ZMCL aims to reduce rev dependency on national news channels

Zee Media Corporation Ltd (ZMCL) is reducing its revenue dependence on national news channel by unlocking the value of regional news channels. ZMCL’s revenue contribution from the regional news channels has been increasing even as the dependence on national news channels is slowly reducing.

That said, the national news channels still contribute a major chunk of the company’s revenue.

According to ZMCL, the revenue from national news channels has come down from 70% in FY14 to 66% in FY17. The percentage of revenue contribution from national news channels further went down to 62% in FY18. In the Q1 FY18, the revenue from national news channels has remained at 62%.

The revenue from regional news channels has seen an explosive growth. The revenue contribution from the regional cluster was 30% in FY14 which has increased to 38% in FY18 and Q1 FY19.

ZMCL owns and operates a bouquet of 14 news channels including five national (Zee News, Zee Business, Zee Hindustan, Zee Salaam, and WION) and regional channels (Zee Uttar Pradesh/Uttarakhand, Zee Madhya Pradesh/Chhattisgarh, Zee Rajasthan, Zee Kalinga, Zee Bihar/Jharkhand, Zee Marathi, Zee 24 Ghanta, Zee 24 Kalak, Zee Punjab/Haryana/Himachal).

The profitability from the national and regional news cluster has also been improving.

In FY18, the operating profit from national channels jumped to Rs 82.2 crore from Rs 75 crore in FY17. The revenue from the national news cluster jumped to Rs 358 crore from Rs 295.9 crore. In Q1 FY19, the company posted operating profit of Rs 24.7 crore on an operating income of Rs 95.7 crore.

The regional news clusters operating revenue saw a big jump from Rs 153.9 crore in FY17 to Rs 215.5 crore in FY18. Operating profit saw a massive improvement from Rs 20.5 crore in FY17 to Rs 49.8 crore in FY18. In Q1 FY19, the operating revenue and profit stood at Rs 59 crore and Rs 11.2 crore respectively.

The EBITDA margin has also improved from 8% in FY14 to 23% in Q1 FY19.

While the TV ad revenues are projected to grow at a CAGR of 11% to touch Rs 368 billion, ZMCL’s projected ad revenue is expected to increase at a CAGR of 28% to Rs 650 crore in FY19 and Rs 900 crore in FY20.

ZMCL-owned channels have been improving market shares and increasing stickiness of the channels resulting into changing trends of Earning Rates (ERs) of respective channels.

The company said that 7 out of 14 channels witnessed over 25% growth in ER in Q1 FY19 over the corresponding quarter last year while 4 out of above 7 channels were Regional channels, reflecting the potential in regional markets.

Zee Hindustan, that was launched last year as a national platform, experienced an over 50% increase in ER for Q1 FY19. Zee Salaam, that was launched last year, achieved operational break even in last financial year itself.