Ladies and gentlemen, good day, and welcome to the Q4 FY 2023 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, please signal an operator by pressing star, then zero on your touchtone 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, and over to you, sir.
Thank you, Darwin. Hi, everyone, and welcome to our Q4 FY 2023 earnings discussion. We have with us today our Managing Director and CEO, Mr. Punit Goenka, along with senior management team. We'll start with opening remarks from Mr. Goenka, followed by commentary on operating and financial performance by Mr. Rohit Gupta, our CFO. We'll subsequently open the floor for questions and answers. 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. With that out of the way, I'll now hand the call over to Mr. Goenka.
Thank you, Mahesh. Good evening, everyone. I hope all of you are doing well. Thank you for joining us this evening to discuss the company's performance during the fourth quarter and the financial year, FY 2022, FY 2023. I'll keep my comments brief as always, and would let our CFO, Mr. Rohit Gupta, take you through the operating metrics in greater detail. I understand that all of you are keen to get an update on the proposed merger with Sony, so let me address this point first. I recognize the time taken to achieve the required approvals. The legal matters are consuming a considerable amount of time in the overall process. I assure you that the team is taking all the necessary steps in accordance with the law, to ensure that there is and are no further hindrances in the approval process.
We are evaluating all legal options present before us to overcome any further hurdles. As you all would have noted, the NCLT has recently dismissed the plea filed by a financial institution against Zee, which is a noteworthy development. With this, matters in the NCLT that are even remotely connected to the company have been addressed. The ones remaining in the tribunal are not pertaining to Zee. We have the best of legal teams advising us, and I am most certain that we are in safe hands. My focus continues to be on enhancing the business performance and completion of the merger. As you all are aware, the merger has already received most of the regulatory clearances, including the ones from our esteemed shareholders, which reinforce the fact that it's a value accretive for the industry at large.
As an optimist, I remain hopeful that when we connect again, there will be some positive developments to share with all of you on the merger front. The financial year 2022, 2023 saw the media and entertainment industry battling the macroeconomic headwinds with resilience and focusing on investments in further strengthening the business fundamentals. At Zee as well, the year was one of concerted efforts to enhancing the strategic aspects across all our key businesses. That said, the new fiscal brings in optimism, and we witness the overall market sentiments improving with the key advertisers set to increase their spends. Despite the headwinds, we remain undeterred in our strategic approach towards the quarter. Our focused efforts and investments in content reflect our long-term strategic intent to further strengthen our market position. We further fortified our position as the number two entertainment network in the country.
In fact, during the quarter, our viewership share gain was higher than the competition. We also witnessed an increase in viewership share across our linear channels in key markets, including South, North, and East. Significant efforts have been made in terms of content strategy for the Marathi market. We are expecting that to translate into positive results over the current financial year. On digital, ZEE5 has been gaining ground quarter on quarter across all metrics. We have recently announced an expansive content slate of 111+ titles for ZEE5, which includes compelling originals, direct to digital films, and theatrical releases in collaboration with renowned content creators. I am certain that this will further enhance our unique value proposition to the consumers and attract newer audience segments to the platform.
As you are aware, several industry reports peg the segmental growth of digital ecosystem to be around 20%-25% CAGR over the next eight years. At Zee, we are significantly outpacing this growth and have doubled our quarterly revenue run rate in a matter of eight quarters. That said, sustained investments in the long term amidst navigating the macroeconomic headwinds strained our near-term financial performance. We have formulated a plan that is focused on higher growth, and we remain well-poised to capitalize on opportunities emerging across business segments during the year. Taking a long-term view, I remain cautiously optimistic on the future of the inflationary headwind ease and NTO 3.0 benefits flowing, resulting in positive signs of demand and growth. I am confident that we are well-placed in the financial year 2023, 2024 to capitalize on growth opportunities.
Our focus remains on generating higher shareholder value year-on-year, and we will strive to only grow higher from here. On that note, I'd like to hand over the session to Rohit, to share granular details about the financials and operating performance of the company during the quarter. I look forward to interacting with you all during the Q&A session. Thank you. Over to you, Rohit.
