Zee Entertainment Enterprises Limited — Q3 FY26 earnings call

Call held 22 Jan 2026

Management summary

Zee Entertainment reported a strong Q3 FY26, primarily driven by exceptional performance in its digital business, which achieved its first-ever positive EBITDA of INR 56.4 crores on the back of a 73% YoY revenue surge. Overall subscription revenue also saw a 7% YoY growth, contributing to a 310 basis points QoQ improvement in EBITDA margin to 10.5% and a 2x sequential increase in PAT to INR 154.8 crores. While advertising revenues showed a sequential pickup, they remained down 9% YoY, reflecting ongoing softness in FMCG spending.

Highlights

  • Digital revenue surged to INR 418 crores, marking a 73% YoY increase, driven by enhanced content offerings and a revised pricing strategy.

  • The digital business achieved its first positive EBITDA of INR 56.4 crores, a significant turnaround from a loss of INR 136.2 crores in the prior year.

  • Overall subscription revenue grew by 7% YoY, primarily due to digital business growth and successful renewals in the Broadcast segment.

  • EBITDA margin improved by 310 basis points QoQ to 10.5%, supported by a 15% increase in operating revenue and tight fixed cost management.

  • Profit after tax grew 2x sequentially to INR 154.8 crores.

Concerns

  • Advertising revenues declined 9% YoY, despite a 6% QoQ increase, reflecting a slow recovery and softness in FMCG spending.

  • Nine-month advertising revenues were down approximately 12%.

Key financials

  1. Digital Revenue ₹418 Cr +73%YoY
  2. Digital EBITDA ₹56.4 Cr
  3. Subscription Revenue Growth 7%
  4. Advertising Revenue Growth 6% -9%YoY
  5. EBITDA Margin 10.5% +3.1%QoQ
  6. PAT ₹154.8 Cr +100%QoQ

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.

Segment breakdown

  • Digital Business
    ₹418 Cr Revenue73% YoY Growth₹56.4 Cr EBITDA
  • Broadcast Business
    17.5% Network Share0.6% YoY Share Gain33.6% Zee Marathi Market Share
  • Music Business
    51 Bn Total Video Views175 Mn YouTube Subscribers
  • Other Sales and Services
    7× YoY Growth

Capital allocation

high confidence
  • Liquidity Cash ₹500 Cr Cash and treasury investments as of December 2025 stood at INR 21.8 billion, comprising of cash of INR 5.0 billion, fixed deposits of INR 7.0 billion and investments in liquid mutual funds of INR 9.8 billion. Content inventory advances and deposits stood at INR 69.3 billion, down by INR 1.2 billion over the last 9 months.
    Cash and treasury investments as of December 2025 stood at INR 21.8 billion, comprising of cash of INR 5.0 billion, fixed deposits of INR 7.0 billion and investments in liquid mutual funds of INR 9.8 billion. Our content inventory declined as of December 2025, driven by disciplined and optimized acquisitions. Overall, our content inventory advances and deposits stood at INR 69.3 billion, down by INR 1.2 billion over the last 9 months.

Guidance & targets

Profitability

  • EBITDA Margin Profitability · FY26 · Medium confidence Improve from FY26 end levels
    Our endeavour is to improve margins from where we will end in FY '26, and that certainly stays as the top priority.

    — Ankit Arora

  • ZEE5 Breakeven Profitability · FY26 end · High confidence Breakeven
    And that was the target, which is what we had said at the start of the year to breakeven by FY '26 end that this should certainly give confidence to the street and with our prudent cost efforts and operating leverage, it will drive the business on a positive unit economics going forward.

    — Mukund Galgali

Revenue

  • ZEE5 Growth Revenue · Medium term · Medium confidence Fastest-growing vertical / Accelerated growth
    but we still believe that ZEE5 will continue to be our fastest-growing vertical amongst other verticals, which is what we are present in. ... we are confident of having an accelerated growth in this business.

