Zee Entertainment Shares Decline 6% After Reporting Rs 104-Crore Net Loss

Zee Entertainment Shares Plummet 6% Amid Quarterly Loss

Shares of Zee Entertainment Enterprises Ltd fell 6% on May 20, a day after the firm reported a quarterly loss, as clients tightened their advertising budgets following the Middle East crisis and higher overall expenses pressured the broadcaster's margins.

The ongoing Middle East conflict severely impacted advertising revenues for March, with advertisers holding back spends near the quarter-end. As a result, ad revenue, which accounts for nearly 40% of the total, fell 3.5% in the quarter. Without the Middle East war in the picture, ad revenue would have likely grown in the low single digits.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

Zee Entertainment reported a consolidated net loss of Rs 104 crore for the January-March period, from a profit of Rs 188 crore a year ago. 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.

The company's overall revenue declined 5.4%. Zee5's core losses narrowed to Rs 8.4 crore from Rs 75.3 crore a year ago, and revenue rose 71% to Rs 470 crore as the service logged an increase in the number of paying subscribers. Revenue from other sales and services was down 46.65% at Rs 192 crore in the quarter, on account of "syndication offset by studios business".

Elara Securities downgraded the stock to 'Sell' and gave a target price of Rs 88. Motilal Oswal Financial Services flagged "dismal end to a subdued FY26". The domestic brokerage believes that a sustainable recovery in ad revenue remains the key to any potential re-rating of multiples for Zee.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline