Zee Entertainment Enterprises Limited — Q1 FY26 earnings call

Call held 22 Jul 2025

Management summary

Zee Entertainment commenced FY26 with strategic transformation, achieving a 16.8% linear viewership share in Q1 and a 30% YoY growth in ZEE5 revenues. The company significantly reduced digital EBITDA losses and saw a 14% YoY increase in PAT, supported by robust cost management. Despite a soft advertising environment, management remains optimistic about H2 FY26, driven by new initiatives and content focus, while maintaining fiscal discipline and strengthening its balance sheet.

Highlights

  • Linear viewership share reached 16.8% in Q1 FY26, with June hitting 17.8%, a 2-year high.

  • ZEE5 revenues increased by 30% YoY in Q1 FY26, driven by digital syndication and language-first strategy.

  • Digital EBITDA losses were reduced by INR 1,119 million YoY in Q1 FY26, moving towards breakeven.

  • Overall operating cost declined by 14% YoY due to efficient execution and cost optimization.

  • EBITDA margins stood at 12.5% for the quarter.

  • PAT from continued operations was INR 1,437 million, marking a 14% YoY increase.

  • Cash and treasury investments totaled INR 21.9 billion as of June 2025.

  • Content inventory advances and deposits were INR 70.2 billion as of June 2025, a QoQ reduction of INR 0.3 billion.

Key financials

2 periods

Headline

  • Linear Viewership Share (June)
    17.8%
  • ZEE5 Revenue Growth
    30%
    YoY +30%
  • Digital EBITDA Loss Reduction
    1,119 Mn
  • Overall Operating Cost Decline
    14%
    YoY -14%
  • EBITDA Margin
    12.5%
  • PAT from Continued Operations
    1,437 Mn
    YoY +14%
  • Other Sales & Services Decline
    64%
    YoY -64%
  • Cash & Treasury Investments (June '25)
    21.9 Bn
  • Content Inventory Advances & Deposits (June '25)
    70.2 Bn
    QoQ -0.43%

Q1

  • Linear Viewership Share
    16.8%
    YoY +0.4%

What they filed

Q1 FY27: revenue up 4.5%, net profit down 48.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue2,001 1,979 2,184 1,825 1,969 −2%2,280 +15%2,025 −7%1,907 +4%
EBITDA323 321 298 239 159 −51%256 −20%-255 −186%100 −58%
Net profit209 164 188 144 76 −64%155 −5%-104 −155%74 −49%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Guidance & targets

Advertising

  • Advertising growth Advertising · FY26 · Medium confidence 8%
    our objective of the growth trajectory that we had guided for in the beginning of the year, which was 8% on advertising is not changing. We are not withdrawing that or changing that.

    — Punit Goenka

  • Advertising growth Advertising · balance 3 quarters (Q2-Q4 FY26) · Medium confidence double digits
    in the balance 3 quarters, your advertising growth will be in double digits.

    — Punit Goenka

Profitability

  • ZEE5 profitability Profitability · by the end of the year (FY26) · High confidence breakeven
    aligned with our stated objective to achieve breakeven in ZEE5.

    — Mukund Galgali

Margin

  • Overall EBITDA Margin Margin · end of the fiscal (FY26) · High confidence 18% to 20%
    our margin guidance of 18% to 20%.

    — Mukund Galgali

Other

  • Number of movie releases Other · this year (FY26) · High confidence 20 to 25
    we target to make about 20 to 25 movies across languages in a particular budget zone, and that is what we are going to do this year also.

    — Vikas Somani

  • Meaningful impact of new initiatives on profitability and scale Other · next 2-3 years · Medium confidence 2 to 3 years
    All the new initiatives collectively will take about 2 to 3 years to really start to have an meaningful impact on the profitability of the company and to attain the scale which we are desiring.

    — Vikas Somani

Risks & concerns

  • Soft advertising spending environment

    medium

    Linear advertisement spending remained soft due to extended sports calendar and slowdown in FMCG companies, though H2 FY26 is expected to recover.

    Management acknowledged

  • Decline in linear TV subscription revenue

    medium

    Slowdown due to decline in pay TV subscribers and ongoing DPO negotiations for FY26 deals, with hopes for gradual growth with conducive pricing policy.

    Management acknowledged

  • Industry consolidation (e.g., Jio-Hotstar) impact on market share and negotiating power

    medium

    Management views consolidation as a benefit for the industry, improving negotiation ability with advertisers and DPOs due to fewer players.

    Analyst downplayed

  • Impact of geopolitical tensions on GEC viewership

    low

    Geopolitical tensions contributed to audience shift away from GEC in Q1, but content focus aims to regain share.