Thank you, Punit. Hello, everyone, and welcome to our Q4 earnings call. I'll discuss our financial performance for the quarter and full year. As Punit alluded, FY 2023 was a challenging year for the entire media and entertainment industry, given weak ad spending, prolonged delay in NTO implementation, putting pressure on linear TV subscription revenues, and relatively subpar movie content performance. This operating environment has adversely impacted Zee Entertainment's performance for the year. In FY 2023, we also withdrew Zee Anmol from FTA, sacrificing revenues and viewership towards our long-term objective of strengthening pay TV ecosystem. While we navigated these headwinds, we continued to invest in our enhancement of our capabilities across digital, which is ZEE5, and sports. Both these segments, being relatively nascent, have needed investments in content, marketing, and technology, intensifying impact on our overall profitability.
We believe these investments are critical to being able to serve and delight our viewers and advertisers. Overall, in FY 2023, despite all headwinds, we have strived to balance near-term financial profile of the business while making room for longer-term strategic investments. Specifically looking at Q4 operating environment, we continued to see muted ad spending by FMCG brands during the quarter. On subscription side, while NTO 3.0 came in effect only from February 1st, 2023, there were a set of DPOs who went to court challenging NTO 3.0, did not sign the interconnection deal with the broadcasters as per the provisions of NTO 3.0. This left us with no choice but to switch off our channels to these DPOs.
While the standoff ended eventually with the DPOs signing new agreements, this situation impacted our ad and subscription revenues adversely during the switch off. On linear business, we continue to be India's strong number two TV entertainment network, and gained a healthy 40 BPS viewership share during Q4, FY 2023, taking our viewership share to 16.6%. In FY 2023, we've had a good year in terms of linear viewership share gain in most of our three frontline Zee channels. We have gained viewership share in FY 2023 over FY 2022 in Zee TV, Zee Cinema, Zee Telugu, Zee Kannada, Zee Bangla, Zee Odisha, Zee Punjabi, and Zee Keralam. We are focused on maintaining the momentum, and hope to see Zee Marathi join the list as well in FY 2024.
On digital side, ZEE5 has posted a healthy quarter across financial and operating metrics. Our quarter four, FY 2023 digital revenues are up 36%, and while there is a minor moderation in usage metrics quarter-on-quarter, watch time has improved quarter-on-quarter to 229 minutes. FY 2023 has been a great year for our digital and ZEE5 strategy. Our original content is being well-received. ZEE5 app user experience has significantly improved, and healthy growth in revenue continues. Now, specifically coming to the financial performance, total operating revenues for FY 2023 is marginally lower by 1.2%, with higher other sales and services, largely offsetting ad revenue decline during the year. Total revenues for quarter four, 23 are down 9% year-on-year, and are largely flat quarter-on-quarter.
Ad revenue for FY 2023 declined 7.7% year-on-year due to Zee Anmol FTA withdrawal and weak ad spending by brands in an inflationary environment. Ad revenues for Q4 2023 are lower by 5.4% quarter-on-quarter, and 10.2% year-on-year. Q4 2023 ad revenues were also impacted by signal switch off. Subscription revenue for FY 2023 was up 2.7%, led by growth in ZEE5 and music, partially offset by decline in linear TV subscription. Subscription revenue for Q4 2023 were lower by 5.3% quarter-on-quarter, and down 1% year-on-year. Adjusted for recognition of prior period subscription revenues from Siti Networks in Q3 FY 2023, quarter-on-quarter subscription revenues would have been largely flat.
In NTO 3.0, we have taken some calibrated price hikes and are monitoring how that stabilizes and flow to revenues over coming quarters in FY 2024. Zee Music Company saw 79% year-on-year growth in the video views in FY 2023, highlighting strength of ZEE Music catalog and library. YouTube subscriber base of ZEE increased to 134 million from 117 million a year ago. ZEE is number two music channel and continues to acquire 50% of new Hindi movie titles. ZEE also recently renewed its multi-year global deal with YouTube and Meta to enable users to consume the label's catalog of songs across globe. Coming to the movie business, during Q4 2023, Zee Studios released six movies, two Hindi and four regional.
Other sales and services revenues in FY 2023 were up 27.9% on the back of higher number of movies produced and released, and syndication deals during the year. FY 2023 had 31 movies produced and released, compared to 23 in FY 2022. Zee Studios has also been winning hearts globally, and earned a distinction of being the only studio from India to premiere three films at three different leading global film festivals in the same calendar year. During quarter four 2023, other sales and services revenues were aided by higher theatrical and syndication revenues from movies like Thunivu and Mrs. Chatterjee vs Norway. Moving to cost and profitability. In FY 2023, year-on-year overall operating costs have gone up by 9.1% due to higher content costs in movies, sustained investment in content, marketing, and technology in ZEE5 and sports.
