Ladies and gentlemen, good day. Welcome to the Q3 FY23 earnings conference call of Zee Entertainment Enterprises Limited. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then 0 on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Mahesh Pratap Singh, Head of Investor Relations, Zee Entertainment Enterprises Limited. Thank you. Over to you, sir.
Thank you, Yashaswi. Hi, everyone. Welcome to our Q3 FY23 earnings discussion. We have with us today our Managing Director and CEO, Mr. Punit Goenka, along with senior management team. We will start with opening remarks from Mr. Goenka, followed by commentary on operating and financial performance by Mr. Rohit Gupta, our Chief Financial Officer. We'll subsequently open the floor for questions and answer session. Before we get started, I'd like to remind everyone that some of the statements made or discussed on today's conference call will be forward-looking in nature and must be viewed in conjunction with risks and uncertainties we face. The company does not undertake to update any of these forward-looking statements publicly. I now hand the call over to Mr. Goenka for his opening remarks. Over to you.
Thank you, Mahesh. Good evening, everyone. I hope all of you are doing well, and I'm glad to connect with you all this evening. As always, I will share a brief outline on the company's performance indicators, post which our CFO, Rohit Gupta, will take you through the financial and operating metrics in detail. Before we begin, I would like to apprise you on the progress of the proposed merger between Zee and Sony. As you are aware, we have received approvals from the stock exchanges, Competition Commission of India, and the company's equity shareholders. The teams at both ends are focused on completing all the required legal and regulatory processes mandated as per law. Our focus remains on concluding these processes in the most appropriate and timely manner, and we stay committed to building a value-generating institution for all our stakeholders.
Speaking about the industry at large, during the third quarter, the M&E sector continued to display immense potential and several growth opportunities across key segments. Keeping pace with the momentum, the company has also continued to make good progress with healthy growth in the digital business and share gains in some of the key channels during the quarter. This mirrors the success of the team's concerted efforts to strengthen our offering across markets. We continue to maintain sharp focus on delivering a robust content slate to consumers. Our recent re-entry in the sports business with the inaugural edition of the ILT20 has augured well for the company and has drawn a positive initial response from the viewers and advertisers alike. We aim to further build onto this momentum and elevate audience excitement, viewership, and economic muscle for the sports business.
Even as the structural growth scenario appears positive in the mid to long term, we remain cautiously optimistic on the near-term advertising revenue outlook. The overall sentiments continue to be soft this quarter as well, which has resulted in muted advertising revenue growth across the sector. While the macroeconomic environment and inflationary headwinds are gradually easing, key brands and advertisers across categories restrain their spending. Given the fact that we have relatively high exposure to FMCG advertisers and tier two, tier three audiences, our advertising revenue sensitivity to rural demand and consumption is more pronounced. We remain hopeful that the steps announced by the honorable Finance Minister in the Budget 2023 will spur broad-based demand and lead to a quicker recovery in the overall ad environment. On the subscription front, the long standstill on the new tariff order has been impeding growth and impacting our profitability.
That said, NTO 3.0 being implemented from February 1, 2023, we look forward to driving subscription revenues growth post-implementation in the most effective manner. At Zee, we continue to focus our energies on building a future-ready portfolio, which is well-poised and diversified to capitalize on the opportunities as the overall market sentiments improve. On that note, I would like to hand over the session to Rohit to share finer details on the company's performance during the quarter. I look forward to interacting with you all during the question and answer session. Thank you. Over to you, Rohit.
Thank you, Punit. Hello, everyone, welcome to our Q3 FY23 earnings call. I will briefly touch upon financial performance and outlook. Starting from an operating environment perspective, we continue to see curtailed ad spending by FMCG brands during the quarter. While October did see a very brief pickup due to festive season, subsequently, spends have continued to taper off. We believe this is a cyclical slowdown, as demand recovers, we will see pickup in TV advertising. TV still remains the most relevant mass media brand-building avenue with unparalleled reach. We are utilizing this period to strengthen our business to capitalize on the opportunity as the tide turns. On linear business, we continue to be India's strong number two TV entertainment network, our viewership share for Q3 FY23 was at 16.2%, marginally lower by 20 BPS quarter-on-quarter.
