The process of stake sale in Zee Entertainment Enterprises Ltd will be completed by end of June-July as we have two term sheets under negotiation and both parties were awaiting the fourth quarter results, said Punit Goenka, managing director and chief executive officer. In an interview with Swati Khandelwal, Goenka said the company's margin guidance for fiscal 2020 remains the same which is more than 30%. The advertising revenue will pick up in the coming quarters, he said.
Zee Entertainment has posted good results in the fourth quarter despite a challenging environment. What were the highlights?
Our domestic advertising revenue went up by 17.7% in the fourth quarter. The subscription revenue was slightly slow and it grew by 3.9%. The Ebitda margin for the quarter stood at 12% and for the full year, it stood at 23.5%.
What helped you to post these numbers? Do you think that this growth pattern will remain intact in the future quarters as well?
Our pattern will be the same. Interestingly, our multiple businesses are firing and if I talk about the broadcasting business, which is the biggest vertical, then we have accelerated in the regional languages and have grown in movie cluster. When it comes to the digital presence, then ZEE5 has performed well in the quarter as well as across the year. In addition, we also had a successful movie release in the quarter, Manikarnika: The Queen of Jhansi. All these have helped us to achieve the numbers that we have. However, Trai's tariff order may create some problems for the short-term growth in the recent future, but our mid-to-long term trajectory in terms of subscription and advertising will remain far ahead of the industry.
What's the update on your stake sale in the company?
We have two term sheets under live negotiations and both the parties were waiting for our fourth quarter results, on the basis of which they will be taking the next steps of due diligence and discussions.
Can we assume that the deal will consummate in the next few days or within a month?
It will be completed by the end of June-July.
Does this mean that you will not have to wait for the September 2019 timeline that has been provided to the lenders?
We are supposed to announce the deal by end of July 2019 and pay back the money by the end of September 2019.
Post this deal, what will be the situation of the company?
I can't disclose much about it because the negotiations are on with both the parties and that too on different terms. But I can say that this sale will help us in repaying our entire loan against shares and every lender will get back their money. Despite this, the promoters will have some stakes in the company.
You have maintained number one position in the television entertainment network throughout the year. How you will continue and maintain it?
Our margin guidance remains the same in fiscal 2020, which is more than 30%. If you have a look at the entire year's margin, then we have delivered above 32%. We have ample room under the margins to stick to the guidance that we had given. Apart from this, we are expanding our business in almost every sector. When it comes to broadcast business, then we will be launching three new channels, one each in Kannada, Tamil and Punjabi. As far as ZEE5 is concerned, we will have a great focus on original content.
What is your outlook on advertisement revenue, which is the core part of the business?
I am quite hopeful – post-election results – the consumption story will go up and it will benefit the industry. It will bring a low double-digit growth in the industry and for the company, our endeavour will always be to beat that going forward as well.
