India’s Zee Entertainment swings to Q1 loss on weak advertising, higher costs

BENGALURU (Reuters) – Zee Entertainment Enterprises reported a quarterly loss on Wednesday, hurt by weak demand for advertisements, while expenses surged.

The broadcaster, which is closing in on a merger with the India unit of Japan’s Sony Group, posted a consolidated net loss of 534.2 million rupees for the first quarter ended June 30, against a profit of 1.07 billion rupees a year earlier.

Total income rose 6.4% to 19.98 billion rupees, while expenses jumped nearly 17%, driven by higher operating, employee as well as marketing costs, the company said in a filing.

Indian broadcasters have suffered in recent quarters as companies cut spending on advertisements to save cash in a challenging macro-economic environment, while some moved to targeted advertisements in digital platforms for specific events like sports tournaments.

Zee flagged muted advertisement spending, mainly due to the Indian Premier League, a cricket league, during the first two months of the quarter.

Programming and technology costs increased due to higher content costs in movies, while marketing costs increased on the back of spending on new shows, movies and theatrical releases, Zee said.

“Green shoots emerged towards the quarter end, with early signs of advertisement spends starting to pick up, led by fast moving consumer goods companies,” Zee added.

Billionaire Gautam Adani-owned New Delhi Television Ltd reported a loss in the first quarter, while Mukesh Ambani-owned TV18 Broadcast saw surging marketing expenses denting a key profit metric.

The Zee and Sony Group unit’s merger was announced in 2021 to create a $10-billion TV enterprise. The company has seen several regulatory issues with its CEO being banned from holding board positions for a year due to the alleged diversion of the company’s funds.

Zee’s shares are marginally up so far this year.

(Reporting by Sethuraman NR in Bengaluru; Editing by Sohini Goswami)