No rethink on FTA strategy, going back will hamper potential growth for pay: Punit Goenka 

Punit Goenka, MD and CEO of Zee Entertainment Enterprises Ltd, has indicated that the company will not be rethinking on its Free To Air (FTA) strategy. 

"No rethink on the FTA strategy because since April 2022 when we went off free to air we have actually seen the stabilisation of the paid subscriber base on both cable and satellite. So, going back so soon would, in our opinion, hamper the potential growth in pay that will come back after three years with the NTO 3.0 implementation, so nothing for now," Goenka said during the Q3FY23 earnings call.

ZEEL pulled out its Hindi General Entertainment Channel Zee Anmol from DD Free Dish last year. 

In Q3FY23, the company's domestic advertising revenues declined by 15.8% to Rs 1015.4 crore on YoY basis. This as per the company was due to the withdrawal from FTA (Zee Anmol) and the slowdown in FMCG spends due to the challenging macroeconomic environment. 

While speaking to analysts about the subscription revenue, Goenka said the standstill on the New Tariff Order has been impeding growth and impacting profitability.

“NTO 3.0 is being implemented from February 1, 2023. We look forward to a very substantial revenue growth post-implementation in the most effective manner. 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 improve.”

Goenka further said that he expects single-digit growth in subscription revenue post the implementation of NTO 3.0. 

Speaking on the rationale behind the price hike, Goenka said they have not been able to take any price hike for the last three years and have launched the maximum number of channels within those years. Last year in December, leading broadcasters, including ZEEL, increased their a la carte and bouquet rates after a period of three years. The new pricing came into effect on February, 2023. The hike comes in the wake of TRAI's amendments to the new tariff order (NTO 2.0), restoring the price cap for bouquet TV channels from Rs 19 to Rs 12.

Last week, Prasar Bharati invited applications for allotment of vacant MPEG-2 slots of DD Free Dish DTH platform. The slots are being allotted for a period of one year, from April 1, 2023, to March 31, 2024. The online e-auction will be tentatively held from March 13, 2023, onwards. The reserve price for GECs is the same as last time - Rs 15 crore.

Briefing upon the financial performance of the company, ZEEL’s Chief Financial Officer (CFO) Rohit Gupta shared that they continue to see curtailed ad spending by FMCG brands during the quarter. While October did see a very brief pick-up due to the festive quarter the spends have subsequently 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 mass media brand-building avenue with unparalleled reach.” 

He further shared, “We are utilizing this period to strengthen our business, to capitalize on the opportunity as a tight turn. On linear business we continue to be India's strong number two TV entertainment network and our viewership share for Q3FY23 was at 16.2%, marginally lower by 20bps quarter on quarter. We have gained shares in several key markets, including in Tamil which has been a consistent growth story over the last couple of quarters.” 

According to Gupta, ZEE Marathi’s performance still remains subdued, and the team is focused on stabilizing and rebuilding network shares in the coming quarters. 

On the digital side, ZEE5 has posted yet another quarter of growth across financial and operating metrics. “Original content is being well received and the ZEE5 app user experience has seen significant improvement. All of these are strong affirmations of our investment in content, technology and marketing.” 

“We have shown some improvement in a challenging backdrop, which is encouraging. Ad revenue growth revival is our key focus and we are hopeful of gradual improvement in the spending environment,” Gupta concluded.