Zee Entertainment Enterprises Ltd (ZEEL) has posted 17 per cent year-on-year increase in income to ₹1,595 crore for the December quarter, driven largely by higher advertisement revenue.

Advertisement revenue, which accounts for 60 per cent of Zee’s income from operations, grew 27 per cent year-on-year to ₹942 crore, broadly in line with the double-digit growth achieved in the past too.

According to Mihir Modi, Zee’s Chief Finance & Strategy Officer, both higher volumes (aided by the newly launched channel, &TV) and better rates boosted ad revenue.

Subscription revenue, which contributes another third, grew 17 per cent to ₹523 crore. Subscription revenue growth in the December quarter was a few percentage points higher than that seen in the preceding two-three quarters.

Higher income coupled with only a moderate increase in the media content cost pushed up operating profit to ₹430 crore, an increase of 22 per cent compared with the same period last year.

A sharp increase in tax expenses (up 51 per cent year-on-year) and a fall in other income (down 64 per cent), however, dented profit. After four consecutive quarters of growth, the company’s net profit fell 11 per cent to ₹275 crore in the December quarter.

According to Mihir Modi, with a larger proportion of income coming in from the Indian operations compared with the overseas operations (spread across regions such as America, Europe and the Asia-Pacific), tax expenses in the December quarter were higher.

The Indian business faces a relatively higher tax rate. For the 2015-16 fiscal as a whole, however, he is guiding for a lower tax rate.

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