What next for Zee Entertainment

Cost-cutting, pivoting to more ad-based programming will get Zee back to double-digit profits. But, with no suitor on the horizon, what happens next is the big question

Goenka (pictured) sounds tired. The managing director and chief ===executive officer (CEO) of Zee Entertainment Enterprises was talking on its third quarter earnings call on Tuesday this week. It has been three weeks since Culver Max Entertainment (earlier Sony) issued a notice to terminate the merger agreement the duo signed in December 2021. For more than two years, everything that one of India's largest broadcasters was doing from shutting businesses in Russia or Thailand or channels like Big Magic and Big Ganga meet regulatory approvals and the 'conditions precedent' to the was to merger. All the effort and expense now lies in legal tatters.

Goenka talks of a three-part strategy of "frugality, optimisation, and sharp focus on quality content to bring back our margins to industry-beating levels and drive growth for the future." This basically means cost-cutting.

Zee has delivered gross profit margins between 25-30 per cent over the years. As they fall (See chart) Goenka's immediate concern is to get them back to 18-20 per cent by 2026.

But just getting margins back to 20 per cent does not address the real, structural changes in the market that made this merger imperative. That is the reason the Zee stock has been battered on the bourses in spite of being an attractive media company.