Zee CEO Punit Goenka hopeful that Budget 2025 will boost ad spends

Zee Entertainment CEO Punit Goenka is hopeful that the upcoming Union Budget will include steps to revive the consumption cycle in order to spur the industry.

Speaking to the investors during the Q3 earnings call on January 23, Goenka said that the overall macroeconomic environment remains challenging. 

“The green shoots we witnessed during the beginning of the quarter did not pick up the required pace to drive a positive growth momentum. This coupled with the muted spending by FMCG brands in a festive quarter further slowed the pace of growth for the industry at large. Although there was a marginal pickup in the rural recovery, the lackluster sentiment in the urban market led to weaker demand and impeded significant growth. This in turn also impacted our advertising revenues during the quarter,” he said.

However, he hopes the measures announced in the Budget will improve consumption which will drive a positive momentum for recovery going forward. He remains optimistic about a gradual recovery in the new fiscal that will enable the network to capitalise on the increased spending by advertisers. 

In its Q3 reports, the company has attributed its 8.4% decrease in advertising revenue (Rs 940 crore) to reduced spending by FMCG companies. However, subscription revenue showed positive momentum, increasing by 7% to Rs 982.5 crore, driven by both linear subscriptions and growth from the ZEE5 streaming service.

ZEE5 has also enabled it to consistently move the needle on subscriptions and margins. The company is taking concrete steps to enhance the growth on digital post a thorough calibration of the cost structure.

“During the quarter the subscription revenues continue to post a healthy growth. In line with the Telecom Regulatory Authority of India (TRAI) tariff regulations, we have published a new Reference Interconnect Offer (RIO) that reflects the competitive pricing approach adopted by the company. We expect subscription revenues to continue growing after a couple of quarters of implementation,” Goenka said during the call.

On the linear side its language markets continue to maintain a strong foothold and post positive results. It is also witnessing an uptick in the Marathi market where it has “invested significant amounts of time and energy over the last few quarters to identify and fill in the required gaps.”

Goenka said that it is focused towards strengthening its Hindi programming and considerable investments are being made in content to enhance the value for its customers. 

The lateral leadership team structure, which the company introduced in April 2024, is enabling the company to direct concerted efforts towards each business segment. Goenka said that the company remains optimistic about firing on all engines moving forward.

“At a macro level we are maintaining a sharp eye on the profitability levels and investing for long-term growth. We have identified the gaps and our teams are working around the clock to innovate and build solutions that will enhance the company's competitive advantage in the market. The company remains on firm footing to drive robust growth in the future with a balanced investment approach,” he said.

The company's focus during the first three quarters of this fiscal was around strengthening the fundamentals of the business and pivoting strategies to enhance the performance and profitability levels. The company has implemented several action-oriented steps that have translated in the year- on-year margin expansion.

“The fiscal prudence exercised across the company has served us well, enabling us to maintain a firm grip on the margin profile and balance sheet. The first phase of our overall strategic road map centered around costs and margins has been successfully executed and our energies are focused towards boosting growth and performance,” he said.