Rohit you are saying that this INR68.5 crores is the billing you were supposed to recognize INR58.4, but since you have not received that money you are providing for it. Is it?
Rohit Gupta — Chief Financial Officer
That’s right.
Vivekanand S — Ambit Private Limited — Analyst
Okay, my second question is on the Zee Learn NCDs. When was this investment made?
Punit Goenka — Chief Executive Officer
So as you can see from the note these Zee Learn NCDs were guaranteed by Zee. And these, these were actually taken over by Zee in 2020. We have been receiving payments from Zee Learn to be NCDs and the amount has come down from INR45 crores to INR24, INR25 crores. But having said that, in the last few months, we have seeing that the amount was — were not coming in and secondly, because there is insolvency remittance [Phonetic] that NCLT has done for Zee Learn based on which we have taken a call to provide for it.
Vivekanand S — Ambit Private Limited — Analyst
Okay. So, third question is you know the [Technical Issues] guarantee. I mean, clearly there is still some amount that is unprovided for. And we see that every quarter there is — there is some additional provision that we are taking for this and I believe the number for the current quarter was INR16.2 crores. So why not take the provision entirely in one quarter so that it will in this one-hour of conference call discussion, we can focus on the business items rather than every quarter, yes jump through to understand the numerous exceptional items?
Punit Goenka — Chief Executive Officer
So, please for Dasara, all the matters are subjudice right now and we are providing for as per the terms of Dasara, so that’s why I have — with various banks, there are certain Dasara terms and based on that we are providing as and when they come due, we provide for it every quarter.
Vivekanand S — Ambit Private Limited — Analyst
Okay and is [Technical Issues] the same with Zee Learn or [Indecipherable] you are charged back to — you have decided to provide for it this quarter?
Punit Goenka — Chief Executive Officer
No with Zee Learn like I said, there was a trigger in this quarter and based on that we have decided to take that provision.
Vivekanand S — Ambit Private Limited — Analyst
Okay, I’m. Understood. Thank you, and I’ll come back in the queue.
Operator
Thank you. We have our next question from the line of Jinesh Joshi from Prabhudas Lilladher. Please go ahead.
Jinesh Joshi — Prabhudas Lilladher — Analyst
Yeah, thanks for the opportunity. I have a question on the subscription basis. Is the revised RIU tax [Technical Issues] basically shows price hike in the LD double-digit, especially some of the bookies [Phonetic] downtown. So owned by this [Technical Issues], very strong growth in the subscription business in the first year of implementation itself like we had Q1 ’22?
That is one, and secondly, can you also share the rationale behind [Technical Issues] I know Zee also felt [Phonetic] badly one of the factor, but is there any [Technical Issues] because some of the [Technical Issues] is the price hike for Zee. Yeah, this is my first question.
Punit Goenka — Chief Executive Officer
Yeah, Jinesh sure. If you recall, because we’ve not been able to take any price hike for last three years and we have launched the maximum number of channels within those three years, we’re — we’re not able to price them into our into our bookeh itself. That is the other reason other than viewership itself. That’s the only reason it looks like that steep. We have factored that into our calculation. But, of course, the resultant growth for the company overall all-India level will not be that high. They will still be moderated single-digit as I’ve been saying to you.
Jinesh Joshi — Prabhudas Lilladher — Analyst
Sure, sir, and my question [Technical Issues] response between [Technical Issues].
Operator
Mr. Joshi, I’m sorry, can you use your handset please, your voice is coming little muffled.
Jinesh Joshi — Prabhudas Lilladher — Analyst
Is this better now?
Operator
Yes.
Jinesh Joshi — Prabhudas Lilladher — Analyst
Yeah, sir my second question is with respect to the response with inaugural IL-T20 legue. Is it possible to share any viewership data or could there be any data point with respective to [Technical Issues] or give some perspective on our profitability timeline in the context of amount that we have paid to get the rights.
Punit Goenka — Chief Executive Officer
Yeah, so the IL-T20 inaugural session has been received quite well. Ratings data is available in the box [Phonetic] system, you can get it from there. I would not have it — we won’t have that readily available here, but we can share it with you. Because this was add-on on our entertainment channels we have seen significant uptake in the advertising and it is within the budget that we had planned. Of course, any league of this sort takes a few years to get established and turn profitable. So we do expect in the third or fourth edition is when we’ll see breakeven or profitability coming from this.