We have gained share in several key markets, including in Zee Tamil, which has been a consistent growth story over last couple of quarters. Zee Bharati performance still remains subdued and team is focused on stabilizing and rebuilding our network share there in coming quarters. On digital side, ZEE5 has posted yet another quarter of growth across financial and operating metrics. Our Q3 FY23 DAUs are highest ever at 11.5 million. Original content is being well received, and ZEE5 app user experience has seen significant improvement. All of these are strong affirmation of our investment in content, technology and marketing. ZEE5 has clocked a revenue growth of 33% year-on-year during Q3 FY23, reflecting healthy traction and adoption. Specifically coming to the financial performance, total revenue for Q3 FY23 are up 4.1% quarter-on-quarter and were flat year-on-year.
Our ad revenue for the quarter grew by 5% quarter-on-quarter, aided by festive season spending, but are lower by 16% year-on-year. On year-on-year ad revenues, in addition to the macroeconomic factors, previous year quarter three also had a stronger festive season and Zee Anmol FTA ad revenue, which we reviewed from first April 2022. Subscription revenues for the quarter were up by 13% year-on-year and 9% quarter-on-quarter. Quarter three FY23 subscription revenues were aided by underlying organic growth in ZEE5 and recognition of INR 59 crores amount from ZEE network, including INR 10 crores of GST, so net revenue of INR 49 crores. On recognition of subscription revenues from ZEE network, while we have recognized revenues, as a conservative practice, we have also provided INR 59 crores amount receivable, including GST in exceptional items, to be consistent with our cash and carry approach.
Zee Music Company saw 246% year-on-year growth in video views, highlighting strength of ZMC music catalog and library. YouTube subscriber base of ZMC increased to 92 million from 80 million a year ago. ZMC continues to be number two music channel and has a very young and new age catalog with very high consumption. ZMC also continues to acquire 50% of new Hindi movie titles. Coming to the movie business, during the quarter, Zee Studios released nine movies, five Hindi and four regional. While the content performance remains soft, syndication revenues were healthy, driving 148% year-on-year growth in Q3 FY23 in other sales and services revenues, albeit on a lower base of Q3 FY22. During the quarter, our content inventory and advances were largely stable at INR 79.5 billion.
We have a strong 2023 pipeline of movies under different stages of production. Moving to cost and profitability. During quarter three FY23, excluding exceptional items, our EBITDA margin came in at 16%, quarter-on-quarter improvement of 135 basis points, but still lower by 668 basis points year-on-year. We continue to be focused on prudent cost management across the business and are hopeful that when the macroeconomic environment and ad spends improves, our margins will recover from these levels. ZEE5 EBITDA losses for the quarter stand at INR 2,820 million, largely stable compared to Q2 FY23. From an outlook perspective, we will continue to invest in strengthening our ZEE5 value proposition in line with our investment strategy and expect ZEE5 to be in investment mode for the next few years. Quickly touching upon the receivables from Dish.
Outstanding has substantially reduced from INR 5.8 billion as on March 20 to INR 1.06 billion in December 2022. Tax for the quarter came in at INR 243 million. Net profit for the quarter was impacted by exceptional items aggregating to INR 169 crores. Provision for Zee subscription revenues, we have accounted INR 68.9 crores for merger-related expenses, INR 25.5 crores provisioning for principal outstanding from Zee Learn entity and INR 16.2 crore provision towards Dasra. The cash and treasury investments of the company as of December 2022 stand at INR 6.7 billion. The cash and treasury investment includes cash balance of INR 4.6 billion and fixed deposits of INR 2.1 billion.
To sum up, while Q3 festive seasonality hasn't been strong, we have shown some sequential improvement in a challenging backdrop, which is encouraging. Ad revenue growth is ad revenue growth revival is our key focus, and we are hopeful of an gradual improvement in the spending environment. Back to you, Mahesh.
Thanks, Rohit. Yashaswi will open the Q&A session.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have our first question from the line of Abneesh Roy from Nuvama Institutional Equities. Please go ahead.
Yeah, thanks. I have first question on the PNL and balance sheet. Firstly, on the PNL, there is an exceptional item of around INR 166 crores odd. I wanted to understand the three a bit more in detail. Why now? Second is, your cash and investments is down in the 9 months from around INR 1,297 crores to around INR 672 crores, almost half. Where does this go from here? I understand the slowdown in advertising and your upfront investments across many of your channels and OTT. From here on next 1 year, where do you see your cash and investments?
Rohit?
Yeah. Thanks, Abnish. Abnish, like I said, you know, the exceptional item has four key elements to it. The first one is, you know, as I said, we have recognized revenue of Siti to the extent of INR 59 crores, including GST. We have also taken a similar provision, which has been reflected in our exceptional items. That is the first part. The second is, you know, there were entities from Zee Learn, which we have impaired, which is about INR 255 million. There is merger-related cost, which includes, you know, legal, professional and other item integration, et cetera, which is about INR 689 million. There is a provision for Dasra, which we had been doing in earlier quarter.