    Management acknowledged

Areas of evasion (2)

  • Quantification of investments for new initiatives
  • Specific market share breakdown beyond broad categories

Q&A highlights

3 direct
Advertising revenue outlook for the balance of FY26 and impact of market consolidation. Direct
Certainly, it is the base effect that is one key factor. But apart from that it is also the fundamental thing that Vikas talked about. The new initiatives that we are trying to build around retail, around finding advertisers, which currently may not be on television, but maybe on other mediums of media and then bring them to television. And therefore, what Vikas talked about that it's going to be skewed towards the second half is what gives us the confidence.

This question addresses the key revenue driver and macro concerns, outlining how the company plans to achieve its advertising growth targets despite industry headwinds and consolidation.

Asked by Abneesh Roy

ZEE5 profitability targets, the language-first strategy, and content investment approach. Direct
The fact of the matter was that our subscriber base was stagnating because people didn't want to pay for everything because it's being offered to them. And that's why we went through this whole language strategy. And we have already started to see traction on how the subscriber base is growing there. And we are quite hopeful that, that will be leading to us getting far more share in the market.

Explains the rationale behind the new ZEE5 language-first strategy, its early success in subscriber growth, and how it contributes to the breakeven target while managing content costs.

Asked by Kavish Parekh

Dip in cash balance and the impact of the failed merger (fresh cash not coming in) on strategic plans. Direct
No, Abhishek. So, nothing changes on that front. In fact, we are as committed as we were on not only enrolling those new initiatives but also increasing and strengthening the core business and increasing the operational performance out there. So, nothing changes in terms of our focus or priority out there. It's business as usual from that perspective.

Directly addresses concerns about the company's financial flexibility and strategic plans following the failed merger, reassuring that core business and new initiatives remain on track.

Asked by Abhishek Kumar

3 min read 7 chapters

Detailed narrative

Content and Viewership Momentum

Zee Entertainment's content enhancement efforts yielded positive results, with linear viewership share reaching 16.8% in Q1 FY26, a 40 bps YoY increase. In June, this share climbed to 17.8%, marking a 2-year high. This growth is primarily driven by quality content across key language markets including Hindi, Marathi, Kannada, Odia, and Bangla, leveraging the company's understanding of regional audience preferences.

Digital Business (ZEE5) Performance and Strategy

The digital segment, ZEE5, demonstrated robust growth with revenues increasing by 30% YoY in Q1 FY26. This was supported by digital syndication and the successful implementation of a new language-first pricing strategy, offering tailored subscription plans in 7 languages. This approach aims to expand the subscriber base by making content more affordable and relevant, contributing to a significant INR 1,119 million YoY reduction in digital EBITDA losses, aligning with the target of achieving breakeven by FY26 end.

Advertising Revenue Outlook and Initiatives

Q1 FY26 saw a soft linear advertisement spending environment, influenced by an extended sports calendar and reduced FMCG spending. Despite this, management maintains its FY26 advertising growth guidance of 8%, anticipating double-digit growth in the remaining three quarters. This optimism is fueled by new initiatives focused on attracting retail advertisers, enhancing content brand integration, and expected recovery from early monsoon onset and the upcoming festive season.

Cost Management and Profitability Enhancement

The company achieved a 14% YoY decline in overall operating costs during Q1 FY26, stemming from efficient programming, technology management, and continuous cost optimization within ZEE5. These efforts, alongside additional rebranding and language pack launch expenditures, helped maintain EBITDA margins at 12.5%. Consequently, PAT from continued operations rose by 14% YoY to INR 1,437 million, with a stated target of 18-20% overall EBITDA margins by the fiscal year-end.

Strategic Partnerships and Future Growth Drivers

Zee Entertainment is actively pursuing strategic transformation, marked by a new brand identity and key partnerships. Collaborations include a venture with Bullet to launch a Micro-drama app targeting young audiences and a partnership with Ideabaaz Technology Private Limited to showcase entrepreneurial stories from Tier 2 and Tier 3 markets. These initiatives are integral to the company's strategy to embrace technology-led innovations and enhance entertainment experiences, with meaningful impact on profitability and scale expected within 2-3 years.

Subscription Revenue Dynamics and DPO Negotiations

Overall subscription revenues remained flat in Q1 FY26, as growth in digital revenue was offset by a slowdown in linear TV subscription revenue. This decline is attributed to a reduction in pay TV subscribers and ongoing, often lengthy, negotiations with Multiple System Operators (MSOs) for FY26 deals. Management expresses hope for gradual growth in subscription revenues, supported by a conducive pricing policy framework.

Balance Sheet Strength and Fiscal Discipline

As of June 2025, Zee Entertainment reported strong liquidity with cash and treasury investments totaling INR 21.9 billion, comprising INR 3.9 billion in cash, INR 7.6 billion in fixed deposits, and INR 10.4 billion in liquid mutual funds. Content inventory advances and deposits were managed efficiently, reducing by INR 0.3 billion QoQ to INR 70.2 billion. The company remains committed to fiscal discipline and strengthening its balance sheet to support future growth ambitions.

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