This has resulted in FY 2023 EBITDA margin coming in at 13.6%, compared to 21.7% in FY 2022. Q4 2023 EBITDA margins have come in at 7.2% due to accelerated investments in ZEE5, movie content costs, and costs for IL T20 Inaugural Edition. We haven't fully optimized revenue potential for IL T20 this year, as we opted to broadcast it on existing TV channels. This is not a reflection of sport's longer-term financial profile. During Q4 2023, ZEE5 has also seen pickup in marketing, along with ongoing investment in content and technology. Quickly touching upon Siti and Dasra. We have arrived on settlement with IndusInd and Standard Chartered Bank. IBBI is the only claim outstanding on Dasra now. The company has adequate provisions to meet its obligations for balance Dasra claims.
Subsequent to the event, due to the continued legal proceedings and non-collection of balances for services, the company has discontinued its services to Siti across India, except East. Tax from continued operations for the year came in at INR 2,514 million, and for Q4, came at a negative INR 729 million. Net profit for the quarter and the year was impacted by exceptional items outlined in our financial results. We are also in the process of discontinuing certain business or operations, including Margo Networks, which is called SugarBox, and our operations in Russia, as part of our portfolio rationalization and conditions of impending merger. Impact of these has been accounted as discontinuing operations. Moving into FY 2024, we are expecting gradual recovery in ad spend. Initial signs have been encouraging, it's too early to make any prediction on pace of recovery.
We also expect NTO 3.0 price transmission, stabilization, and revenue transmission during the year. While our investments will continue, with some tailwinds to revenue, we are hoping to have more levers to manage profitability in FY 2024. Back to you, Mahesh.
Thanks, Rohit. We will now proceed to the Q&A session. Before we proceed to the Q&A session, I'd like to inform everyone that due to schedule conflicts, Mr. Goenka will only be able to join us till 5:45 P.M. to answer questions. Request you to please prioritize your questions accordingly, and restrict yourself to maximum of two questions. Feel free to join the queue back. Me and Rohit will stay back to answer the call till 6:00 P.M., and we can take all the bookkeeping or financial related questions. With that, I request the moderator to take the discussion forward for Q&A.
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. The first question is from the line of Abneesh Roy from Nuvama Institutional Equities. Please go ahead.
Thanks. My first question is on Zee5. If I see digital businesses in other industries, the players are talking about control on cost and drive towards profitability. When I see Zee5 numbers, YoY revenue is up INR 60 crores in this quarter, but losses are up INR 115 crores, which means your cost has gone up YoY by INR 125 crores. I wanted to understand, in FY 2024, how do you see the losses in this business? The revenues are increasing, but costs are increasing much higher. What will be the plan for FY 2024?
Is that it, Abneesh? That's the only question?
Yeah, I have one more question. I'll ask that later.
Abneesh, on the digital side, for ZEE5, as I stated in my opening remarks, we are ramping up our content offering that we want to give to the consumers, so that we make sure that we become the preferred option, to be in the top three OTT platforms, as I have mentioned previously in our other calls. There have been investments on the technology side that we are having to make, to make sure that we are, you know, a platform of choice from the consumer point of view. These are the investments that have taken the costs up. I don't think these are going to be recurring costs going forward.
Of course, technology costs based on consumption will continue to monitor that or mirror that. Beyond that, the one-time investments are pretty much done now. Of course, content will be something that we have to continue to invest behind. I am certain that from now, the losses in ZEE5 will start to be moderated downwards.
Sir, my second and last question is on your main business. There, if I see your market share in terms of viewership, that's at a four-quarter high. Do you think now soon you'll start getting benefit of that? Second is in terms of the linear subscription revenue, do you think now 7%-8% CAGR is possible there, given the disruption is already done and now the court case is also behind? Can you look at a 7%-8% CAGR in linear subscription revenues?
On the advertising front, certainly we will start to see benefit of the market share gain that we have seen in the last four quarters. That should certainly start flowing, hopefully post the sports calendar that's currently running. That's my expectation. It's still not very high in terms of the industry growth levels are not seeing that kind of number. I know FMCG companies are talking about spending a lot more, we are yet to see signs of that in reality. On the subscription side, given the fact that Rohit talked about the kind of challenges we faced with some of the large DPOs in terms of them not signing the agreement, there may be some delay, certainly there will be certain growth that we are anticipating.
Whether it will be 7%, 8% in the current year itself is hard to predict right now, Abneesh, but I do believe the trajectory will be towards growth. It's a question of balancing pricing versus churn.