In terms of, you know, the contractual agreement, we continue to provide for it. That is about another INR 162 million. That is the breakup of the exceptional item. As far as cash, if you see in this quarter, the cash, primarily reduction in cash is because there's a dividend payout that has happened to the tune of about INR 300 crores. Quite frankly, you know, this quarter there is a free cash flow of INR 100 crores plus that has happened. Over the last nine months, primarily because, you know, we have seen dip in advertising revenues, you know, and that is one reason why of course, you know, it has impacted our profitability and our cash as well.
Like we said, you know, the key is the turnaround of the advertising revenue. As the advertising revenues improve, our profitability will also improve, and that will also have a positive impact on our cash. Having said that, we have been making investments in ZEE5 in both in, you know, in the content side, in technology and marketing. That investment, you know, will continue because we see that as the growth area.
Sir, one, follow-up on that. The merger cost of 68 crores seems quite high. What exactly is it? Merger cost and NCD, say on Zee Learn or say Siti Networks, any more recurring item? We had understood that any more group level issues are mostly done. Why this fresh issue? Can again more issues happen from group companies?
Abnish, on the Siti part, because we are on cash and carry, the billing has happened of the INR 59 crore that Rohit talked about. Because the cash is not received by us when is it's parked in either court or in FDs with the banks which are earmarked for us. Good prudence governance made us take the decision to provide for it. Zee Learn is a one-off. There is no other outstanding against that. Rohit, correct me if I'm wrong. There is not gonna be anything else. On the merger-related issues, Abnish, you can take it offline with Mahesh in detail. Like I said, you know, just to add to it, this includes merger transaction, integration planning, several other functional workstream, you know, specific to the merger.
This is a big merger, so, you know, these expenses, look high, but in terms of the overall, merger, you know, you know, this is what it is.
Sure. That's useful. My last question is on advertising. When I see the FMCG ad spend in Q3, we have obviously not seen a 15% cut in their advertising spend. There are other sectors, I do understand that. What's the strategy now on Zee Anmol because, say 6%-7% of the advertising impact is clearly there from there also. You are now seeing improvement in your subscription revenue with the new, approvals, et cetera, which have come in terms of NTO 2.0 also. On Zee Anmol, any refurbished strategy, given the impact is quite high and rural slowdown, we don't know. As of now, still it is still very early green shoots. In that scenario, any rethink on the FTA strategy?
No, Abneesh. No rethink on the FTA strategy because since April 2022, when we went off free-to-air, we have actually seen, you know, the stabilization of the paid subscriber base on both cable and digital. Sorry, satellite.
Therefore, going back so soon would, in our view, will hamper the potential growth for the pay which is going to come back after three years with the NTO 3.0 implementation. Nothing as of now.
Sure. Okay, thanks. That's all from me. Thanks.
Thank you. We have our next question from the line of Vivekananda S. from Ambit Private Limited. Please go ahead.
Hi. Thank you so much for the opportunity. In your consolidated notes to accounts, you mentioned that you have billed a subscription of INR 68.49 crore from Siti and you have booked provision of INR 58.4. Does this mean that you received around INR 10 odd crores from Siti during the quarter? I'm just trying to understand this note better.
Yeah. Rohit?
Yeah, I'll take this one. We have... The total amount that was billed was, you're right, about INR 68 point, you know, some crores. The revenue that we have recognized is actually based on, you know, the amount that Siti has either deposited in the court or the fixed deposits that they have made, which is earmarked for, Zee. Based on that, they have because the amount to which we have done it, is about INR 59 crores, that is why we have taken revenue of INR 59 crores. Similar amount has been provided for in the, which is shown in the exception items.
Rohit, you are saying that this INR 68.5 crore is the billing, you were supposed to recognize INR 58.4, since you have not received that money, you are, you know, providing for it. Is it?
That's right.
Okay. My second question is on the Zee Learn NCDs. When was this investment made?
as you can see from the note, these Zee Learn NCDs were guaranteed by Zee, and these, you know, these were actually taken over by Zee in 2020. we have been receiving, you know, payments from Zee Learn, to the NCDs, and the amount had come down from INR 45 crores to INR 24-25 crores. having said that, in the last few months, we have seen that, you know, the amount was, one, not coming in, and secondly, because there is a insolvency, admittance that NCLT has done for Zee Learn, based on which, you know, we have taken a call to provide for it.
