Indian broadcaster Zee posts quarterly loss on weak ad demand, higher costs

India’s Zee Entertainment Enterprises reported a quarterly loss on Tuesday, as weak advertising demand and higher expenses pressured margins.

Zee, which runs channels including ZeeTV, ZeeCinema and streaming platform Zee5, reported a consolidated net loss of 1.02 billion rupees ($10.57 million) for the January-March period, from a profit of 1.88 billion rupees a year ago.

Zee’s advertising revenue, which accounts for nearly 40% of the total, fell 3.5% in the quarter, as the Middle East crisis hurt ad spending in March.

Advertisements are typically the biggest source of revenue for broadcasters.

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Muted demand likely kept Zee’s ad revenue under pressure during the quarter, analysts at Elara Capital said in a pre-earnings note, even as the broadcaster continued investing in content and digital platforms.

Expenses rose 19.6%, driven by a 17% increase in operational costs after Zee recognised higher charges related to movie and content rights following changes in accounting estimates.

Advertising and publicity costs surged 44% due to higher spending on content launches, including KidZ, and increased legal expenses.

Meanwhile, Zee’s subscription revenue rose nearly 4%, supported by user growth in its digital platform and higher average revenue per user.

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The company’s overall revenue declined 5.4%.

Core losses in Zee5 narrowed to 84 million rupees from 753 million rupees a year ago, while revenue rose 71% to 4.7 billion rupees as the service saw an increase in the number of paying subscribers.

Peer Sun TV will report its quarterly results on Thursday.