Advertising revenue of entertainment industry to decline in FY21: ZEEL

The company believes in the coming festive season, brands will come back with full force and by the end of this fiscal the ad growth could return to its normal trajectory. "In the first quarter (April-June), lockdown and absence of fresh content led to a sharp decline in advertising revenue.

Advertisers are coming back but it is still far from recovery and advertising revenue is expected to decline in 2020-21, leading media and entertainment company Zee Entertainment Enterprise Ltd has said. Although Zee Entertainment Enterprise Ltd (ZEEL) is witnessing a significant spike on both TV and digital platforms, but its ad monetisation has gone down sharply, the company said in its annual report for 2019-20. The company believes in the coming festive season, brands will come back with full force and by the end of this fiscal the ad growth could return to its normal trajectory.

"In the first quarter (April-June), lockdown and absence of fresh content led to a sharp decline in advertising revenue. Though things are improving sequentially, the loss of revenue in the first half will lead to de-growth in the advertising revenue for the year," ZEEL CFO Rohit Gupta said on the outlook for the business. According to the media and entertainment major, private consumption growth in the country was tepid during FY2019-20 which forced marketers to reduce their advertising spends. "With the wheels of economy back in motion and resumption of fresh content on our channels, we are seeing advertisers coming back and increasing their spends," he said.

Gupta further said, "However, we are still far from complete recovery. We believe that the festive season will see brands come back with full force and by the end of this fiscal the ad growth could return to its normal trajectory. "Our estimate is that the advertising revenue for the entertainment industry could decline by 25-30 per cent during FY21," he added.

In FY2020, ZEEL's advertising revenues declined by 7 per cent largely due to the "macro-economic slowdown, fall in FTA revenue and loss of viewership" in certain markets. ZEEL in March 2019 converted two of its popular free-to-air channels into pay and pulled them out from DD FreeDish.

This had a significant impact on their viewership and affected the revenue of the network, he added. On the cost front, the media major has initiated an exercise to relook at every cost item, across businesses and functions, resorting to zero-based budgeting. While, during FY2020, domestic subscription revenues witnessed a growth of 33 per cent led by better monetisation of TV viewership after implementation of NTO and growth in the subscriber base of its OTT platform ZEE5.

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