Okay. Third question is, you know, the Dasra guarantee, clearly there is still some amount that is unprovided for. We see that every quarter there is some additional provision that we are taking for this. I believe the number for the current quarter was 16.2 crore. Why not take the provision entirely in one quarter so that it will, in this one hour of conference call discussion, we can focus on the business items rather than every quarter just jump through to understand the numerous exceptional items.
See, for Dasra, you know, all the matters are sub judice right now. We are providing for as per the terms of Dasra. Dasra have, you know, with various banks, there are certain Dasra terms. Based on that, we are providing. As and when they become due, we provide for it every quarter.
Oh, I see. Okay. Was that the same with Zee Learn, or was that your choice that you decided to provide for it this quarter?
With Zee Learn, like I said, you know, there was a trigger in this quarter, and based on that, you know, we decided to take the provision.
Okay. Understood. Thank you. I'll come back in the...
Thank you. We have our next question from the line of Jinesh Joshi from Prabhudas Lilladher. Please go ahead.
Yeah, thanks for the opportunity. I have a question on the subscription business. The revised RIO that we have filed, basically shows a price hike in only double digits, especially in some of the bouquets, down South. Going by this trend, can we expect a very strong growth in the subscription business in the first year of implementation itself, like we had witnessed for NTO 1.0? That is one. Secondly, can you also share the rationale behind pricing? I know viewership is probably one of the factors, but is there any math linked to it? Because in some of the bouquets the price hike is quite steep. This is my first question.
Yeah. Jinesh, if you recall, because we've not been able to take any price hike for the last 3 years, and we have launched the maximum number of channels, you know, within those 3 years, which means we were not able to price them into our, into our bouquet itself. That is the other reason other than viewership itself. That's the only reason it looks like that steep. We have factored that into our calculation. Of course, the resultant growth for the company overall, all India level will not be that high. It'll still be moderated single digits, as I've been saying to you.
Sure, sir. My second question is with respect to the response to the inaugural ILT20 league. Is it possible...
Mr. Joshi, I'm sorry, can you use your handset, please? Your voice is coming a little muffled.
Is this better now?
Yes.
Yeah. My second question is with respect to the response to the inaugural ILT20 league, is it possible to share any viewership data or probably any data point with respect to ad view or give some perspective on profitability timeline in the context of amount that we have paid to get the right?
Yeah. I... the ILT20 inaugural session has been received quite well. Ratings data is available in the box system. You can get it from there. I would not have it, we won't have it directly available here, but we can share it with you. Because this was aired on our entertainment channels, we have seen a significant uptake in the advertising, and it is within the budget that we had planned. Of course, any league of this sort takes a few years to get established and turn profitable. We, we do expect in the third or fourth edition is when we'll see breakeven or profitability coming from this.
Got it. That's it from my side. Thank you.
Thank you.
Thank you. A reminder to participants to press star and one to ask a question. We have our next question from the line of Arun Prasath from Avendus Spark. Please go ahead.
Hello. Thanks for the opportunity. Punit, my first question is on ZEE5. If you look at the trends for the last nine months, clearly the MAUs have increased, the DAUs have kind of become flat and average watch time has actually reduced and revenue has increased. I just want to understand this divergence in these trends. How should we read this, what's happening and what should we expect in the next say one or two years on this front?
MAUs have increased and even DAUs have increased over the last 9 months. In fact, they have gone from, I think from my memory, I'm talking, Arun, but we can reconfirm these to you. About 9 months ago it was daily active users between 7 million-8 million, and today we are at about 11.5 million. The trend in the time spent has weakened this quarter only because we had a lot of new customers that came in to sample. As you would know, for any new customer, for them to become loyal and start consuming content for long periods of time takes time. This is just an aberration. I do expect this to stabilize back to the 180-200 levels that we have been seeing for the last 3 quarters.
Okay. Just the numbers that we see is close to DAUs have kind of been flat between June to September around 11 million. Nevertheless, what I'm trying to understand is if you can give your gross adds on the subscriber, because these numbers are looking like based on the usage and as well as the retention. But if you consistently are using increase in the gross adds and also the net adds is remaining more or less the same, or how should we look at this? If you slice and dice qualitatively, can you explain what's happening here?
Arun, sorry, I stand corrected. You are right. DAUs have been flat for last 2 quarters. I stand corrected there. We will be sharing a whole lot of new metrics with you all starting post the merger. kindly bear with us for a couple of more months and we'll start sharing all the detailed metrics with you.
Okay. Okay. All right. Thanks.
