Longer festive period likely to aid pick-up in ad rev: ZEEL's Rohit Gupta

"We have belief in the potential of the merged company to generate immense value for all stakeholders and the media and entertainment industry, " said Rohit Gupta, CFO, ZEE Entertainment Enterprises, on the ZEE-Sony merger during the Q1 earnings calls.

He shared that the merger has already received approvals from the Bombay Stock Exchange, National Stock Exchange and the Competition Commission of India and the shareholders of the company.

Meanwhile speaking about the quarter, he said that there were positive signs of growth across the Media & Entertainment sector at large with several attractive opportunities existing across segments.

According to Gupta, even as the digital ecosystem continues to grow at a steady pace, there is an exciting opportunity for television as well.

"The headroom for growth of pay TV households in India is immense and rising content consumption can certainly act as a catalyst for growth in this segment."

He shared that evolving consumer behaviours and technological advancements are becoming the growth tailwinds for the sector, and it remains well-poised to witness robust and orderly growth across all segments in the near future.

The new fiscal has started on an optimistic note, he said, with some green shoots being seen in the overall advertising sentiment and the rollout of NTO 3.0 paving the way for TV subscription revenue growth.

"That said, there remains immense headroom for overall ad environment recovery on the back of improving consumer demand, and we remain hopeful of the next few quarters driving growth."

He further shared that the focus for the network during the quarter has been on strengthening businesses and offering a compelling content pipeline across platforms to keep viewers entertained.

"While we continued to see muted ad spending environment during the good part of the quarter, encouragingly there were green shoots emerging as we exited the quarter. Q1 started off on a slow note and with IPL during the month of April and May the ad spending was particularly muted. However, towards the back end of the quarter, there were early signs of ad spends starting to pick up, led by FMCG."

"We have seen this pickup continue in Q2 as well. However, recovery is still nascent, and the pace of pickup is moderate at this point. Overall, we remain hopeful that the positive momentum will continue, enabling us to drive growth in ad revenues.
There are also very encouraging signs across the TV broadcasting industry. IPL 2023 was the biggest ever IPL on television with a 32% growth in television ratings compared to the 2022 edition.”

Adding to the above statement, he said overall TV viewership during the quarter is at its five-quarters peak and the share of Pay TV in the overall TV viewership has also increased.

" In fact, even from the base of Q1 FY23, when we and other major broadcasters removed our Hindi GECs from Free Dish, Pay TV has gained further share in the last four quarters. Linear TV plays a very important role in our business portfolio, and serves a very relevant purpose for both viewers as well as advertisers. We remain confident about our ability to grow our overall linear TV business revenues."

He also said that the network is seeing benefits of NTO 3.0 translate to revenues and it will take couple of quarters for NTO transmission to fully settle down.

"As we drive NTO rollout, we are also ploughing back some of this growth in marketing for longer-term sustenance and growth of pay TV ecosystem. Hence, do keep in mind that while the headline growth in linear TV subscription revenues seems higher than the inflationary growth levels we had indicated earlier, from a net contribution perspective, factoring in higher marketing, we will likely end up close to inflationary growth. "

Moving through the rest of FY24, Gupta said that they were expecting a gradual recovery in ad spends, and are optimistic based on the green shoots they have seen in the last six weeks.

"We will still need to see this traction fructify in spending and sustain before making any firm prediction on the pace of recovery. The pick-up in ad revenues will hopefully be aided by a longer festive period this year, with Diwali being in mid-November. We will continue to recalibrate our investments and optimise our cost structure, while making room for strategic bets. With the revenue pick up, we are hopeful that we will also have more levers to manage profitability as the year progresses."