Jinesh Joshi — Prabhudas Lilladher — Analyst
Got it sir. That’s it from my side. Thank you.
Punit Goenka — Chief Executive Officer
Thank you.
Operator
Thank you. [Operator Instructions]. We have our next question from the line of Arun Prasad from Avendus Spark. Please go ahead.
Arun Prasad — Avendus Spark — Analyst
Hello, thanks for the opportunity. My first question is on Zee5. If you look at the trends for the last nine months, clearly the MAUs have increased but DAUs have kind of become flat and average watch time has actually has reduced and revenue has increased. So, I just want to understand this divergence in these trends. How should we read this? What’s happening and how should — what should we expect in the next say one or two years on this front?
Punit Goenka — Chief Executive Officer
Yeah, so MAUs have increase,d and even DAUs have increased over the last nine months. In fact, they have gone from I think from my memory I am talking, I don’t know if we can reconfirm these two, but about nine months ago it was — daily active viewers were between 7 million and 8 million and today we are at about 11.5 million. But — then in the time span has weakened quarter only, because we’ve had a lot of new customers that came into sampling [Phonetic] and as you would know, for any new customer for them to become loyal and start consuming content for long periods of time takes time. So this is just an aberration. I do expect this to stabilize back to the 150 to 200 levels that we had been seeing for the last three quarters.
Arun Prasad — Avendus Spark — Analyst
Okay, just the numbers that [Indecipherable] kind of in flat in the beginning in the June to December the 11 million, but nevertheless what I, what I’m trying to understand is, if you can give your gross adds on the subscriber because these numbers are looking like based on the usage and as well as there is a churn, but consistently are you seeing increase in the gross adds and also churn so the [Technical Issues] is remaining more or less same, or how should we look at this if you slice and dice qualitatively can you explain what’s happening here?
Punit Goenka — Chief Executive Officer
So Arun sorry, I stand corrected. You are right, DAUs has been flat for last two quarters. I stand corrected, there so we will be — we will be sharing a whole lot of new metrics with you all starting post the merger. So kindly bear with us for couple of more months and we will start sharing all the detailed metrics with you.
Arun Prasad — Avendus Spark — Analyst
Okay, [Technical Issues] thanks. My next question is on the cost side, if you see the content costs and obviously, the marketing spends, I’m just comparing this nine-month data from the ’20 and as well as 2022. Obviously, the cost is increasing, because you’re investment is going up in middle of these properties. Just — my — what I’m thinking is, are we, too aggressive in the content investment in these times despite knowing that there is a slowdown in the FMCG spends because we are aware about the FMCG spends at least — we are talking about this for last two-three quarters. Are we going to — are we going to tone down aggression at some point of time? And how should we think about the cost going forward?
Punit Goenka — Chief Executive Officer
So Arun you are right. This is a natural question that we ask FMCG everyday. But the impact of that is also seen — because last year the same time when we have cut costs significantly it had an impact on our business in the current year. So we consciously chose not to cut the investments in this year, so that when the tide turns, we are ready to capture the growth. And therefore, we will continue to remain [Technical Issues] in the content investments. Of course, that doesn’t mean that we keep jumping by 14% to 15%. I think there are inflationary in nature, even if you look at now, it’s only about a 10% growth in content costs, but [Technical Issues].
Arun Prasad — Avendus Spark — Analyst
Right, makes sense. At what point in time, we will take a relook at these costs cost levels?
Rohit Gupta — Chief Financial Officer
We do it every day Arun, that’s what I’m saying.
Arun Prasad — Avendus Spark — Analyst
Sorry, couldn’t hear you.
Rohit Gupta — Chief Financial Officer
I’m saying we do this every day, every quarter. So that’s our job, to read [Phonetic]. We look at these costs other than revenues that what [Technical Issues] we look at our cost. So rest assured, we are going to be prudent and when we think it is no longer viable to invest in the content, we will pull-back.
Arun Prasad — Avendus Spark — Analyst
Okay, alright Rohit, great, thanks for all the best.