Right.
My next question is on the cost side. If you see the content costs and obviously the marketing spends, I'm just comparing this 9-month data from the 2020 and as well as 2022. Obviously the cost is increasing because your investment is going up in, you know, this properties. Just my what I'm thinking is, are we too aggressive in the content investment in these times, despite knowing that there is a slowdown in the FMCG spends because we are aware about the FMCG spends at least. We are talking about this for the last two, three quarters. Are we going to tone down our aggression at some point of time?
How should we think about the costs going forward?
Arun, you are right. This is a natural question that we ask ourselves every day. The impact of that is also seen, you know, because last year's same time when we had cut costs significantly, it had an impact on our business in the current year. We consciously chose not to cut the investments in this year so that when the tide turns, we are ready to capture the growth and therefore we will continue to remain aggressive in the content investments. Of course, that doesn't mean that we keep jumping by 14%, 15%. I think they are inflationary in nature. Even if you look at now, it's only about a 10% growth in content costs that we are seeing.
Okay. You know, great. At what point of time you will take a relook at these costs, cost levels?
We do it every day, Arun. That's what I'm saying.
Sorry, I couldn't hear you.
I'm saying we do this every day, every quarter, that's our job to be prudent. We look at these costs. Other than revenue, that's the next line item we look at, is our cost. Rest assured we are going to be prudent. When we think it is no longer viable to invest in the content, we will pull back.
Okay. All right, great. Thanks. All the best.
Thank you. We have our next question from the line of Kunal Bora from BNP Paribas. Please go ahead.
Yeah, hi. Thanks for this opportunity. I wanted to check regarding your thoughts on Jio's decision to offer IPL for free on JioCinema. Would this have an adverse impact on the PTV customer base and ability of broadcasters to monetize the cricket broadcasting rights? I know it's different, IPL versus World Cup rights, which you own, but how do you see this development? Would this mean a larger move of ad dollars towards digital?
I don't think so that it is that easily substituted that you can just shift the viewership from, you know, television to digital overnight. If you look at even the case of when the predecessor had IPL, if you'll recall the first two years, they also were giving it free. It's only in the third year or third edition that they had it, that they put it behind the paywall. Of course, it will pull advertising dollars towards that, but that does not mean it will replace television from any angle. Our own calculations state that even in the last season of IPL, almost 75%+ advertising came on television and only 20%-25% came on digital. That will not significantly change overnight.
Even with IPL being available for free and on one channel while, that's being paid on television, you don't think it'll have any meaningful impact? I mean, why would that be the case? For the customer it becomes so much convenient plus affordable to directly go for digital, right?
No, you see, you are talking about the, you know, maybe the high-end customer who's got the high-end television set that they watch it on. The other 200 million or 250 million people are not gonna sit and watch a 5-hour match on the mobile screen, right? Once you are home, you generally just go to the convenience of watching it on television. That is what I believe is general human nature.
Okay. Okay. Okay. Okay. Second and last question is I wanted to get your initial thought, revenue growth, subscription revenue growth and margins in FY24.
Kunal, we are not doing that guidance out right now. As I said in my opening remarks, the advertising market is still soft. We have to take it quarter on quarter. For FY24, we are not giving a guidance at this time. Subscription revenue will grow. As I said, once the NTO 3.0 is implemented, you will see a healthy single digit growth on subscription revenue.
Interesting. On ad tech are you seeing any signs of a recovery? For consumer companies, the gross margins are expanding, ad trends are at a multi-year low. Are you optimistic about a recovery?
I'm always optimistic and, you know, with the headwinds and, you know, on the inflation side and the rule thing, hopefully we'll bounce back soon enough for consumption to again pick up and therefore advertising should come back.
Okay. Okay. Okay. Okay. Just lastly, on the sharp decline in average viewership minutes in digital, I couldn't understand the reason for that. Why is there a sharp alteration?
It's basically new users that came on. Their consumption generally is low in the beginning months. It's only once they get used to the platform that they consume more, so it's an aberration. There is no trend to it.
We haven't seen a sharp increase in users as well, right? I mean, what am I missing here?
Kunal, you've seen the MAU go up meaningfully. If you look at where our MAU is, about 10 million on addition in the quarter.
Okay. Okay. Okay. I'll have a look at it. Thank you. That's it from my side.
Thank you.
Thank you. We have our next question from the line of Ankur Periwal from Axis Capital. Please go ahead.
