Zee Entertainment Enterprises (ZEEL) recently reported its consolidated audited results with revenues and net profits at Rs 2,199 crore and Rs 634 crore, respectively. The company has repaid its debt and is sitting on cash of Rs580 crore. In an interview with Ram Prasad Sahu, the company’s managing director, Punit Goenka, says restructuring within the group is done and the focus is to stay ahead of competition with innovative programming while keeping costs under check.
What has ZEEL done differently that has helped improve profitability?
Our policies on the return on investment (RoI) differentiates us from our competitors. Chasing ratings at a high cost of programming and marketing is not a sustainable business model in the medium-to long-term. For any new vertical we get into, our horizon for breakeven ranges from two-four years; depending on the size of the investment and the market. Our focus is content at a cost which can be monetised.
What innovations you are doing across your properties ?
Consumer feedback is our benchmark. Ratings, while they are a tool for monetisation, are a bigger tool which help us understand whether the consumers are liking our products or not. This is why when our peers were launching programmes with opulent sets and stories set in big towns, our story portrayed the frustration of a small town villager in the show agle janam mohe bitiya hi kijo. Similarly, when they were doing reality shows based on international formats or dance shows with celebrities we launched Dance India Dance which proves the point that you don’t have to depend on a few celebrities to find talent.
Do you expect the recovery in the ad revenue growth to sustain, given the increased competition?
With the exception of 2009, the advertising market has been growing roughly at 2-2.5 times the GDP over the last four to five years. We have beaten that with a growth of 24-25 per cent. We have been getting more market share than the industry growth. We have an effective monetisation system in place, which will grow faster than the market growth.
How do you tackle challenges on the cable and international revenues fronts?
On the international side, averaging out all the territories, we have hit the saturation level. Now our endeavour is to start experimenting and create another category of viewers. We are picking the markets where the cultural differences are the least and we are packaging our content for such markets. We are in fact dubbing and subtitling our shows in English, Bahasa, Arabic, French and Russian. On the cable front, we believe there will be a small single-digit growth and this will continue for some time.
How do you see your DTH revenues shaping up?
DTH will outgrow cable over the next two-three years and will form a substantial part of our subscription revenues. DTH will continue to penetrate into the semi-urban areas as the demand for entertainment will keep growing. It is not just the disposable income which will ensure penetration, but also the low cost of pay TV at $3 or Rs150 per subscriber , which is not much for the bouquet of channels that you get.
How do you plan to utilise cash on the balance sheet?
The cash we are conserving at the balance sheet today is kept for investments that can increase our returns further. In case we do not find adequate opportunities it is better to return to shareholders than park in liquid instruments. Our RoI target is 16-18 per cent (over the long-term) from our investments.