Operator
Thank you. We have our next question from the line of Kunal Vora from BNP Paribas. Please go ahead.
Kunal Vora — BNP Paribas — Analyst
Yeah, hi. Thanks for the opportunity. I wanted to check regarding your thoughts on U.S. [Technical Issues] would this have an adverse impact on the, [Technical Issues] and ability of broadcasters to monetize the cricket broadcasting. I know it’s different IPL versus world cup [Technical Issues], but how do you see this development? And also, would this mean a larger view of ad dollars towards digital?
Rohit Gupta — Chief Financial Officer
I don’t think so Kunal. It is that easily substitute that debentures shift the viewership from [Indecipherable] to digital overnight. If you look at — even in the case of when the predecessor had IPL, if you will recall, the first two years, they also were giving it free. It’s only in the thrid year or third edition that they had — that they put it behind the paywall. Ours [Indecipherable] advertising dollars towards that, but that does not mean that it is replaced from any angle. Our own calculation state that even in the last season of IPL almost 75% plus advertising came on television and only 20% to 25% came on digital. That has not significantly change overnight.
Kunal Vora — BNP Paribas — Analyst
Even with IPL being available for free and on one channel, while that’s being paid on television, you don’t think it’ll have any meaningful impact. I mean, why would that be the case? For the customer, it becomes so much convenient plus affordable to directly go for digital, right?
Rohit Gupta — Chief Financial Officer
No, you see you are talking about the maybe the high-end customer who’s got the high-end television sets that they watch it on. The other 200 million or 250 million people, are not going to sit and watch the five-hour match on the mobile screen, right. So and once you are home, you generally just go to the convenience of watching it on television. That is what I believe is the general human nature.
Kunal Vora — BNP Paribas — Analyst
Okay, okay, okay, second and last question is I wanted to get your initial thoughts on ad revenue growth subscription revenue growth and margins in FY ’24?
Punit Goenka — Chief Executive Officer
Kunal, we are giving that guidance out right now. As I’ve said in my opening remarks, the advertising market has been soft. We have to take it quarter-on-quarter. So by FY ’24, we are not giving guidance right now. Subscription revenues will grow. As I’ve said once NPO 3.0 is implemented, you will see a healthy single-digit growth on subscription revenue.
Kunal Vora — BNP Paribas — Analyst
Okay, on LTV are you seeing any signs of a recovery because as per consumer companies, the gross margins are expanding, ad-spends are at a multi-year low, are you optimistic about a recovery?
Punit Goenka — Chief Executive Officer
I’m always optimistic. If the headwinds and on the inflation side and the rural [Technical Issues] hopefully they’ll bounce-back soon enough for consumption to again pick up and therefore advertising should come back.
Kunal Vora — BNP Paribas — Analyst
Okay, okay, okay and just lastly on the sharp decline in average viewership minutes in digital, I couldn’t understand the reason for that. Why is there a sharp moderation?
Punit Goenka — Chief Executive Officer
It’s basically users that came on, their consumption generally is lower in the beginning months. It’s only once they get used to the platform that they can view more. So it’s an aberration. There is no trend to it.
Kunal Vora — BNP Paribas — Analyst
But we haven’t seen a sharp increase in users as well right, so I mean, what am I missing here?
Rohit Gupta — Chief Financial Officer
Kunal, you see in the MAU go up meaningfully, if you look at wherever the MAU is, about 10 million on addition in the quarter.
Kunal Vora — BNP Paribas — Analyst
Okay, okay, okay, I will have a look at that. Thank you. That’s it from my side.
Punit Goenka — Chief Executive Officer
Thank you.
Operator
Thank you. We have our next question from the line of Ankur Periwal from Axis Capital. Please go ahead.
Ankur Periwal — Axis Capital — Analyst
Yeah, hi sir, thanks for the opportunity. First question on the Zee5. If I look at it over the last two years the DAUs have almost doubled, MAUs have also more or less doubled. The conversion rate is around 9% to 10% odd. The revenues have grown, but the costs has grown even sharper. How do you plan to monetize these footfalls or these DAUs, sort of DAUs that we are seeing? We had earlier mentioned, large part of this will be driven by are driven by subscription on the advertising front, if you can share some thoughts there?