Yeah. Hi, sir. Thanks for the opportunity. First question on Zee5. You know, if I look at over the last 2 years, the DAUs have almost doubled. MAUs have also more or less doubled. The conversion rate is around 9%-10% odd. The revenues have grown, but the costs have grown even sharper. How do you plan to, you know, monetize these footfalls or these sort of, you know, DAUs that we are seeing? We had earlier mentioned large part of this are driven by subscription. On the advertisement front, if you can share some thoughts there.
You're right. We will continue to grow our revenues by subscription itself, and also by advertising. Advertising will be, you know, a smaller segment, unlike television, where it constitutes almost 70% or 80%, 75%. In this case it will be, you know, reversed to begin with and then probably plateau out between 60/40 in the favor of subscription.
Is there any inflection point in terms of, let's say, DAUs or maybe the conversion rate wherein you believe the monetization on advertisement will be much more sort of, you know, feasible and visible there?
Yes, obviously there will be, you know, once we started in conversion, levels 15%-18%, you will start seeing far more traction in advertising coming in.
Sure. On the advertisement front, while the environment is still soft, and as you suggested, probably near term, the outlook is not as great. If you can share probably, let's say, on a nine-month basis, how has been our volumetric growth and maybe the correction on the yield front that we have seen?
Most of the de-growth has come on the yield part. Only some part has come on the inventory or the consumption.
This will be largely led by, you know, let's say the likes of Tamil and, Marathi languages, or even Hindi and other languages are seeing corrections.
Across the board.
Sure. Lastly, you know, maybe a bookkeeping. The one-off that we had taken in this quarter, Zee Learn largely is done. You know, merger cost, is it all done or probably there could be certain more expenses there? Secondly, on the Siti exposure bit as well, and DSRA. You know, will we be taking a quarter-on-quarter approach there, or there is a possibility of sort of, you know, front-loading all the provision at one go?
As Rohit explained, as part of the DSRA agreement, as and when those amounts fall due, exposure falls due, we take it in a quarterly approach. As far as Zee Learn is concerned, you're right, it's done for. As far as the merger expenses are concerned, the merger is not yet done, no? That's, it will continue.
Just want to add, you know, while we do take this provision for DSRA, entire provision is without prejudice because, we have these matters via subsidiaries.
Sure. Just a clarification, this merger cost of INR 68-69 crores, this is only for the quarter or there are certain longer term costs also which have been booked here?
This is the cost for the quarter. Sorry, I didn't get what was the question?
No, no. I'm just wondering if sort of, you know. This is cost only for Q3. In Q4 possibility of such costs repeating also remains there.
Not necessarily that it has to be the same, right? I mean, because some consultants who have finished their work and gone away, it will continue to vary. We can't make a standard statement that this will continue at the same level.
Okay, sure. That helps. Thank you.
Thank you. We have our next question from the line of Abhishek Kumar from JM Financial. Please go ahead.
Hi. good evening to the management team. sorry to harp on the exceptional item again. two questions here. Rohit, you mentioned that we are providing for DSRA as and when they fall due. Does that mean that, you know, and I'm, if my understanding is correct, this is basically the guarantee that we provide for the interest which is due? Consistently whenever it is due, it is, you know, not being paid by the entity which we have guaranteed. If that is the case, what is the outstanding amount now which has not fallen due? Any number to give us little bit of visibility or clarity on, you know, what to expect going forward?
You know, first of all, you know, whatever amount that was due for DSRA till date, that has, you know, we have taken a provision and that is without prejudice. We have these matters in the court, and, you know, so we are aware about that.
We won't be able to disclose those figures to you.
Yeah. Yes, whatever, you know, so there is like you're saying, is there any outstanding amount which is due? It's nothing like that. Whatever is, you know, we have already taken a provision for that.
Okay. Okay. Second, you know, like Zee Learn, you know, can we disclose the overall outstanding that we might have across, you know, the Zee entities or other related parties which, we should be aware of?
All are disclosed, Abhishek. There's nothing which is not disclosed. Even Zee Learn was disclosed.
Okay. Okay. Fine, that's helpful. Now one question on the OTT. Just wanted your view. Have we seen any decline in the competitive intensity, you know, the, over the past few years or the competition continues to be, you know, competitive intensity continues to be very high and therefore we continue to invest in the OTT platform that we are doing?
Competition on OTT is still high. I don't see it as being reduced in any manner whatsoever. I think it's still early days and this competition intensity will remain high for at least the foreseeable future.
Okay. That's all from my side. Thank you and all the best.
Thank you.
Thank you. We have our next question from the line of Aditya Chandrashekhar from UBS. Please go ahead.
