Zee Growth Rates to Moderate

Zee Entertainment's outperformance (vs. TV ad industry) due to gains in viewership share, favorable base and increased programming hours is largely reflected in FY13 and we expect ad growth rates (ex-sports) to moderate to mid-teens level in FY14E. While sectors like FMCG, durables, luxury retail and internet continue to register higher ad spends, there has been some moderation in ad spends by sectors like autos, telecom and DTH in recent months. ZEEL continues to invest in content and number of original programming hours on its flagship channel Zee TV has risen from 24 to 29 hrs over the last one year and is likely to go up to 31 hrs soon.

Digitalistation to lead the way; though Phase 2 benefits are likely to be limited as per mgmt. Monetization from Phase 2 HH is already good for ZEEL. However benefits from Phase 3 could be substantial but
they will likely accrue over FY15-16E.

Original number of programming hours has been increased to 29.5hrs in Q3 vs. 24hrs last year. Mgmt plans to increase number of original programming hours to 32hrs in FY14. Domestic subscription revenues
have seen a healthy uptick driven by benefits of digitalization and better pricing power with Media Pro JV