    — Mukund Galgali

What to watch in Q4 FY26

Advertising Revenue Recovery

Next quarter
Current Down 9% YoY, up 6% QoQ
Target Continued sequential improvement, reduced YoY decline

Why it matters

Advertising revenue is a key driver for the broadcast business and an indicator of broader economic health and FMCG spending.

advertising revenues were up 6% quarter-on-quarter and though they are down 9% year-on-year, reflecting a slow but steady pace of recovery.

Risks & concerns

  • Uncertainty of Star arbitration outcome

    high

    The next hearing for the arbitration is in July, and the verdict timeline is unpredictable due to confidentiality reasons.

    Management not addressed

  • Softness in FMCG spending affecting advertising revenue

    medium

    Advertising revenues declined 9% YoY, largely led by softness in FMCG spending, indicating a slow recovery in ad spends.

    Management acknowledged

Q&A highlights

4 direct
Advertising growth and FY27 outlook Partial
So Kavish, slightly early if you were to kind of look at FY '27, but the good news is that I'm sure, as to what you rightly mentioned that we have been seeing the moderation in our Y-o-Y decline. And we continue to kind of have a very encouraging and positive conversations with our FMCG players. ... it will be too early for us to kind of give a specific number guidance at this stage.

Analyst questioned the 12% decline in 9-month ad revenues and sought FY27 growth and margin targets, which management deferred providing specific numbers for.

Asked by Kavish Parekh

ZEE5 breakeven sustainability Direct
So, Kavish, as to what you would have noticed, I think this year, we have reached an ARR business in ZEE5 of north of INR 1,000 crores. Without getting into specific, it is a good enough number for us to kind of start looking at this business driving towards a medium-term sustained profitability.

Analyst questioned if ZEE5's breakeven was sustainable given aid from syndication and telecom deals, seeking clarity on its underlying profitability.

Asked by Kavish Parekh

Declining depreciation and amortization Direct
This has been because in the last few years, our capitalization has not been very high. So, it is just a normal amortization as per the policy. And it is just that the rate of our addition to fixed assets has not been very high.

Analyst sought an explanation for the observed trend of declining depreciation and amortization, which management attributed to lower capitalization.

Asked by Kavish Parekh

Headcount number and trajectory Partial
So as Ankit also mentioned, we are operating and I also reiterated, we are operating at a very optimized cost structure for the company. Our headcount is pretty much the most competitive in the industry in terms of number of people per revenue of rupee or dollar that we earn. And I think beyond that, giving any more information would be competitive in nature.

Analyst inquired about the company's headcount, which management described as optimized and competitive but declined to provide specific numbers due to competitive reasons.

Asked by Kavish Parekh

Core business cost impact of movies and ILT20 Partial
So Umang, I think just to kind of clarify on that number, Mukund mentioned in his opening remarks that excluding the movies and the ILT20 preponement, our overall total operation cost would have been down on a sequential basis by about mid-single digit.

Analyst asked for the specific cost impact of movie acquisitions and ILT20 preponement on core business costs, which management clarified directionally but did not quantify.

Asked by Umang Mehta

Star arbitration update and verdict timeline Partial
So as you are aware, this is under arbitration and due to reasons of confidentiality, we cannot reveal the nature of the developments. But yes, the next hearing will be somewhere in July. So, I think that's all we can express on this call right now.

Analyst sought an update on the Star arbitration, a significant ongoing legal matter, and the timeline for its verdict, which management could only partially disclose.

Asked by Umang Mehta

Sustainability of ZEE5 revenue and profitability Direct
Yes, of course. I mean, there has been a catch-up revenue in this quarter, as Ankit had mentioned on account of revised pricing agreements with one of the telecom operators. But even if you strip this quarter's revenue of that catch-up revenue, still ZEE5 is breaking even. So that's something to factor in. Yes, there is a one-time income, but even without that and some syndication income, ZEE5 has broken even.

Analyst questioned the sustainability of ZEE5's revenue and profitability, specifically if the telecom deal's impact was a one-off, to which management confirmed underlying breakeven.

