ZEEL - Zee Entertainmen

📊 NSE: ZEEL 🏢 Entertainment / Electronic Media Software 📅 Last Updated: 12/14/2025 15:21

💰 Financial Performance

Revenue Growth by Segment

In H1 FY26, Advertising revenue was INR 20,490 Mn (declined 8% YoY), Subscription revenue was INR 15,648 Mn (grew 14% YoY), and Other Sales & Services was INR 4,343 Mn (grew 2% YoY). The decline in advertising is driven by a 12% YoY drop in domestic advertising due to a slowdown in FMCG spending, while subscription growth is fueled by both linear and digital (ZEE5) gains.

Geographic Revenue Split

ZEEL operates a domestic portfolio of 49 channels and an international portfolio of 35 channels reaching 170+ countries. While specific regional % splits for FY26 are not fully detailed, international revenue includes Advertising (INR 510 Mn), Subscription (INR 919 Mn), and Other Sales (INR 144 Mn) for Q2 FY26.

Profitability Margins

Net Profit for Q2 FY26 was INR 76.5 Cr (INR 765 Mn), representing a 63% YoY decline from INR 209.5 Cr. Profitability was squeezed by a 9% YoY increase in operating costs and a 38% surge in A&P expenses (INR 224.5 Cr in H1 FY26) related to new channel launches.

EBITDA Margin

Q2 FY26 EBITDA margin stood at 7.4% (INR 146.4 Cr), down from 10.8% in Q2 FY25. H1 FY26 EBITDA margin was 9.9% (INR 397.9 Cr). The margin compression is attributed to higher programming costs for non-fiction content and a soft advertising environment.

Capital Expenditure

Not explicitly disclosed as a single 'planned' figure, but content inventory and advances (a form of operational CAPEX) stood at INR 6,990 Cr as of September 2025, reflecting a strategic reduction of INR 60 Cr since March 2025 to optimize cash flow.

Credit Rating & Borrowing

Brickwork Ratings (BWR) maintains a 'Negative' outlook due to financial performance deterioration and legal battles. The company has a repayment obligation for preference shares amounting to INR 403.39 Cr. Liquidity is rated 'Superior' with cash/treasury investments of INR 2,114.7 Cr.

⚙️ Operational Drivers

Raw Materials

Content (Programming and Film Rights) is the primary 'raw material,' accounting for approximately 64% of the content inventory in the form of Movie Rights and 12% in Shows as of Sept '25.

Import Sources

Content is primarily sourced domestically from Indian production houses and internal studios (Zee Studios), with international rights acquired for global distribution across 170 countries.

Key Suppliers

Not specifically named as individual vendors, but involves a network of independent production houses, movie producers, and music labels for content and music rights acquisition.

Capacity Expansion

Current broadcasting capacity includes 49 domestic and 35 international channels. Recent expansion includes the launch of two new GEC channels in the Kannada and Bangla markets in Q2 FY26 to capture regional viewership share.

Raw Material Costs

Operating costs (primarily content) rose 11% YoY to INR 2,004.7 Cr in H1 FY26. Programming costs specifically increased 9% YoY due to the launch of high-cost non-fiction shows like 'Chhoriyan Chali Gaon'.

Manufacturing Efficiency

TV Network Share improved by 100 bps QoQ to 17.8% in Q2 FY26, indicating high efficiency in content-to-viewership conversion despite a soft market.

Logistics & Distribution

Distribution is handled via satellite broadcasting and the ZEE5 digital platform. ZEE5 revenue grew 32% YoY to INR 310.8 Cr in Q2 FY26, showing a shift toward digital distribution efficiency.

📈 Strategic Growth

Expected Growth Rate

18-20%

Growth Strategy

Growth is targeted through a pivot to digital (ZEE5), where revenue grew 32% YoY, and by expanding regional footprints (new Kannada/Bangla channels). The company is also implementing a 15% workforce reduction to improve operating leverage and targeting an 18-20% exit EBITDA margin through cost optimization.

Products & Services

Satellite TV channels (Zee TV, Zee Cinema), ZEE5 OTT subscriptions, movie production and distribution (Zee Studios), and music label services (Zee Music).

Brand Portfolio

Zee TV, ZEE5, Zee Cinema, Zee Studios, Zee Music, Zee Cafe, Zee Marathi, Zee Bangla.

New Products/Services

Released 26 shows and movies in Q2 FY26, including 7 originals. Launched two new GEC channels in regional markets to drive long-term viewership growth.

Market Expansion

Focusing on regional Indian markets (Kannada, Bangla) and digital global expansion via ZEE5, which currently has 101.9mn MAUs.

Market Share & Ranking

All India TV Network Share is 17.8% as of Q2 FY26, ranking as one of India's leading television networks.

Strategic Alliances

Proposed merger with Sony Pictures Networks India (SPNI) where Sony would hold 50.86% and ZEEL promoters 3.99%; however, recent documents focus on standalone recalibration.

🌍 External Factors

Industry Trends

The industry is shifting from linear TV to OTT (Digital). ZEE5's 32% revenue growth and the reduction of its EBITDA loss by INR 127.6 Cr YoY show ZEEL is positioning itself for this digital transition while maintaining a 17.8% TV market share.

Competitive Landscape

Competes with major broadcasters and global OTT giants (Netflix, Amazon, Disney+ Hotstar). ZEEL is responding by launching 7 originals in a single quarter.

Competitive Moat

Moat is built on a 270,000+ hour content library and a massive reach of 1bn+ people. This is sustainable due to high entry barriers in satellite broadcasting and established brand equity in regional markets.

Macro Economic Sensitivity

Highly sensitive to GDP and FMCG sector health; a soft macro environment led to an 8% YoY decline in H1 FY26 advertising revenue.

Consumer Behavior

Shift toward regional content and digital consumption; ZEEL responded by launching Kannada/Bangla channels and 7-language ZEE5 subscription plans.

Geopolitical Risks

International broadcast portfolio of 35 channels is subject to local regulatory and geopolitical stability in 170 countries.

⚖️ Regulatory & Governance

Industry Regulations

Subject to Ministry of Corporate Affairs (MCA) inspection under Section 206(5) of the Companies Act and Income Tax Department surveys. Compliance with SEBI LODR is maintained.

Environmental Compliance

Zee scored 51/100 in S&P Global CSA 2025, ranking in the top 5% globally in the media sector for ESG.

Taxation Policy Impact

Effective tax rate for Q2 FY26 was approximately 33.7% (INR 38.9 Cr tax on INR 115.4 Cr PBT).

Legal Contingencies

Pending legal battles and court cases (Delhi High Court, NCLT) are cited as key rating sensitivities. Repayment of preference shares (INR 403.39 Cr) is a critical financial obligation.