A 26.7% growth in second quarter net profit has been announced by Zee Entertainment Enterprises Ltd (ZEEL), which weathered a 4.2% drop in advertising revenue during the period.
However, its consolidated net profit for the three months to 30 September 2011 was INR 1.6 billion, compared to INR 1.26 billion in the same period of 2012.
"The Indian economy continues to grow at a good pace but high inflation and the resultant tight money policy of RBI is taking its toll," said Subhash Chandra, chairman, Zee Entertainment Enterprises.
"While the economic situation in India is far better than most other countries, market sentiment continues to be cautious. This caution has affected advertising spends on television, which has witnessed some deceleration. The good part is that the television economy continues to grow robustly on the back of subscriber growth and digitisation," he added.
The broadcaster's consolidated operating profit (Ebitda) was up 10.1% to INR 2.07 billion for the quarter, up from INR 1.88 billion in the same period last year. The operational profit margin was 28.9%.
Although ZEEL expects a weak advertising market this financial year, the company said the recent dip in its advertising revenue was accounted for by a strong roster of Indian cricket in the previous quarter, attracting higher spend. Excluding sport, ZEEL's advertising revenues had increased in the last quarter, to a total of INR 3.95 billion.
"Zee Entertainment has a wide portfolio of television channels and we have seen some gains and some losses in our market shares during the quarter. We are confident that we would continue to grow our business profitability in a sustained manner," said Punit Goenka, managing director and chief executive, ZEEL.
"During the quarter, we have seen a healthy increase in our operating margins, partly due to lower sports losses and partly due to better cost efficiency measures. Though advertising spends are better sequentially, overall trends remain subdued and FY'2012 does look to be a year of tepid growth in advertising spends on television. Our strategy during the last few years has been to create a formidable entertainment enterprise and invest in the business in a focused disciplined way."