Asked by Dixit Doshi

FCCB fundraising plans Direct
No, We have deferred the next drawdowns. And we have said it very clearly before also unless we have full visibility on the deployment of those proceeds, we are not going to go for any drawdowns. So right now, we have deferred the next tranches.

Analyst inquired about future plans for FCCB drawdowns, which management stated have been deferred pending clear visibility on deployment.

Asked by Dixit Doshi

3 min read 7 chapters

Detailed narrative

Digital Business Achieves First Positive EBITDA

Zee Entertainment's digital business, ZEE5, reported a significant turnaround in Q3 FY26, achieving its first-ever positive EBITDA of INR 56.4 crores. This marks a substantial improvement from a loss of INR 136.2 crores in the same quarter last year. The digital segment's revenue surged by 73% year-on-year to INR 418 crores, driven by an expanded content offering of 39 shows and movies, including 11 original series, across 7 languages, coupled with a revised pricing strategy and improved advertising revenues. Management expressed confidence in improving unit economics and driving sustained returns on these investments.

Broadcast Business Maintains Strong Position

The broadcast business demonstrated stability, with the overall linear TV landscape maintaining weekly impressions above 28 billion and a weekly reach exceeding 730 million. Zee Entertainment sustained its position as India's number 2 TV entertainment network, increasing its network share by 60 basis points year-on-year to 17.5%. Flagship Hindi GEC channel Zee TV showed strong GRP growth, while Zee Bangla regained leadership in the East. The company also reported being the fastest-growing network in the South with a 17.7% share, and Zee Marathi achieved a 33.6% market share with its new content slate.

Advertising Revenue Shows Sequential Pickup Amidst YoY Decline

Advertising revenues for the quarter increased by 6% quarter-on-quarter, indicating a gradual pickup in ad spends. However, on a year-on-year basis, advertising revenues were down 9%, primarily due to continued softness in FMCG spending. The 9-month advertising revenue also reflected a decline of approximately 12%. Management remains optimistic about a gradual recovery, anticipating benefits from improved network share, growth in the digital business, and increased brand-building initiatives by FMCG players.

Improved Profitability Driven by Cost Management

The company's overall operating costs increased by 12% quarter-on-quarter, mainly due to higher programming costs from the preponement of ILT20 cricket matches and acquisitions of Kantara Chapter 1 and Akhanda 2. Excluding these specific items, operational costs would have declined by a mid-single-digit on a quarter-on-quarter basis. Coupled with a 15% increase in operating revenue and tight management of fixed costs, the EBITDA margin improved by 310 basis points quarter-on-quarter to 10.5%. Profit after tax stood at INR 154.8 crores, growing 2x sequentially.

Strategic Content and Studio Business Growth

The studio business released 8 movies during the quarter, including 1 Hindi and 7 regional titles, with 3 being own productions and 5 distribution deals. The company also acquired theatrical and satellite rights for Kantara Chapter 1 and Akhanda 2, contributing to a 7x year-on-year growth in other sales and services. The music business garnered over 51 billion total video views and 175 million YouTube subscribers, leveraging its new-age music catalogue and a rich library of over 18,000 songs, maintaining healthy profitability.

Strong Liquidity Position and Content Inventory Management

As of December 2025, Zee Entertainment maintained a robust liquidity position with cash and treasury investments totaling INR 2180 crores. This includes INR 500 crores in cash, INR 700 crores in fixed deposits, and INR 980 crores in liquid mutual funds. The company also reported a disciplined approach to content inventory management, with content inventory advances and deposits standing at INR 6930 crores, a reduction of INR 120 crores over the last nine months, driven by optimized acquisitions.

Update on Star Arbitration and FCCB Drawdowns

Regarding the ongoing arbitration with Star, management confirmed that the next hearing is scheduled for July 2026. Due to confidentiality, further details on developments could not be disclosed, and the verdict timeline remains unpredictable. On the capital allocation front, the company has deferred further drawdowns from its FCCB, stating that it will only proceed once there is full visibility on the deployment of those proceeds, indicating a cautious approach to funding.

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