Punit Goenka — Chief Executive Officer
No, you’re right. So we will continue to grow our revenues by subscription itself and also by advertising, but advertising will be our smallest segment, unlike television where it constitutes almost 70% or 75%. In this case, it will be the worst to begin with and then probably plateau [Phonetic] off between 60%, 40% in the favor of subscription.
Ankur Periwal — Axis Capital — Analyst
Is there any inflection point in terms of, let’s say, DAUs on maybe the conversion rate wherein you believe the monetization on an advertisement we’ll be much more sort of achievable and visible [Phonetic] there?
Punit Goenka — Chief Executive Officer
Yes, it is obvious. There will be once we started in conversion levels of 15% to 18%, we will start seeing sharp raise [Phonetic] in the advertisement income.
Ankur Periwal — Axis Capital — Analyst
Sure on the advertisement front while the environment is still soft and as you suggested for the near-term, the outlook is not as great, if you can share probably, let’s say on a nine-month basis, how has been our volumetric growth and maybe the correction on the yield front that we have seen?
Punit Goenka — Chief Executive Officer
So most of the deal growth has come on the yield part, only some part has come on the inventory or the consumption.
Ankur Periwal — Axis Capital — Analyst
This will be largely led by let’s say, the likes of Tamil and Marathi languages or even in Hindi and other languages have seen correction?
Punit Goenka — Chief Executive Officer
Across-the-world.
Ankur Periwal — Axis Capital — Analyst
Sure, and lastly maybe a bookkeeping. So the one-off that we have taken in this quarter Zee Learn largely is done. The merger cost is it all done, or probably there could be certain more expenses there. And secondly, on the Siti exposure bit as well and [Indecipherable] will it be will be taking the quarter-on-quarter approach there or there is a possibility of sort of front-loading all the provision at one go.
Punit Goenka — Chief Executive Officer
So as Rohit explained as part of the [Indecipherable] as and when goes amounts for due we take exposure — exposure falls due we take it in a quarterly approach. As far as Zee Learn is concerned, you’re right, it’s done for. And as far as the merger expenses are concerned, the merger is not yet done, so it will continue.
Rohit Gupta — Chief Financial Officer
Just want to add you know, while we do take provision for Dasara, the entire provision is without [Technical Issues] because we had these matters we submitted to.
Ankur Periwal — Axis Capital — Analyst
Sure, just a clarification, this merger cost of INR68 crores to INR69 crores, this is only for the quarter or there are certain longer-term costs also, which have been booked here?
Punit Goenka — Chief Executive Officer
So this is the cost for the quarter? I think that you are — what was the question?
Ankur Periwal — Axis Capital — Analyst
No-no, sorry, I’m just wondering if sort of what — so this has cost only for Q3, so in Q4, possibility of such costs repeating also remains there.
Punit Goenka — Chief Executive Officer
It is not necessary it has to be the same, right? And because some consultants would have finished their work and gone away. So it will continue to vary. We can’t make standard statements that this will continue at the same level.
Ankur Periwal — Axis Capital — Analyst
Okay, sure that helps. Thank you.
Operator
Thank you. We have our next question from the line of Abhishek Kumar from JM Financial. Please go ahead.
Abhishek Kumar — JM Financial — Analyst
Yeah, hi, good evening to the management team. Sorry to harp on that [Technical Issues]. So few corrections here. Rohit, you mentioned that we are providing for Dasara as and when [Technical Issues]. So does that mean that, if my [Technical Issues] correct this is basically the guarantee that we provide for the interest which is due that consistently whenever it is due, it is not being paid by entity, which we have guaranteed and if that is the case, what is the outstanding amount now, which has not fallen due? Any number to give us little bit of visibility or clarity on what you expect going forward?
Rohit Gupta — Chief Financial Officer
So. first of all. Whatever the amount that was due for Dasara that till date that has we have taken a position and that is without the [Indecipherable]. We have that matter in the court, so you are aware about that.
Punit Goenka — Chief Executive Officer
We won’t be able to disclose those figures to you.
Rohit Gupta — Chief Financial Officer
Yeah. But yes, whatever — so there is like — like is there any outstanding amount which is [Technical Issues] at that. Whatever, we have already taken approval hints to [Phonetic] that.