Sure. Okay, thanks, sir. That's all from me.
Thank you.
Thank you. The next question is from the line of Vivekananda Subbaraman from Ambit Capital. Please go ahead.
Yeah, hi. Thank you so much for the opportunity. I have two questions. The first is on the TV ad revenue outlook. Question is in light of the IPL rights being split now between TV and digital, and every day we see this drama play out, where, you know, somebody from one side says that digital has become bigger than TV, and then you have counterarguments also. How are you looking at the TV ad market if one takes a three-year, three, four-year view, and that is prime for a recovery in fiscal 2024? If you zoom out a little bit and look at a slightly time frame. That's question one. Second question is on the subscription side.
Now, you are obviously, you've taken a very bold decision of, let's say, pulling your channels out of DD Free Dish and also now, not providing your content to which is not making payments. How are you thinking about the balance between reach and subscription revenue growth, and also if you could, you know, cover a bit on subscription monetization via your TV, DTH and cable versus, say, your ZEE5 and other TVs? Thank you.
Yeah. Your first question was.
The TV outlook.
The TV outlook, right? First, whatever you may be hearing, Vivekananda, about digital versus TV, let me assure you that television is still the prime mode of consumption of entertainment in this country, including for IPL. I don't know if you've seen the data, but the IPL viewership over last year has grown by almost 29%. That is despite the fact that on digital, it's available for free, whereas on television, it is paid for. For long-form content in this country and anywhere globally, television will remain the prime medium for consumption. I am not really concerned about that. Of course, the growth pace on digital is much faster given the lower base, and television may be a bit slower given the penetration that television already enjoys.
That's the first part. On the subscription front, switching off a DPO is not something new to us or to the industry. It has happened to us many times in the past. We do deal with the question of reach versus revenue. It's a balanced trade-off that we do anytime we take those kind of decisions. In this case, it was a conscious call for us to take that decision to switch off SITI Cable, given that we have not been receiving payments for what, nine months now?
Yes.
Therefore, that's a call that we consciously took, and, I'm certain that will pay off in the long term for us.
Okay. if I may just follow up on the first question.
Right, go ahead.
Continue to that. Yeah. You continue to believe that TV still has much bigger reach than digital. But if I were to hazard a guess on the growth trajectory, would you peg it as 7%-10% CAGR growth for, say, three to five years, or will it be lower? Any color on that that will help? And the second follow-up on the subscription side is, could you help us understand the monetization on subscription versus that on ZEE5? And what can you do to get much more subscription revenue for ZEE5, potentially if you shift to connected TV or new market opportunities there due to digitization?
On the first part, definitely the growth trajectory for advertising is going to be positive from television perspective. I don't want to give a percentage as we speak, given that we are just coming out of this entire macroeconomic situation that the country has been under. Certainly, the numbers that you are talking about are not unheard of, and I do believe that most of the agencies have given a number to that effect or in that ballpark, which is in the high single digit to potentially a low double digit kind of a number. I would like to believe that that's what could be attained at least for the next three to five years for the television business in that ballpark range. That's something I think we can go with.
On the subscription side, I think the two businesses are very different from linear to digital perspective, so I don't think we can kind of compare them equally. I think on the ZEE5 side, the team is working diligently to make sure that we get higher and higher subscription revenue by offering unique and more content, which is suited to people who are not on television consumption, and therefore, that's a separate audience segment that one is addressing. Television, I think we have to continue to do the balance, as I said earlier, of pricing versus churn, and that's the balance we have to keep and work towards.
Thank you so much, Punit, for the detailed clarification. I join the queue.
Thank you.
Thank you. We have the next question from the line of Jay Doshi from Kotak. Please go ahead.
Yes. Hi, thanks for the opportunity. My first question is, you know, is NCLT, BCCC or SEBI, any of these three entities, are they reevaluating the approval that was granted for the merger?
Jay, you've seen the order that has been uploaded on 19th of May by the NCLT after the hearing on 11th of May, right? Based on that, it is asking the NCLT, BCCC to potentially reevaluate the NOC that they have given, including the fact that whether they have given the permission for the non-compete to be there. Whether NCLT, BCCC have taken cognizance of that and are doing it, is something that I can't comment on because I'm not aware of that. But in our view, that order was completely incorrect, because none of that actually transpired in the hearing of 11th May. Therefore, you would have noticed that we also challenged that in the NCLAT today, and we will know the outcome of that very soon.