Yeah, hi. A couple of questions from my side. On subscription, basically some part of the growth is because of the Siti revenue that's recognized, right? I just wanted to understand, is this a kind of cumulative catch-up revenue that's been recognized or, are these amounts also included in prior quarters? I'm just trying to understand like for like kind of how do I compare, Q over Q.
It is catch-up. Entirely catch-up.
For how long will this be? As in what's the period for this?
Just one second.
12 months.
Last 12 months' revenue.
Yeah.
Yeah.
Yeah. We have not been recognizing revenue from Siti because we have said that, you know, should the revenues be recognized only on the basis of when we collect. Only this time when they have actually made deposits into the court and they have these which are earmarked, we have recognized this revenue just to be, you know, in line with the accounting standards. At the same time, we have made a similar provision to make sure that, you know, unless these amounts are received, we don't take them into our profitability. I hope that helps.
Yeah, helpful. Going forward, every quarter will they be continuing this deposit to the court or, I mean, what's the arrangement in place going forward?
They have to deposit in the court or in the FD until the court resolution happens on the case.
Okay.
Because up until then, they were paying us directly.
Okay. Okay. Got it. Second question, is it possible to give any sense on the potential total merger costs? Like, what are we looking at?
Difficult to say right now, we'll try and get an estimate for you.
Okay, sure. Lastly, on the content costs, I think related to a question that another analyst had asked. In terms of like inflection point, in terms of when you might think of saying that the content investments have peaked, is there a particular benchmark in terms of linear viewership share or maybe DAU, MAU number that you maybe have in mind? Say the 16% goes to X percent or the MAU goes from 11 million to... Or sorry, DAU goes from 11 million to 15, whatever number it is. Is that the right way to think about it as to from then the content investments will kind of start tapering down or is that too simplistic?
Aditya, that's very simple, right? Why would I want to put a ceiling for my growth on viewership or any of those things? Generally, the way to look at it is because linear is a stable business, we generally remain between 40% and 45% of our revenue as the cost of programming. That has been the benchmark that we follow. That's what you should continue to look at. Of course, today it will be higher because of-
Yeah
... current macroeconomic situation. As and when that improves, this will again come into the same level of 40%-45%. You will agree that as long as we are growing, we should be investing in content so that we can continue to grow our viewership and therefore the revenue. On the Disney side.
But currently-
it's still early days, so we have to see and.
Okay
... see how that metric goes.
Okay. currently on linear side, you're investing, right, to catch up on some of the markets where we're lagging behind?
That is correct.
Yeah. Once you reach kind of the market share that you expect in those segments, then it'll come down to the steady state, 40%-45% of revenues. That's what you're saying, right?
That's what I'm saying. Yes.
Okay. Got it. Okay. Thanks. I'll reach out for any estimate if possible on the merger costs.
Yeah, sure.
Okay. Thank you.
Thank you. We have our next question from the line of Pulkit Chawla from Emkay Global. Please go ahead.
Yeah. Thank you for the opportunity. First on the market share, this quarter again, there has been a slight decline in the market share and market share gains, recovery seems to be slightly on the slower side. This is despite the fact that you've seen improvement in both Hindi and Tamil. Is there some reason that I'm missing or some other factor as well?
The 20 bits is too small a number to, you know, even consider because it's not happened in any one given channel. It has been a combination of little ratings going away from multiple channels, which is a function that happens every quarter. You gain in some, you lose in some.
Got it. Second on the merger, any estimated timeline for the merger to be completed now, given that it's already been delayed by quite some time?
We are working on it as fast as we can. Difficult to give a timeline because the NCLT is not really in our control. All other things are pretty much in our control and we are pretty much something that is doable as soon as the NCLT order is received.
Sure. That's helpful. That's it from my end. Thank you very much.
Thank you.
Thank you. We have our next question from the line of Kshitij Saraf from Tusk Investments. Please go ahead.
Hi. good evening. Thank you for taking my question. it's on the NCLT procedure. We see with regards to the ITRS and with regards to the set of lenders, the cases are ongoing in NCLT. Could you just shed some light on where we go forward from here with regards to the closure or resolution of these cases? Because that might determine the merger timelines perhaps.
As of now, the next hearing of the NCLT is tomorrow. We will have to see what happens there. From what I've understood... Just one second. Give me a second. As I said that our next date is tomorrow itself. From the, you know, from the perspective that these are subjective matters, it'll be difficult for me to give some timelines to go forward. You will have more color on this tomorrow, what happens in the court.