Abhishek Kumar — JM Financial — Analyst
Okay. And second — Zee Learn can you disclose the overall outstanding that we might have across the Zee entities or related parties, which we should be aware of?
Punit Goenka — Chief Executive Officer
All are disclosed. There is nothing that is not disclosed. Even Zee Learn was disclosed.
Abhishek Kumar — JM Financial — Analyst
Okay. So that’s helpful. Now, one question on the OTT. I just wanted your view, have we seen any decline in the competitive intensity over the past few years, or the competition continues to be — and eventually competition continues to be very-high and therefore, we continue to invest in other TV platform that you are dealing [Phonetic]?
Punit Goenka — Chief Executive Officer
The competition on OTT is still high. I don’t see it has been reduced in any manner whatsoever, so I think it’s still early days and this competition intensity will remain high for at least the foreseeable future.
Abhishek Kumar — JM Financial — Analyst
Okay, okay. That’s all from my side. Thank you and all the best.
Punit Goenka — Chief Executive Officer
Thank you.
Operator
Thank you. We have our next question comes from the line of Aditya Chandrasekar from UBS. Please go ahead.
Aditya Chandrasekar — UBS — Analyst
Yeah, hi, a couple of questions from my side. So on subscription basically, some part of the growth is because of the Siti revenue that’s recognized, right. I just wanted to understand, is this kind of cumulative catch-up revenue that’s been recognized or are these amounts also included in prior quarters. I’m just trying to understand like-for-like kind of compared Q-o-Q?
Punit Goenka — Chief Executive Officer
It is catch-up, entirely catch-up.
Aditya Chandrasekar — UBS — Analyst
For how long will this be and then what is the period for this?
Punit Goenka — Chief Executive Officer
Just one second, 12 months.
Aditya Chandrasekar — UBS — Analyst
Last 12 months revenue.
Punit Goenka — Chief Executive Officer
Yeah.
Rohit Gupta — Chief Financial Officer
Yeah, yeah. So we have not been recognizing revenue from PayTM, because we have said that — should the revenues were recognized on the basis of when we collect. So only this time when they have actually made deposits into the court and they have these — these which are earmarked we have recognized this revenue, just to be in-line with the accounting standards and at the same time, we have made a similar provision to make sure that we know unless these amounts received we don’t take them into our possibilities. I hope it was helpful.
Aditya Chandrasekar — UBS — Analyst
Going forward — yeah, helpful. And going forward, every quarter will they be continuing this deposit to the court or how will — I mean what’s the arrangement in place going forward?
Punit Goenka — Chief Executive Officer
They have to deposit in the court — or in the FDs until the court resolution happens on the case. Because [Technical Issues] they were paying us directly.
Aditya Chandrasekar — UBS — Analyst
Okay, okay, okay, and second question, is it possible to give any sense on the potential total merger costs, like what we’re looking at?
Punit Goenka — Chief Executive Officer
Difficult to say right now, but we’ll try and get an estimate for you.
Aditya Chandrasekar — UBS — Analyst
Okay sure. And lastly, on the content cost, I think related to question that another analyst had asked, so in terms of like inflection point in terms of when you might think of saying that the content investments have peaked, is there a particular benchmark in terms of linear viewership share or maybe DAU or MAU number that you maybe have in mind, say, the 16% goes to X percent or the MAU growth from 11 million to — sorry, DAU goes from 11 million to 15 million whatever number it is. Is that the right way to think about it as to from then the content investments shall kind of start tapering down or is that too simplistic?
Punit Goenka — Chief Executive Officer
Aditya, that’s very simple, right. Why would I want to put a ceiling for my growth on viewership? Or any of the [Technical Issues]. So generally, the way to look at it is, because linear is a stable business, we generally remained between 40% and 45% of our revenue as the cost of programing. That has been the benchmark that we follow. And that’s what you should continue to look at. Of course today, it will be higher because of, current macroeconomic situation, but as and when that improves this will again come into the same level of 40% to 45%. And you will agree that as long as they are growing, we should be investing in content, so that we can continue to grow our viewership and therefore the revenue. In the early days, we have seen — see how that GAAP metric is?
Aditya Chandrasekar — UBS — Analyst
Okay, but currently on the linear side, you are investing right to catch up on some of the markets where we’re lagging behind?
