Zee Entertainment forms panel to review business performance

Zee Entertainment Enterprises is embarking on a strategic overhaul aimed at reducing losses across its business segments and achieving key profit targets, the company announced on Tuesday following recommendations from a review panel.

The decision comes in the wake of recent setbacks, including the collapse of a $10 billion merger with Sony India and the termination of a $1.4 billion cricket broadcasting deal due to missed payments, underscoring the urgency for Zee to enhance its financial performance.

Zee's CEO, Punit Goenka, has proposed a bold target of attaining a 20% earnings before interest, taxes, depreciation, and amortization (EBITDA) margin, which stands at 10.2% as of the December quarter.

Over the years, Zee's business has encountered challenges, with advertising revenue declining from approximately $600 million to $488 million in the 2022-23 fiscal year. Additionally, cash reserves have dwindled by about 25% during this period.

The review panel, led by company chairman R. Gopalan and audit committee chairman Prakash Agarwal, has identified five key businesses, including Zee's English television channels, the Hindi channel 'Zindagi', and communication technology-maker Margo Networks, where substantial losses need to be curtailed.

Margo Networks, for instance, reported losses of Rs 117 crore in the fiscal year ended March 31, 2023. However, Zee did not provide detailed performance insights for the other businesses or respond to requests for comment.

Furthermore, the committee has recommended a significant reduction in costs at Zee's technology and innovation centre, aiming to halve expenses by fiscal 2025 from the previous year's Rs 600 crore.

Zee faces additional challenges, including legal battles stemming from the failed Sony and cricket deals, as well as heightened competition following the merger of Disney and Reliance's Indian media assets, forming a formidable $8.5 billion media conglomerate.

(With Reuters inputs)