Zee Telefilms never ceases to surprise you. And its latest financial results for the year 2000-2001 must be surely making many an industry watcher shake their heads in disbelief. But the results are there for all to see. Still, one will have to wait for the Annual Report to make more sense of the financials.
But for the nonce, one will have to complement the Subhash Chandra-led management for what can be called a better than expected performance at a time when everyone had been writing Zee TV‘s obit.

Total income for Zee Telefilms is up 68 per cent to Rs 4.35 billion (RS 2.97 billion) aided by a hefty increase in other income to RS 511.11 million (RS 100.8 million). Net profit is up 59 per cent to RS 1.38 billion (RS 822.5 million).

A dividend of 55 per cent has been recommended by the management, which should keep shareholders - who have been bruised by the downslide in the share price - in some cheer.

Zee Telefilms figures for Q4 2001 show that total income is up 57 per cent to RS 1,364.4 million (RS 780.9 million in Q4 2000) while programming costs have more than doubled to RS 647.6 million (RS 299.3 million). Net profit has more than doubled to RS 472.9 million (RS 203.9 million).

The Zee Network Financial Roundup

Looking at the Zee Network as a whole, total revenues have been far higher than predicted by market analysts with total income of RS 10.16 billion, an increase of 29.1 per cent over last year‘s figure of RS 7.87 billion. Q4 revenues have also shown a jump to RS 2.99 billion over last year‘s figure of RS 2.11 billion.

Breaking down the revenues, there have been significant increases in other sales (now what‘s that?) and interest earned. Looking at subscription and ad revenues separately, the increases have not been quite so significant. With Zee TV expected to go pay in the first half of June 2001, subscription revenues are expected to give a significant boost to the overall profitability of the company in the future.

However, it remains to be seen how ad sales will be impacted because going pay normally results in a loss of viewership as decoder boxes are rolled out nationally - with a concomitant loss in ad revenue. And considering the depressed market scenario there may even be a bigger fall in ad sales revenues than that.

Coming back to the figures. Ad revenues have gone up from RS 5.74 billion last year to RS 6.77 billion this year. Subscriptions have increased from Rs1.81 billion to RS 2.05 billion. Pretty healthy numbers for a channel that was supposedly in the dumps.

Figures for other sales show an increase from RS 203 million to RS 754.5 million. Other sales in Q4 went from RS 83.9 million to RS 345.2 million, an over 400 per cent increase. Interest income also saw a big jump. It went from RS 114 million to RS 585.8 million, a fivefold increase. Income increase in Q4 was even bigger - from RS 15.4 million to RS 206.1 million, that‘s 1,238 per cent more than last year.

As far as the results go, market analysts HSBC Securities & Capital Markets Ltd were the closest in their predictions of how the results would pan out (see earlier report).

All in all Zee seems to have done a neat number on all the naysayers who had written off its chances of making a comeback.

There was some activity on another front as well. Sandeep Goyal, the freshly inducted group broadcasting CEO, is now a whole time director of the company. And Rajeev Chandrashekhar, head honcho of consumer electronics major BPL LTD (with interests in a whole slew of other ventures) and Vipin Malik, a Delhi-based chartered accountant, have been inducted as additional independent directors. According to company officials, Malik was formerly on the board of the the Reserve Bank of India.

Chandra returns RS 500 million given to Essel Group investment firms

In another announcement, Zee Telefilms said that chairman Subhash Chandra said that he had returned RS 500 million of the RS 2500 million that had been transferred from ZTL to investment companies belonging to Chandra‘s Essel group for acquiring stakes in B4U and AB Corp. He is supposed to return the entire sum by 30 June 2001.

Hours ahead of an announcement by Zee Telefilms regarding its 2000-01 financial results, market analysts were cautiously optimistic about Zee‘s expected performance for the year.

While Goldman Sachs, which recently subscribed to a private placement by Zee Telefilms at close to Rs 1,000 per share, predicts that Zee‘s net profit would jump 25 per cent to Rs 2.07 billion, HSBC Securities & Capital Markets Ltd put the figure at Rs 1.8 billion. Regarding total revenues, Goldman expects a 17 per cent rise at Rs 9.3 billion while HSBC prediction is that it will be marginally lower at Rs 9.2 billion.

For the fourth quarter, Goldman sees Zee‘s net rising to Rs 450 million (a 69.8 per cent rise) while HSBC predicts Q4 growth of Rs 400-410 million. Both Goldman and HSBC predict Q4 revenues to be Rs 2.5 billion, a decline of 2.6 per cent.

HSBC said the income decline was because of a drop in advertising revenues due to the depressed market conditions prevailing as well as a drop in overall market share by a few percentage points.

Zee Telefilms, once the undisputed TV ratings market leader, dropped to third place in mid-2000 following a good run of programmes from Star Plus, and its own botched efforts at responding to the Star offerings. It kept on losing marketshare and its losses in Q4 to Star and Sony were significant enough to translate into a drop in ad income over Q3, analysts point out.

Zee Telefilms has, however, been clawing its way back from April 2001 when it dropped a clutch of shows and introduced a rash of new ones. These have been finding cachet with TV viewers. But do not expect both Star and Sony to sit back watching Zee roar back once again. The battle has just begun.