Punit Goenka — Chief Executive Officer
That’s correct.
Aditya Chandrasekar — UBS — Analyst
Yeah, so once you reach kind of the market-share that you expect in those segments, then it will come down to the steady-state 40% to 45% of revenues, that’s what you’re saying.
Punit Goenka — Chief Executive Officer
That’s what I am saying.
Aditya Chandrasekar — UBS — Analyst
Okay, okay, thanks, and I’ll reach-out for any estimate if possible on the merger costs.
Punit Goenka — Chief Executive Officer
Yeah, sure.
Aditya Chandrasekar — UBS — Analyst
Okay, thank you.
Operator
Thank you. We have our next question from line of Pulkit Chawla from Emkay Global. Please go ahead.
Pulkit Chawla — Emkay Global — Analyst
Yeah, hi, thank you for the opportunity. Sir first on the market share this quarter again, there has been a slight decline in-market share and market-share gains recovery seems to be slightly on the slower side. This is despite the fact that you’ve seen improvement in both Hindi and Tamil. So is there some reason that I am missing or some other factor as well?
Punit Goenka — Chief Executive Officer
So the [Indecipherable] versus to smaller number to even compare, because it’s not happened in any one given channel. It will be a combination of little, little [Technical Issues] going away from multiple channels. It is a function that happens every quarter. We gain in some, we lose in some.
Pulkit Chawla — Emkay Global — Analyst
Got it. And secondly, the merger any estimated timeline for the merger to be completed now, given that it’s already been delayed by quite some time?
Punit Goenka — Chief Executive Officer
We are working on it as fast as we can. And difficult to give a timeline because the NCLT has not really in our control. Other than that, all other things are — pretty in our control and are pretty much something that is doable as soon as the NCLT orders have been recieved.
Pulkit Chawla — Emkay Global — Analyst
Sure, that’s helpful. That’s it from my end. Thank you very much.
Punit Goenka — Chief Executive Officer
Thank you.
Operator
Thank you. We have our next question from the line of Kshitij Saraf from Tusk Investments. Please go ahead.
Kshitij Saraf — Tusk Investments — Analyst
Hi, good evening, and thank you for taking my question. It’s on the NCLT procedures. So we see with regards to the IPRS and with regards to the set of lenders. The cases are ongoing in NCLT, so could you just shed some light on where we go forward from here with regards to the closure or resolution of these cases, because that might determine the merger timelines for that.
Punit Goenka — Chief Executive Officer
So as of now, the next hearing of the NCLT is tomorrow. We will have to see what happens there. But from what I’ve understood, just one second, give me a second. So as I said, said that our next date is tomorrow itself. From the perspective that these are subjective [Phonetic] matters, it will be difficult for me to give some timelines to go forwards, but you will have more color on this tomorrow what happens in the court.
Kshitij Saraf — Tusk Investments — Analyst
Okay, just a quick follow up, we will get a better strength on both the IPRS, as well as the set of lenders tomorrow itself?
Punit Goenka — Chief Executive Officer
Well, when the court gives a date, [Technical Issues] I am keeping my fingers crossed.
Kshitij Saraf — Tusk Investments — Analyst
Alright okay, thank you so much.
Operator
Thank you. We have our next question from the line of Sameer Deshpande from Fairdeal Investments. Please go ahead.
Sameer Deshpande — Fairdeal Investments — Analyst
Hello, good evening, everyone. My question was actually regarding this merger only and [Technical Issues] that is the final case hearing is tomorrow. So hope the Valentine’s Day proves to be a good day for the great merger, we are all awaiting for an easy merger.
Punit Goenka — Chief Executive Officer
Yes, Sameer, keep your fingers crossed, please.
Sameer Deshpande — Fairdeal Investments — Analyst
Yes, yes, we are long — we are waiting for that. Let us hope it is completed shortly, and if it is — if the hearing is over tomorrow, while expecting in our favor because as I have read from the newspaper reports it mentioned that our lawyers have already mentioned that whatever liabilities arise due to these type of cases it will be borne by the merged company. So, I think there is nothing beyond that which the lenders are interested. Is that correct?
