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Zee Entertainment (ZEE.BO; Rs142.60; 2L)
Takeaways from Mumbai – ZEEL presented at our India Investor Conference in
Mumbai. Below are the key takeaways.
13-14% industry ad growth in FY12 – Mgmt thinks ~13-14% ad market growth is
likely during the current fiscal largely on the back of higher yields/pricing, coupled
with benefits of better efficiencies coming through – expects ZEEL to maintain/
marginally exceed industry growth. 1QFY12 has been impacted by IPL and some
moderation in spends from FMCG companies (~40% of ad pie) in June.
Medium- to long-term benefits through Star/Zee Distribution JV – 50/50 JV
between Zee Turner and Star Den, Media Pro Enterprise is likely to help
subscription revenues as it targets to improve declaration levels and attempts to
curb piracy. Mgmt expects FY12 to be a year of consolidation and benefits are likely
to kick in only in FY13. Mgmt does not expect any major issues with Competition
Commission of India. Carriage fee currently does not come under the purview of the
distribution agreement – it is managed by the principals themselves.
Investing in content – Number of hours of original programming are likely to
increase from the current 27hrs to ~32-33hrs in the next few quarters. This will bring
Zee closer to peers - Star/Colors have ~40-41/30 original programming hrs. Thus, in
the near term content costs may see some escalation.
Sports – distribution led strategy – Mgmt reiterated its guidance of containing
sports losses to ~Rs1bn in FY12 (~Rs2.1bn in FY11). Higher subscription revenues/
distribution led benefits will drive sports break-even in 12-18 months.
Other takeaways –a) ZEEL has fixed rate agreements with 3 DTH operators. It
does expect good DTH-related subscription revenues growth; b) Analog cable
revenues should remain flat to marginal decline in the medium term; c) International
subscription remains flat – given the lackluster performance in Europe/UK, despite
good performance in US, Middle East and South East Asia.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Zee Entertainment (ZEE.BO; Rs142.60; 2L)
Takeaways from Mumbai – ZEEL presented at our India Investor Conference in
Mumbai. Below are the key takeaways.
13-14% industry ad growth in FY12 – Mgmt thinks ~13-14% ad market growth is
likely during the current fiscal largely on the back of higher yields/pricing, coupled
with benefits of better efficiencies coming through – expects ZEEL to maintain/
marginally exceed industry growth. 1QFY12 has been impacted by IPL and some
moderation in spends from FMCG companies (~40% of ad pie) in June.
Medium- to long-term benefits through Star/Zee Distribution JV – 50/50 JV
between Zee Turner and Star Den, Media Pro Enterprise is likely to help
subscription revenues as it targets to improve declaration levels and attempts to
curb piracy. Mgmt expects FY12 to be a year of consolidation and benefits are likely
to kick in only in FY13. Mgmt does not expect any major issues with Competition
Commission of India. Carriage fee currently does not come under the purview of the
distribution agreement – it is managed by the principals themselves.
Investing in content – Number of hours of original programming are likely to
increase from the current 27hrs to ~32-33hrs in the next few quarters. This will bring
Zee closer to peers - Star/Colors have ~40-41/30 original programming hrs. Thus, in
the near term content costs may see some escalation.
Sports – distribution led strategy – Mgmt reiterated its guidance of containing
sports losses to ~Rs1bn in FY12 (~Rs2.1bn in FY11). Higher subscription revenues/
distribution led benefits will drive sports break-even in 12-18 months.
Other takeaways –a) ZEEL has fixed rate agreements with 3 DTH operators. It
does expect good DTH-related subscription revenues growth; b) Analog cable
revenues should remain flat to marginal decline in the medium term; c) International
subscription remains flat – given the lackluster performance in Europe/UK, despite
good performance in US, Middle East and South East Asia.
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