By Aleef Jahan C S
May 19 (Reuters) – India’s Zee Entertainment Enterprises reported a quarterly loss on Tuesday, as clients tightening their advertising budgets following the Middle East crisis and higher overall expenses pressured the broadcaster’s margins.
Advertising revenues for March were “severely impacted” by the ongoing Middle East conflict as advertisers held back spends near the quarter-end, Mukund Galgali, deputy CEO and chief financial officer, said in a post-earnings call.
Advertisements are typically the biggest source of revenue for broadcasters.
Zee’s ad revenue, which accounts for nearly 40% of the total, fell 3.5% in the quarter. Without the Middle East war in the picture, ad revenue would have likely grown in the low single digits, Galgali added.
Zee, which runs channels such as ZeeTV and ZeeCinema as well as the streaming platform Zee5, reported a consolidated net loss of 1.02 billion rupees ($10.57 million) for the January-March period, from a profit of 1.88 billion rupees a year ago.
Expenses rose 19.6%, driven by a 17% increase in operational costs after Zee recognised higher charges related to movie and content rights, following changes in accounting estimates.
Advertising and publicity costs surged 44% due to higher spending on content launches, including the launch of children’s vertical KidZ, as well as increased legal expenses.
Meanwhile, Zee’s subscription revenue rose nearly 4%, supported by user growth in its digital platform and higher average revenue per user.
The company’s overall revenue declined 5.4%.
Zee5’s core losses narrowed to 84 million rupees from 753 million rupees a year ago, and revenue rose 71% to 4.7 billion rupees as the service logged an increase in the number of paying subscribers.
Peer Sun TV will report its quarterly results on Thursday.
($1 = 96.5325 Indian rupees)
(Reporting by Aleef Jahan in Bengaluru; Editing by Eileen Soreng and Janane Venkatraman)
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