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Zee Entertainment Enterprises Ltd (ZEEL) reported a challenging start to FY26, as a soft advertising environment, reduced FMCG spending, and an extended sports calendar impacted revenues in the June quarter.
The company’s total income declined by 14% in the quarter on a Y-o-Y basis. However, disciplined cost management helped ZEEL post a 21% increase in net profit for the period, the company said.
“During Q1 FY26, the linear advertisement spending environment remained soft due to the extended sports calendar and slowdown in spending by FMCG companies,” said Mukund Galgali, Deputy CEO and CFO of ZEEL, during the company’s earnings call on Tuesday.
Despite the drag, ZEEL maintained an optimistic tone for the remainder of the year. CEO Puneet Goenka said the company is holding to its earlier guidance of 8% advertising revenue growth for FY26, even though visibility on recovery remains limited.
“Given the monsoon and other things, the consumption is looking very positive and therefore, we are cautiously optimistic on advertising revenue coming back. But right now, it is still very early days for us to comment and give you any outlook on that. As far as what Mukund stated, our objective of the growth trajectory that we had guided for in the beginning of the year, which was 8 per cent on advertising, is not changing. We are not withdrawing that or changing that. So, we will stick to that and continue to work towards getting that done,” Goenka said.
ZEEL reported a 21% year-on-year rise in net profit to Rs 143 crore for the first quarter of FY26, up from Rs 118 crore in the same quarter last fiscal. The growth in profit came despite a broad-based revenue decline as total income for the quarter ended June 30, 2025, dropped 14% to Rs 1,849.8 crore from Rs 2,149.5 crore in Q1 FY25, primarily due to sharp declines across advertising, subscription, and other revenue streams.
Advertising revenue fell 16.7% to Rs 758.5 crore from Rs 911 crore during the same quarter last year. Subscription revenue also dipped, though marginally, to Rs 981.7 crore from Rs 987 crore, marking a 0.5% decline. Revenue from other sales and services saw the steepest fall, down 63.5% year-on-year to Rs 84.6 crore from Rs 232 crore in Q1 FY25.
Goenka also addressed broader market concerns around industry consolidation, especially the impact of large scale mergers such as the Jio-Hotstar integration, and what that means for ad market dynamics.
“In terms of consolidation, I think that is a benefit for the industry. It is not a downside for the industry because instead of having three to four players, now you have maybe two and a half or three players at best. And therefore, our ability to negotiate with advertisers or even DPOs goes up that much more. Obviously, as you know, anything in the media business has a lag effect. And therefore, that is the stage we are in currently,” he said.
The company believes multiple internal and market-driven levers will support growth in the second half of the year.
“We also need to look at some of the levers which are going to have an impact going forward. As we speak, our ratings have already crossed 18 per cent. Now, of course, this needs to be sustained going forward, but it looks like we are on the right trajectory and the current content slate is really firing. Having said that, also in the second half of the year, there is a whole slew of new content which is going to get released, be it fiction or nonfiction. So, we are also very hopeful of that again further giving a boost to our ratings,” said Vikas Somani, Chief Relations and Strategy at ZEEL.
“All those new initiatives, whether we are focusing on our retail advertisers or in-content brand integration, will start having an impact only in the second half. And, you know, this year structurally is a bit of a back-end from that point of view. That is how we have built the business plan also,” he said.
In the FMCG category, which is a major contributor to TV advertising, ZEEL said it is watching the space closely.
“Yes, they have been giving positive outlooks, especially in terms of the volume uptick. Hopefully, that gets translated into numbers. But as PG said, we are still not setting our expectations high. We are just holding back and watching right now,” Somani said.
On the digital front, ZEEL’s OTT platform ZEE5 posted 30% year-on-year revenue growth in Q1. The company attributed this to syndication revenue and the introduction of regional language subscription packs, aimed at expanding its paying user base.
“Our subscriber base was stagnating because people did not want to pay for everything being offered to them. That is why we went through this whole language strategy. We have already started to see traction on how the subscriber base is growing and we are quite hopeful that will lead to us getting far more share in the market,” Goenka said.
Mukund Galgali added that newer formats and content strategies would further aid this momentum.
“With things like Bullet coming in as well, we will be able to do far more experimentation and exchange of IPs within platforms, from micro-series to mini-series to mega-series. We have a plan to execute that efficiently,” he said.
Explaining how the Zee5 model was being shaped using lessons from TV, Somani said, “What we are actually doing is working both on the breadth and the depth of the content offering for each of the languages... We are not compromising on quality for sure, but at the same time, we are being able to give the same offering across the breadth and depth of the content at a reasonable price. And that’s what gives us the cost leverage going forward.”
ZEEL maintained that its break-even target for Zee5 by end of FY26 remains intact.
Despite the headwinds in Q1, ZEEL’s management reiterated its focus on delivering growth and profitability, supported by strong content, technology-led initiatives, and fiscal discipline. The company sees the back half of the year as structurally stronger and expects the impact of its content and monetisation initiatives to start reflecting meaningfully from Q3 onward.
On the cost side, ZEEL managed to significantly rein in its expenditure. Total expenses declined 14.9% to Rs 1,652 crore from Rs 1,941 crore a year earlier. Operational costs were brought down 17.5% to Rs 971 crore, compared to Rs 1,177 crore in Q1 FY25.
Advertising and publicity expenses stood at Rs 275 crore, a 5% decrease from Rs 289.6 crore. Depreciation and amortization expenses reduced 22% to Rs 59 crore from Rs 75.6 crore. Employee benefit expenses saw a modest 2.2% drop to Rs 220 crore from Rs 225 crore in the corresponding quarter last year.
Zee Entertainment is reshaping its revenue and content strategy by moving beyond traditional television advertising and cautiously re-entering the sports broadcasting space.
With linear TV ad growth stagnating, the company is shifting to solution-based advertising, offering customized packages that blend Zee5’s digital reach, short form content like miniseries, and influencer led integrations.
“We are no longer selling TV inventory. It is all about solutions to the advertiser,” said Ashish Sehgal, Chief Growth Officer, during a shareholder facing ‘Ask Me Anything’ webinar held earlier this month.
He detailed how Zee is leveraging new formats like Mini Series and “Dilfluencers,” popular TV characters used as social media brand influencers, to offer 360-degree campaigns aimed at both large and smaller advertisers.
On the sports front, Zee is planning a return after exiting the segment in 2017, but with a focus on regional, cost effective formats instead of high-priced marquee tournaments.
“We will be prudent in selecting our content of sporting rights,” said Mukund Galgali during the AMA webinar.
The company management had said that the aim is to tap into underexploited local sports to attract specific viewer cohorts, particularly male audiences, while maintaining low risk and high impact. Zee’s renewed approach across advertising and sports signals a broader pivot towards profitability, platform synergy, and sharply targeted audience engagement.
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