I think there was, you know, NCLT hearings were delayed because of some, you know, creditors would approach NCLT. On that front, are more or less all disputes resolved now, or is anything still pending?
As I said in my opening remarks, all disputes that were remotely connected to Zee, and I use the word remotely very, very distinctly, because in our view, some of those cases also are not connected to Zee, have been resolved either through the legal route or through settlements outside of the court. All those matters that remain in NCLT today have no connection whatsoever to Zee, and those are being disputed as we speak.
Understood. The next hearing, I understand, is on sixteenth of June. Is that correct?
That is correct.
Do you hope for some clarification from BCCC, NCLT by then, before then? I mean, Sorry, I am not on top of, you know, what are the timelines within which BCCC or NCLT have to revert, you know, and give a go-ahead or whatever it is.
As per the NCLT order, they have to revert before the next date of hearing. Whether they will revert or not is something that's a question that I can't answer.
Got it. That's helpful. Thank you so much. That's all from my side.
Yeah.
Thanks.
Thank you, Jay.
Thank you. The next question is from the line of Abhishek Kumar from JM Financial. Please go ahead.
Hi, good evening, and thank you for taking the question. I have a question on the pricing of channels and subscription growth in general. What transpired when we raised the rate, the DPOs pushed back? After that, I just wanted to understand, did we roll back the prices or, you know, they finally agreed? How has the response been from the consumers? Is that a reflection of the market not being ready for any kind of price hike, and therefore, can we look at sort of flattish subscription growth going at or at least in FY 2024, even if, you know, the NCLT gives us that flexibility?
The price hikes that were taken by the broadcasters did not get rolled back. We have rolled out precisely what we had launched, and those are being accepted by the DPO. The discounting is again standardized through the tariff order that is prescribed by the TRAI, we cannot have differential discounting that we can do across a platform. As I stated earlier, the increase in subscription revenue is a function of pricing and churn. If you notice, in the last three years, we've seen churn happening in the cable and DTH industry, although DTH has now stabilized and the churn has pretty much gone away and is quite stable for the last four to five quarters that we've been noticing.
The cable industry still continues to see some churn, but we are hopeful that, because the price increases that were taken were very inflationary in nature, should not have a major impact for us. We may not see a large amount of growth in FY 2024 itself, but certainly subscription revenue in the medium to long term, we'll see at least inflationary growth coming in for the industry overall.
Second question is on ad revenue. This year we have, obviously, IPL is little expanded, and then we have World Cup. In a year where there are, you know, some large sporting events, and with the fact that those are now. Anyway, the ad spending environment is not very strong, and it's probably IPL being broadcast, certainly, some of the advertisement might be asking for from the digital platform. Does that put any pressure on TV ad? How has the experience been in previous years, where there were multiple global sporting events earlier?
Even today, Abhishek, the strongest medium for advertising for IPL also is television. Our own estimate is that it's attracting almost 3x the revenue that digital is attracting because of the sheer volume of advertising of viewership that it attracts. Digital, despite being free, the pure medium being conducive to a 3.5 in, 4 in screen, is not the optimum method of consumption for long-form content. As I said earlier, long-form content is best suited to be watched on television. Given the fact that our country is not yet fully connected TV equipped, we are still going to be dependent on linear broadcast, either through cable or satellite, for at least the foreseeable future. From that perspective, I don't think it's a threat for us, at least in the foreseeable future, from here.
Sure. That's helpful. That's all from my side. Thank you so much and all the best.
Thank you. Thanks.
Thank you. Ladies and gentlemen, if you wish to ask a question, you may please press star and one. The next question is from the line of Jinesh Joshi from Prabhudas Lilladher. Please go ahead.
Yeah, thanks for the opportunity. I have a two-part question. Can you share what was the operational cost of conducting the IL T20 league in this quarter? Secondly, is it also possible to quantify what was the loss in subscription and advertising revenue due to the blackouts that prevailed momentarily in March?
Hey, Jinesh. Unfortunately, we're not going to be able to comment on that. We've not provided either of those, so won't be sharing or be able to give you that.
Let me rephrase my question. If you look at our EBITDA margins in this quarter, they were at about 7%. And if I look at the previous three quarters, we were in that band of about 15%-17%. Obviously, some bit of a hit in margins could be because of the operational cost of IL T20 league. Going ahead in FY 2024, I know, I mean, giving a margin output guidance may not serve the purpose, but will our journey, that 15%-17% band be swift in one to 18 months, the ad revenue recovered, so you feel that the cost of IL T20 was so substantially up, and the margins could perhaps hover in this band?
