Demonetisation hits TV, print and film exhibition in Q3 FY17

The impact of demonetisation and the cash crunch that ensued as a result is evident in the quarterly numbers released by Zee Entertainment Enterprises, Inox Leisure and HT Media. While Zee managed to show single digit growth in revenue, HT Media saw a marginal dip in income while Inox Leisure's revenue growth remained flat.

While it continued to beat market expectations, Zee's revenue growth was just 3.4 per cent in Q3 FY17, a significant reduction from Q3 FY16. Its advertising revenue grew by 3.4 per cent in the third quarter. The muted growth is attributed to the impact of demonetisation and the high base formed by the 26.8 per cent year on year growth it saw last financial year. Advertising revenue growth during first 40 days of the quarter, i.e. pre-demonetisation was similar to the growth seen in H1 FY17.

For Inox, there was a 3 per cent dip in box office revenue compared to the December quarter in FY16, a direct impact of demonetisation as Inox operates heavily in the non-metro territories, where digital payment methods are not as popular as in the metros. The pan-India exhibitor also saw muted growth in advertising revenue which grew marginally by two per cent, again a result demonetisation. However, since the company added new screens, some of the impact was off set and hence there was no de-growth in advertising revenue. It's total income from operations remained flat at Rs 298 crore (Rs 297.9 crore in Q3 FY16).

In case of HT Media, however, revenue dipped by 0.7 per cent in Q3 FY17 compared to Q3 FY16. Advertising revenues dipped by 5.7 per cent while circulation revenue saw marginal growth at 2.1 per cent. The reduction in advertising revenues was felt not only in the print sector, but also in HT Media's digital businesses, which operate predominantly on advertising. DB Corp, another print media company, saw print advertising revenue grow at 2.4 per cent, thanks to its presence in regional print media. HT Media however, operates mainly in the English publication space, which has been seeing narrowing revenue growth for a while now, and hence seems to have been more affected in terms of advertising revenues.

Despite stunted growth or de-growth in revenues, HT Media and Zee managed to maintain EBITDA margins of 31.5 per cent and 23.5 per cent respectively. EBITDA grew for both companies - 10.5 per cent year on year for HT Media and 20.1 per cent for Zee Media as both rationalised costs. Inox saw dip in EBITDA (41 per cent) and EBITDA margin (from 17.9 per cent in Q3 FY16 to 10.6 per cent this year). This can be attributed to the fact that the company opened two new properties, increasing the operational cost while revenues remained flat.

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