Optimistic about high growth levels returning soon: Punit Goenka

ZEEL MD & CEO Punit Goenka has asserted that the media & entertainment (M&E) industry will return to its high-growth phase notwithstanding the near-term macroeconomic challenges that have led to volatility in the advertising ecosystem.

"The start of this fiscal has been soft for the sector as anticipated, due to the macro-economic headwinds impacting overall growth. But I remain optimistic of high growth levels returning soon for the industry," Goenka told analysts during the company's Q1 FY23 earnings call.

ZEEL, Goenka said, was well-poised to capitalise on this next wave of growth in the M&E sector. The company will continue with its investment plans in order to build long-term value for the shareholders, he added.

"We are currently going through a phase where we are focusing on building value in the long term and are persisting with our investment themes, given our strong positioning and an attractive market opportunity ahead."

He also disclosed that the company has recalibrated its investments wherever possible while making room for longer-term growth aspirations. "I remain optimistic about the choices we are making as we navigate this phase."

Goenka said the M&E sector was at the cusp of higher structural growth with numerous opportunities to capitalise. He also noted that the industry is facing near-term challenges emerging from macroeconomic factors.

"That said, these challenges are also an opportunity to build stronger and agile business models. Amidst this scenario, the tenacity displayed by the company has enabled us to continue making good progress on the strategic priorities set across the business," he said.

While pointing out that ZEEL's operating margins have got impacted due to the impact on advertising revenue, Goenka stated that the current market scenario is a temporary and transitionary phase. He also contended that TV continues to remain a powerful proposition for brands as it provides massive reach at competitive price points.

"As you would have noted, large FMCG players drew a positive co-relation between advertising and promotional spends, and volume growth during the quarter. But presently, the FMCG segment is weathering inflationary headwinds with commodity prices rising to decadal highs and suppressed consumption leading to minimal volume growth for the sector at large. As this segment is dynamic and has a significantly higher spending potential, there has been an impact on our advertising revenues as well," Goenka added.

The ZEEL MD & CEO is hopeful that the company will reap rich dividends as soon as the advertising market bounces back. "We do remain hopeful of a quick recovery and as the tide turns, we will reap the benefits of higher market-wide advertising and promotional spends. At the moment, we are focusing our energies towards further sharpening our content offerings and strengthening our viewership share to be well positioned to capitalize on this uptrend."

He said that the subscription revenue continues to remain under pressure due to the pricing embargo. That said, there is headroom for growth in the pay-TV segment, he added. "I firmly believe that there is enough headroom for the growth of pay TV in the country. India still has about 90 million households who are yet to own their first TV sets, which represents a long runway for TV subscription revenues, unlike other global markets where TV penetration has saturated."

Goenka also highlighted that ZEE5 had performed well across all usage and engagement metrics. "The platform consistently ranks amongst the top players in terms of recall value, content appeal, frequency of usage, and time spent. Our efforts and investments towards offering a robust content slate and user experience reflect in the positive growth momentum displayed by the platform."

Speaking about the technology and innovation centre that was inaugurated recently in Bengaluru, Goenka said the tech team’s efforts would be directed towards creating path-breaking and innovative solutions to enhance the company's technological capabilities and sharpen data interpretation and analytics.

"We are building a strong tech foundation for the company, and this tech centre will be instrumental in augmenting our offerings in the future. We are certain that going forward, the targeted investments being made into the business will aid mid to long-term growth," he stated.