Punit Goenka — Chief Executive Officer
You are correct, Sameer. But there are some — things that have no claim and also [Technical Issues]. So it not just people who have — there are certain legitimate claims also that people have put. Just to clarify that.
Sameer Deshpande — Fairdeal Investments — Analyst
Okay, but if it is the final I hope, it will get squared [Phonetic] whatever is not really legitimate.
Punit Goenka — Chief Executive Officer
Correct.
Sameer Deshpande — Fairdeal Investments — Analyst
Okay, thank you and all the best.
Punit Goenka — Chief Executive Officer
Thanks, Sameer.
Operator
Thank you. We have our next question from the line of Satish Jain from Money First Capital [Phonetic]. Please go ahead.
Satish Jain — — Analyst
Good evening, Punit and the team. Some of my questions have been answered, but one question probably that still remains to be answered is, on the movie business can you give some color, how much have the investors and what are the revenues and profitability, if that’s possible to give. And what are the next few movies that are in the pipeline and is there strategy for movies still intact or have curtailed that in-line of the reduced cash flows or whatever?
Punit Goenka — Chief Executive Officer
So actually we have very little [Phonetic] slate for ’23, which is already signed-up, so there is visibility to curtail that if at all. Of course, the movie business has been profitable for us. Unfortunately, I cannot share the details as we don’t report the segment-wise yet. But it is a profitable. And the strategies will remain because there is a very strategic feeder into our core business of linear, as well as digital.
Satish Jain — — Analyst
Okay and which are the next two big movies that are in the pipeline, if you can share that is it possible or?
Punit Goenka — Chief Executive Officer
Of course, there is a movie called Maidaan, which is with Ajay Devgan. There is movie with Mr. Ajith in the South. These are the two large ones that I can recall at the top of my head. But there will be certainly more.
Satish Jain — — Analyst
Okay, what about Gadar 2? Is it a part of your production or is it only a distribution?
Punit Goenka — Chief Executive Officer
Gadar 2 is very much part of our production and we are looking forward to the Independence Day for its release. There is another [Foreign Speech].
Satish Jain — — Analyst
That’s it. Thank you all the best for the hearing tomorrow. I think that’s more crucial than everything else at this point in time for at least the investors.
Punit Goenka — Chief Executive Officer
Yes, it is.
Operator
Thank you. We’ll take our last question from the line of Vivekanand S from Ambit Private Limited. Please go ahead.
Vivekanand S — Ambit Private Limited — Analyst
Thank you so much for the follow-up opportunity. So could you help us understand I assume levels of Zee5 versus how we can catch up with competition, is there even a desire to do that or will we keep pricing low. That’s one.
Secondly, how much of this year-on-year revenue growth much driven by pricing, I mean just a [Indecipherable] sense would be very helpful. And lastly just a request, I mean, there are still some analysts who have been covering Zee from the time when it was owning 10Sports. It will be great if you can share sports losses going ahead also because that helps us look at the business segment. Thank you.
Punit Goenka — Chief Executive Officer
Sure, on the sports side. We will — we will continue to do that as I said, if the merger is [Technical Issues], we will share those segments numbers with you.
In terms of Zee5 pricing, I think we are quite aggressive with our pricing in the market if you look at it. I mean today the Zee5 mobile-only pack is available for INR499 and the multi-user pack is available INR699. The growth that you have seen, I’m only looking at my teams, the growth came from price increase largely for us in the current year, because we went from INR499 pack to INR699 pack. And we believe we are quite aggressive on pricing. You will continue price hikes from our side even in the coming year, especially with the two companies merging.
Vivekanand S — Ambit Private Limited — Analyst
Great, thank you so much, and all the best for the [Technical Issues].
Punit Goenka — Chief Executive Officer
Thank you, very much.
Operator
Thank you. I would now like to hand the conference over to Mr. Mahesh Pratap Singh for closing comments. Over to you sir.
Mahesh Pratap Singh — Investor Relations
Thank you, Yashasvi, and thanks to everyone for joining us. We realize some of you would have had very little time to look at it, but hopefully, the last one hour of this session has been helpful for you to get perspective of our performance. If there are any follow-up questions or clarifications, please feel free to reach out. We will talk to you again next quarter. Have a great evening.
Operator
[Operator Closing Remarks]