Zee Entertainment Enterprises (ZEEL) Q4 98/99 earnings summary

Executive summary

• FY1998-99 revenue from operations rose 30% to Rs 2,262 million; operating profit increased 44% to Rs 851 million and PAT rose 40% to Rs 611 million.

• Total return on capital employed reached 35.8%, up from 34.6% in FY1997-98; growth strategy centered on content rights, wider distribution and new subscription revenue streams.

• FY1999-2000 priorities included regional channels, digital Direct-to-Operator service, internet access over cable and expansion into film production and international operations.

Financial highlights

• Indian GAAP sales and services were Rs 2,261.8 million versus Rs 1,733.9 million; total income was Rs 2,317.4 million versus Rs 1,809.1 million.

• Operating profit was Rs 851 million, 38% of operating income; PBIDT was Rs 906 million, PBT Rs 807 million and PAT Rs 611 million.

• EPS rose 40% to Rs 32.7 from Rs 23.4; a 55% dividend, or Rs 5.50 per equity share, was recommended.

• Advertising bookings reached Rs 3,853 million, up ~30%; network revenue rose 31% to Rs 4,140 million from Rs 3,170 million.

• US GAAP net revenue was $53.97 million, up 15.3%; net income before accounting changes was $10.29 million, up 14.5%, and EPS was $0.55.

Outlook and guidance

• Management expected sustained growth in FY1999-2000, supported by new regional-language channels uplinked from India and advertising revenue accruing to the business.

• Direct-to-Operator decoder seeding was planned from October 1999, with 25,000 decoders targeted in three months; the longer-term plan cited 35,000-50,000 in the first three years.

• Three regional channels—Marathi, Bengali and Punjabi—were planned, with original programming, regional films and dubbed content; launch preparations and transponder negotiations were underway.

• A Rs 10 crore Hindi film, Gadar, was under production; theatrical release was planned for the following calendar year, alongside the animated feature Bhagmati.

• Planned investment in new businesses was $28.48 million; a separate ISP project estimate put total cost at Rs 400 crore, with details still being finalized.