Let me take a shot at it, Jinesh. I'll ask Rohit and Punit if they want to add anything. When you look at this quarter's margins, not just IL T20, right? There are broadly three factors. One is, of course, the sports, which you spoke about. The second is, I think, as you would have seen in other sales and services bump up, we have had a fair bit of active quarter in terms of movies. While this is coming in revenue, it is also reflected in the cost structure of the business. That's the second bit to think of. Thirdly, there is ongoing investment in ZEE5 as we continue to grow it. If when you look at the margin structure of this quarter, it's not just the 7% being a reflection of IL T20.
Keep the frame, keep that frame in mind. Of course, there's been additionally some revenue softness, which has driven negative operating leverage in terms of switch off and other things which, Rohit alluded to. Rohit, you want to add?
Yeah, I, no, thanks, Mahesh. Just one point, I mean, it's a, it's a point I already mentioned during my call, but, maybe missed. See, last quarter, we had also recognized, revenues for SITI, you know, to the tune of about, you know, INR 58 crores, which was, you know, for the prior period. That had, you know, reflected in the reported EBITDA. I think that is also, you know, to be considered.
Sure. One last question from my side. Can you please elaborate a bit more on reasons to discontinue the Sugarbox business as such? Obviously, we would have had some plan in mind when we started it, and something may not have worked out over the last two to three years. Any specific reason you would want to highlight over here? And have you taken a complete write-down is also what I want to do.
No, we've not taken a complete write down yet. The reasons are manifold. Most importantly is the fact that given the current macroeconomic situation, secondly, the priorities of the company to focus on the capital allocation to priority businesses, are the two main reasons why we have chosen to take that decision. Beyond that, there is no other reason. We are evaluating options as to how to look at hiving off or potentially even getting third-party investors into that business. That's for us to talk later when we have more details. Right now, it is a decision that we have made as a standalone business ourselves.
Sure. Thank you so much, and all the best.
Thank you.
Thank you. Ladies and gentlemen, if you wish to ask a question, you may please press star one. The next question is from the line of Arun Prasad from Avendus Spark. Please go ahead.
Thank you for the opportunity. I have a couple of questions. First, sorry if this is a repeat here, I joined late. The DAUs and MAUs are not in sync for last three, four quarters. I understand there is a bit of a slowdown overall, but what this explains is this continual underperformance in the digital, especially, now that we are established there for the last three, four years. We have huge content. We have continuously been investing in the content. Is there any thoughts about slowing down the content investment in the digital side, and to see whether this will have any impact on the acquisitions?
Is the current spend rate is required to keep the subscriber base at this level? Is it something that we have evaluated? That's my question number one. Second is on the FTA part. Have you assessed what is the kind of opportunity loss because of withdrawing from FTA now that it's almost 12 months since the decision has been taken? Any thoughts of going back to the tool, given that the overall macro slowdown, it will be a sizable revenue to have in RTP?
I'll take the second one. I'll ask Mahesh to cover the first point. On the FTA part, I think it's a collective decision that as an industry, we took in the interest of the PTV revenues. We have seen the PTV revenues fall, especially on the DTH side, which is a positive sign for us. Of course, we had expected growth to come in, but which has not yet. We have to look at it in the perspective of medium to long term rather than just a one-year aspect. In terms of the loss on the FTA side, as of now, all of it is a pure loss. We have not seen any gain coming back to us. The entire revenue that we were earning from FTA is a loss to us.
What I can say to you confidently is that if we decide to go back to FTA, it will be an industry decision. It will not be a individualistic decision that we will make, and that's something that as an industry, we have committed. And when I say industry, I'm not talking only about broadcasters. I'm talking about the broadcasting industry along with the DTH industry. Mahesh, you want to take a shot?
As I think Punit Goenka covered in his opening remarks, we've seen fairly healthy growth. If you look back, let's say, just a period of Q1 FY 2022, as an example, from a revenue run rate standpoint, we were probably about INR 110 crore quarterly revenue run rate. In a span of eight quarters, where you look at Q4 2023, we are generating about INR 220 crores. It's almost doubling revenue in last eight quarters. On your question of MAU, DAU: Look, I think like we've explained before, MAU, DAU, watch time are sort of input parameters, but what eventually is important to look at is revenue. In initial year phases, we'll always be focused on driving higher MAU, DAU, driving higher sampling.
