Zee too may shut some channels in India

Zee is India’s largest home-grown broadcasting company

Punit Goenka, MD and CEO of Zee Entertainment Enterprises, hinted that his company may follow suit after Sony Pictures Networks shut down some channels due to evolving market conditions.

“We constantly re-evaluate our portfolio of content offering that’s out there, whether in linear form or digital form. And we have taken certain decisions in the international markets for shutdown of linear channels. Similar things we are evaluating even in the domestic market, and you may see some announcements coming in the current fiscal,” he said, when asked by an investor whether the company could also consider shutting down channels that appeal to niche audiences.

The question came up in the context of the media and entertainment industry witnessing a sharp fall in their revenue from April onward due to the impact of the COVID-19 pandemic and government’s efforts to deal with it.

The lockdowns, designed to arrest the spread of the COVID-19 virus, has impacted economic activity in the country and resulted in a widespread loss of livelihoods.

As consumers focus on saving cash, companies have seen a sharp decline in sales. This has in turn led them to cut back on discretionary spends like advertising, which contributes more than half of the Indian media industry’s revenue.

The sharp pullback in advertising, however, is only the latest trigger in a market beset by a long-term trend of educated, urban middle class Indians increasingly turning to online streaming to meet their entertainment needs.

Channels that air English-language general entertainment programs, such as AXN, have been the first to feel the full impact of the rising popularity of online streaming platforms like Amazon Prime, Hotstar and Netflix.

The first primary reason for people turning to streaming platforms for such content is that it is far more convenient to watch an entire season over a single week or even a day, than to keep track of when it airs on a particular channel and catch all the episodes over a three-month period.

The second genre of channels that is getting affected by the rising popularity of streaming platforms is that of movie channels.

Here too, Sony was the first to act, shutting down Le Plex HD Hollywood movie channel more than a year and a half ago.

On the other side, the channels serving content in Indian languages are considered safe for now as around 90% of the audiences of such channels no not have access to cheap, high-speed Internet access — a prerequisite for using streaming services. In contrast, a substantially larger chunk — if not the majority — of those who watch English language serials and movies have access to cheap, high-speed data.

Among the surviving English entertainment channels in the Indian market are Star World and Star World Premiere from Disney and Zee Cafe from Zee Entertainment.

The English-language movie channel space is occupied by Star Movies and Star Movies Select from Disney, &flix and &prive from Zee, Sony PIX, and four channels from Times Global Broadcasting.


Goenka, however, said he was not worried about the shutting down of ‘niche’ channels as audiences shift to streaming services.

Goenka pointed out that Zee Entertainment Enterprises is investing over 7% of its operating profit [EBITDA] into its Zee5 streaming platform.

“I do not see them [the shutdown of niche channels] having a long-term impact on our subscription revenue, because [with regard to] any loss there, the gains we will see on our digital platforms will be far higher,” he said in his comments on the company’s performance in Q4 FY20.

“At the end of the day, the audience doesn’t evaporate. The audience has moved from one platform to another. Therefore, we will get our share of that niche content on our digital platform,” he said.

He also seemed to dismiss concerns among some investors and analysts that the revenue from streaming platforms is considerably smaller than the revenue of the broadcasting industry in India. “The value of that being so small in the larger scheme of things doesn’t really impact us in the short term, medium term or even the long term,” he affirmed.