Looking to build on traction created by Salman Khan’s ‘Radhe’: Rohit Gupta, Zee

One of the most important things ‘Radhe’ has established for us and for the industry is the feasibility of India’s first pay-per-view model during the pandemic and Radhe is the first mega movie to be released on ZeePlex, said Rohit Gupta, CFO, to ET Now. Edited excerpts:

Could you start off by running us through the outlook on the Q4 numbers?
So let me start by talking about FY21 which has been an uncertain year for the Indian economy and businesses across sectors. We have faced both operational challenges and economic headwinds, both by industry and Zee. However, Zee’s performance has been resilient quarter on quarter. During this quarter we have improved our all-India TV viewership share by about 70 bps to 18.9%. On the digital front, we have clocked 72.6 million global MAUs. This quarter we released the much-awaited Salman Khan starrer ‘Radhe’ across our pay-per-view platform ZeePlex and Zee5 and theatres wherever they were operational.

Talking about quarter four, this quarter continues to see recovery in ad revenue and we had seen a sharp rebound in quarter three. This continued in quarter four as well. Our overall domestic advertising revenue grew by 8.9% year on year. Domestic subscription revenue grew by 5.6% year on year on a like-to-like basis. For quarter four, despite theatres not opened and lower syndication income, we have still grown our revenues marginally to 19.7 billion and we have delivered an EBITDA margin of 27.5%. Talking about FY21 numbers, the outbreak of COVID had impacted advertising revenues in H1 of FY21. We have witnessed sharp recovery, like I said in advertising revenues quarter three onwards and owing to, of course, lockdown relaxations, etc.

You have spoken about this before, but can you talk in greater detail about the ad revenues in terms of how ad spends have particularly been impacted and how you see the trajectory of ad revenue growth?
Before the onset of second wave of COVID, ad spends were recovering very well for both industry and Zee. We were heading back to normal double-digit growth. At the beginning of March, we were quite certain that FY22 would be a normal year and possibly we might see an accelerated growth our product; innovation launches which we had postponed were likely to be rolled out. So, additionally a lot of our customers also saw improvement in margins.

However, due to increase in COVID cases and consequent lockdowns across the country, the advertisers have started pulling back their spends. It looks like 1Q would be impacted due to slow down caused by COVID. That said, 1Q FY22 would be far better than 1Q of last year when we had seen our revenues fall by about two-thirds. Our endeavour is to recoup the loss of ad revenues in 1Q in the remainder of the quarters and we are very optimistic that a good part of this loss would be offset if lockdowns do not exceed beyond 1Q.

What is your view on big budget venture ‘Radhe’, simultaneously on pay per view, the platform pack ZeePlex, OTT platform Zee5 and in theatres worldwide? This was the first time you released such a big-budget venture across the board. How did that work out for you?
One of the most important things ‘Radhe’ has established for us and for the industry is the feasibility of India’s first pay-per-view model during the pandemic and Radhe is the first mega movie to be released on ZeePlex. It has opened up a new segment of audience who are happy watching movies from the comfort of their homes and paying for that. So, we believe this might become a new revenue stream for studios in time.

Radhe is the first in the list of strong movies and original content lined up that we have created for Zee5. We are enthused by the response we have received. Zee5’s daily subscriber additions have gone up several times and continue to remain high and that has also improved the top of the mind recall of Zee5 within the Indian OTT space. We are looking forward to build on the traction generated by Radhe through the strong content pipeline that we have for the year. As far as monetisation of Radhe is concerned, it is moving in line with our expectation. However, it is only seven days and it is too early to talk about numbers right now. Typically, a movie of this scale will see a theatrical monetisation building over three to four weeks. As we speak, the movie is also getting released on some international markets and once it is released in international markets, we will then probably launch pay per view window in these markets.

What about SugarBox? What are the plans there? Any cost cutting?
We have looked at pandemic and we have looked at where we want to invest. We have prioritised our investments as well, and we are committed to investing in both broadcasting and digital. And in SugarBox we will be cutting down some of the planned investments that we had prior to this second wave of COVID pandemic that came in place. And as far as Zee5 is concerned, we are looking at increasing our value proposition on Zee5 and we are going to offer compelling content and make it more affordable as well. We have launched Radhe, which is the first of the mega movies on Zee5 and we have a very good slate of digital originals in both Hindi and other select languages. You will see a lot of excitement around content in the coming year. Even on pricing, we have made it more affordable and this will help us.

Are there any big strategic investors coming in? There were some high-level talks at market desk that there is a change of hands at the shareholder level. Any updates?
No, there is no change in any of the shareholders level. We continue to have very much the same shareholding pattern, except for the normal changes that we have and are focussed on — the operational performance. The management team is a set of professionals working with Punit and we are completely focussed on the operational performance. Like I said, we have a five-year plan that has been put in place where we have our strategy for all lines of businesses, including broadcasting, digital, studios business and so on. We are committed to working towards that.

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