Once you have a large enough sample size, a lot of focus moves in engagement and what you want to do within the base, which is already consuming the content, right? Even for this quarter, when you would have seen, while the MAU, DAU has seen some moderation, the watch time has gone up. Don't over-index MAU, DAU. At some point, I think we did disclose those metrics early on because the business was nascent. When you look at a lot of large players, you know, once you get to a certain critical mass and scale, the revenue becomes the lead indicator. We will also eventually move to sort of streamline the reporting metrics in longer in terms of how do we give you better metrics to give a shape of business.
I would urge you to anchor back to revenue sort of growth rate, because quarter-on-quarter, MAU, DAU, watch time will vary depending on what our marketing objectives are, and revenue is a better reflection of what's happening in the business.
The very large part of the revenue there also comes from the pricing, which we want to be sustainable going forward. Obviously, the user growth is probably the sustainable one, and it will indicate that whether we have reached steady state when it comes to reaching a certain scale or not. Then this business is it's a scale and high operating leverage when you grow users. Obviously that is a very integral part of the business side.
I think, look, pricing has been one part of it, but it's not just all pricing, right? I think if we would have disclosed subscribers at some point, you would have seen that. Pricing is one element of it, but it's not just entire pricing. We've seen fairly healthy adoption and increase in usage as well. At some point, I think, you know, the operating leverage point is correct. Keep in mind that a lot of initial costs have gone into step-up investments like technology. It's more like a zero to one scenario, but year on year, it's not gonna be multiplying or amplifying in that context. Yes, you're right about the fact that cost has been stepped up a lot, but that's really the nature and function of cost we invested behind.
Also, the function of pricing is a factor of the amount of content we are putting out there. If you look at from last year when we took the last price hike versus the amount of content that we are putting out now, that is commensurate to the kind of pricing that we can charge and what we believe people are willing to pay for it. Given that we have not seen high level of churn, despite the price increases, gives us the confidence that our content is now being liked and people are willing to pay for it.
Right. You, when you said churn is more or less stable, so what is the current level of churn? Anything qualitatively or quantitative information on the churn, or how much churn has reduced compared to the previous year?
We haven't spelled that out. We haven't given that number.
What I get to understand is this is a steady state kind of a customer we have already reached. Is it, is it the basis to take it in?
Look, there'll always be some churn. It's not that if you got 100 customer in the beginning of the year, you're gonna have the same 100. The churn, given that we have a reasonably sharper focus on B2C customer versus some of the other players who do a lot more emphasis on B2B, we believe our customer base is sticky, and to that extent, that reflects in churn dynamics compared to industry. Beyond that, given sensitivity and, you know, competitive nature of the information, we won't be able to get into granular.
Correct, correct, Mahesh. Thank you very much.
Thank you. The next question is from the line of Rushabh Sharedalal from Equirus Securities. Please go ahead.
Am I on?
Yes, Rushabh, please go ahead.
Yeah. My first question is on the case of JRT. Why are actually promoters so willing to settle? I mean, the company so willing to, you know, company is looking to settle promoters' personal liabilities. That's my first question.
Sorry, I'm not clear which case are you referring to?
For the case of JRC, where basically, Axis Finance, you had some INR 150 crores of loans, that were extended to Cyquator Media Services Private Limited and Primat Infrapower & Multiventures Private Limited, where Yes Bank were had extended loans of INR 377 crores to Essel Infraprojects also, and where Zee is a guarantor.
Rushabh, I think you've got the name mixed up. I don't think... Do you mean? I'm not sure what you mean by JRC.
I'm sorry, JC Flowers. It's not JRC, it's JC Flowers.
Look, I think if you would have, if you would have listened to the court proceedings and NCLT proceedings, like what Punit said in his remarks, from our standpoint, which is from company's standpoint, anything which had any remote connection to the company has been taken care of. There is no sort of no action or anything close to what you're implying in terms of company settling, which is not to do with company. I'm not sure where you get that impression from, but all the hearings have been public, investors could come and listen to, and we've been very clear about our stand against what is pertaining to the company and what doesn't pertain to the company.
Okay. One question on the merger. Correct me if I'm wrong, but we actually had four entrances in merger, where the first one was the settlement of INR 211 crore of with the IPRS. The second one was the INR 83 crore settlement with IndusInd, which we have already done. NCLT has already dismissed the plea against Zee for INR 150 crore. Where are we in terms of merger, and how quickly can we get it done?