Okay, just a quick follow-up. We'll get a better sense on both the ITRS as well as the set of lenders tomorrow itself?
Well, when the court gave the date, they said it's a final hearing, so I'm keeping my fingers crossed.
All right. Okay. Thank you so much.
Thank you. We have our next question from the line of Sameer Deshpande from Fairdeal Investments. Please go ahead.
Hello, good evening, everyone. My question was actually regarding this merger only, and it has just got been got answered. That is the final case hearing is tomorrow. Hope the Valentine's Day proves to be a good day for the great merger we are all awaiting, Sony-Zee merger.
Yes, Sameer. Keep your fingers crossed, please.
Yes, we are long, we are waiting for that. Let us hope it is completed shortly. If it is, if the hearing is over tomorrow and everything goes in our favor. As I have read from the newspaper reports, it mentions that, the, our lawyers have already mentioned that whatever liabilities arise due to these type of cases will be borne by the merged company. I think there is nothing, beyond that which these lenders are interested in. Is it correct?
You're correct, Sameer, but there are some, you know, parties that have no claim and have also intervened. It's not just people who have legitimate claims. There are certain illegitimate claims also that people have put, just to clarify.
If it is a final hearing, I hope, the things will get squashed, which are whatever, not really legitimate.
Correct.
Okay. Thank you and all the best.
Thanks, Sameer.
Thank you. We have our next question from the line of Satish Jain from Monifest Capital. Please go ahead.
Yeah, good evening, Punit and the team. Some of my questions have been answered, but one question probably that still remains to be answered is on the movie business. Can you give some color, how much have we invested, and what are the revenues and profitability, if that's possible to give? What are the next few movies that are in the pipeline? Is the strategy for movies still intact, or have we curtailed that in line of the reduced cash flows or whatever?
Actually we have a very decent slate for 2023, which is already signed up. There is difficulty to curtail that if any, if at all. Of course, the movie business has been profitable for us. Unfortunately, I cannot share the details, as we don't report the segment-wise yet, but it is a profitable business for us, let me tell you that. The strategy will remain because it is a very strategic feeder into our core business of linear as well as digital.
Okay. Which are the next few big movies that are in the pipeline, if you can share that? Is it possible or...
Of course. There is a movie called Maidaan, which is with Mr. Ajay Devgn. There is a movie with Mr. Ajith in South. These are the two large ones that I can recall off the top of my head, but there will be certain more.
Okay. What about Gadar 2? Is it a part of your production or is it only a distribution?
Gadar 2 is very much part of our production, and, we are looking forward to the Independence Day for its release to make another dhamaka.
That's it. Thank you. All the best for the hearing tomorrow. I think that's more crucial than everything else at this point in time for at least the investor community.
Yes, Satish. Thank you.
Thanks.
Thank you. We'll take our last question from the line of Vivekanand S. from Ambit Private Limited. Please go ahead.
Hi. Thank you so much for the follow-up opportunity. Could you help us understand the pricing levels of ZEE5 versus how we can catch up with competition? Is there even a desire to do that or will we keep pricing low? That's one. Secondly, how much of this year-over-year revenue growth was driven by pricing? I mean, just a broad sense would be very helpful here. Lastly, just a request, I mean, there are still some analysts who have been covering Zee from the time when it was owning Ten Sports. It'll be great if you can share sports losses going ahead also, because that helps us look at the business better. Thank you.
Sure. The sports side, we will continue to do that. As I said, in the merged environment, we will share those segment numbers with you. In terms of ZEE5 pricing, I think we are quite aggressive with our pricing in the market, if you look at it. I mean, today, the ZEE5 mobile-only pack is available for INR 499, and the multi-user pack is available for INR 699. The growth that you have seen, I'm only looking at my team, the growth it came from price increase, largely for us in the current year, because we went from a INR 499 pack to a INR 699 pack. We believe we are quite aggressive on pricing.
You will continue to see price hikes from our side even in the coming year, especially with the two companies merging.
Great. Thank you so much, and all the best for the NCLT proceedings.
Thank you very much.
Thank you. I would now like to hand the conference over to Mr. Mahesh Pratap Singh for closing comments. Over to you, sir.
Thanks, Yashaswini, and thanks, everyone, for joining us. Realize some of you would have had very little time to look at it, but hopefully, the last one hour of discussion has been helpful for you to get a perspective of our performance. If there are any follow-up questions or clarifications, please feel free to reach out, and talk to you again, next quarter. Have a great evening.
Thank you. On behalf of Zee Entertainment Enterprises Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.