Mumbai: Broadcaster Zee Entertainment Enterprises may post a sharp drop in net profit in the quarter ended June as Covid-19 pandemic-induced lockdown significantly hurt advertising demand. The television channels were also forced to air rehashed old content as production came to a grinding halt.

The company is slated to announce its June quarter earnings on Tuesday.

ICICIDirect expects Zee Entertainment to report a 55.5 per cent drop in its quarterly net profit at Rs 236 crore, while its revenues may have declined 37.6 per cent to Rs 1,252.2 crore.

The brokerage expects Zee to report 8.2 per cent YoY domestic subscription growth while it sees overall subscription growing 5 per cent YoY. It believed domestic advertisement revenue may have declines 60 per cent YoY.

Even as they foresee 40 per cent decline in, ICICIdirect analysts we expect Zee to witness EBITDA margins at 28 per cent, 490 basis points (bps) down year-on-year (YoY) owing to sharper decline in operational revenues.

Kotak Institutional Equities expects Zee to report a 32.8 per cent decline in adjusted net profit, while it sees net sales declining by 33.2 per cent. It expects Ebitda to drop by 46.9 per cent.

“The Covid-19 outbreak and subsequent lockdown significantly impacted advertising demand. Broadcasters aired old episodes/re-hashed content as production studios were shut during the quarter,” Kotak analysts said.

They model 62 per cent YoY decline in advertisement revenues and 9 per cent YoY growth in domestic subscription revenues. They also estimate 27 per cent YoY decline in operating costs on the back of 30 per cent decline in programming costs after factoring higher movie amortization costs, 10 per cent YoY decline in employee costs, and 30 per cent decline in other overheads.

Kotak analysts also expect 675 basis points (bps) YoY decline in EBITDA margin to 26.1 per cent.

Shares of Zee Entertainment have eroded 42 per cent value so far this year, compared with a 7.8 per cent drop in benchmark Sensex.