I think it's difficult for us to comment on a timeline which is subject of, you know, legal process. I'll refrain from giving any comment on timeline. Like you, we are also looking forward to it, and we are doing what we could to get to that closure. In terms of, you know, what was, what is there in the court, you know, most of the parties have argued their case. There was one party to argue. The next hearing is scheduled for 16th of June, and we will see where it goes from there on. Like I said, I'll reiterate again, anything which had any connection with the company, Rohit spoke about IndusInd Bank, some of the other lenders like Standard Chartered Bank, you made a mention of IPRS. All this is sorted and done with.
Anything which we could do in our control to get merger expedited is done from our part. Of course, we will have to, you know, put our trust and faith in the legal system and go with it, and whatever legal action we can do, in that journey are being pursued at all different forums.
Okay, okay. Just getting back to my first question only. I was referring to the JC Flowers case, and these loans were extended to different entities of the promoter and Zee is a guarantor. My question is, why is the company, you know, willing to settle the personal liabilities of the promoter? That was my question, if I had, you know, miscommunicated in any manner.
No, no, I don't think you miscommunicated, the point about company looking to settle, I'm only questioning that part. I'm not sure where you got that impression from.
Okay. maybe I'll take this offline.
Sure. Happy to.
Yeah. Thanks. Thanks.
Thank you. The next question is from the line of Vivekanand Subbaraman from Ambit Capital. Please go ahead.
Hello. Thank you so much for the follow-up opportunity. Punit, if you're there or Mahesh and Rohit, you can address this. As far as the pricing lever is concerned for ZEE5, just wanted to understand in terms of the headroom that you believe you have for more pricing-led growth, say, in fiscal 2024 and 2025, considering the fact that you now have invested in a lot more content, have a bigger library. That's question one. The other question, Mahesh, I think you made this comment that you seem to have a sharper focus on B2C versus peers.
I'm just trying to understand, when one looks at ZEE5 revenue through the various quarters this year versus last year, could you call out impact of B2B deals and any reset that you may have seen there so that we can better make out the growth that you have achieved in the B2C segment? Thank you.
Let me take the second question first, Vivek. I think that won't be possible. B2B is a small universe, you know, so it does become sensitive. B2B is an important part of our strategy, it's just that the dynamics or components may be different than their some of the other players are. That would be difficult to split out and give you or point you to specific quarters where there has been bumps or pressures and so on. I think you'll have to bear with us on that one. On your, remind me on the first question, sorry, what was that, Vivek?
I was referring to the pricing levers that you may have now, given that you have already pushed through a price increase. If you would want to comment on any potential segmentation that you could work out now that you have a large enough library across multiple languages.
Yeah. Look, I think we are still one of the most compelling, sort of scaled OTT player out there. I think, with, when you compare our pricing versus, let's say, a lot of our peers, the pricing does leave a fair bit of, headroom in that sense. Of course, there could also be tiers of it in terms of how you want to do a 4K pricing different than what your base pricing is, and so on and so forth. The room exists, and we had done this in last few quarters. If you remember it, there was a phase we went from INR 499- INR 699.
There will be opportunities, but at this stage, there isn't any forward-looking guidance we want to give in terms of how would we think about. I think it's gonna be a function of we do have certain revenue objectives in mind, which is a function of subscriber growth and yield or pricing we are deriving, and that gets translated into multiple strategic outcomes in terms of, you know, how you exercise pricing lever, B2B versus B2C, and so on. It'll all come back to revenue growth, Vivek, and I think what we've done, our aspiration would be to sort of continue in building on it, and levers could change. Rohit, do you want to add anything?
No, I, you already added it. I think, you know, even in terms of your point on segmentation, there are initiatives we've taken. We have a, you know, a mobile-only price, then, like you said, 4K, and then, you know, the South. There are different packs and are available to consumers depending on the kind of content that they want to consume. We've already taken two price hikes in the last few quarters, and like Mahesh said, there is room for more. We will obviously look at it, you know, based on the competitive intensity.
Yeah, this is helpful. Thank you so much.
Thanks so much, Vivek.
Thank you. Ladies and gentlemen, for paucity of time, that would be our last question for today. I would now like to hand the conference over to Mr. Mahesh Pratap Singh for closing comments. Over to you, sir.
Thank you, everyone. Thanks for joining us today. If any of your questions were unanswered, please feel free to reach out to us. Thanks for your interest in Zee Entertainment, look forward to speaking with all of you in the next quarter, and maybe meet a lot of you in person through the quarter. Thank you so much. Have a great evening.
Thank you. On behalf of Zee Entertainment Enterprises Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.