Aug 10 (Reuters) - India's Zee Entertainment Enterprises reported a 46.9% fall in quarterly profit on Monday, hurt by weak advertising revenue and higher costs related to its return to sports broadcasting.
The company posted a consolidated net profit of 763 million rupees ($8.01 million) for the quarter ended June 30, compared with 1.44 billion rupees a year earlier.
The results come as investors assess whether Zee's push into sports and streaming can help revive profit growth, as its traditional television advertising business remains under pressure from a shift in spending towards sports and digital platforms.
Zee returned to sports broadcasting during the June quarter after securing Indian rights to 39 FIFA events through 2034, including the 2026 and 2030 men's World Cups, as it looks to attract viewers and advertisers across its television and streaming platforms.
The company's total income rose 4.8% to 19.39 billion rupees.
While brokerage CLSA said weekly active users for its Z5 platform doubled after the World Cup began, analysts have cautioned that the company's investment in sports could weigh on near-term profitability.
In a pre-earnings note last month, brokerage Elara Securities said while Zee's advertising would fall 16% year-on-year due to weak demand from consumer goods companies, higher upfront spending on FIFA events would weigh on margins.
Zee said the FIFA rights helped drive a recovery in advertising revenue in June, while subscription revenue grew on higher pricing and digital subscribers. However, programming and promotional costs rose due to FIFA and the launch of sports channels, the firm said.
Advertising revenue, which accounts for about 35% of Zee's total income, fell 11.5% to 6.71 billion rupees in the quarter, while subscription revenue rose 15.8% to 11.37 billion rupees.
The company's total expenses rose 12.8% year-over-year to 18.64 billion rupees, as advertising and publicity expenses surged 62.4% to 4.47 billion rupees.
($1 = 95.3000 Indian rupees)
Reporting by Surbhi Misra in Bengaluru; Editing by Mrigank Dhaniwala
Source: Reuters