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Zee Entertainment Enterprises Ltd
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Ladies and gentlemen, good day, and welcome to the Zee Entertainment Enterprises Limited Q3 FY '19 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Bijal Shah. Thank you, and over to you, sir.
Thanks, Denise. Hello, everyone, and welcome to Zee Entertainment's earnings call to discuss the mid-performance in Q3 FY '19. Joining us today on this call is Mr. Punit Goenka, Managing Director and CEO of ZEEL; and Mr. Rohit Gupta, Chief Finance Officer; along with senior management of the company. We'll start with a brief statement from Mr. Goenka on the third quarter performance. Subsequently, we'll open the call for questions. Before I pass it onto Mr. Goenka, I would like to remind everybody that anything we say during this call that refer to our outlook for the future is a forward-looking statement and must be seen in context of the risk that we face. Thank you, and over to you, Mr. Goenka.
Thank you, Bijal. I would like to welcome everybody to this call and appreciate your joining us for the discussion on the results of the third quarter of fiscal 2019. I'm really pleased with our performance this quarter, which further strengthens our position as India's leading entertainment content company. Our television business continues to consolidate its #1 position, and with 20.2% all-India viewership share, it is the undisputed leader in the country. Launch of our Malayalam channel, ZEE Keralam, makes us the biggest network with presence in 9 Indian languages in the country. We are the leaders in the Hindi segment during the quarter, and our performance in regional language market continues to be good, particularly in Kannada and Tamil, where we became the leader in the urban market and the #2 channel, respectively, for the first time. While our network share is at an all-time high, we believe that our portfolio has the potential to further grow, and the launch of Zee Keralam will surely help. After much delay, TRAI's tariff order is now set to be implemented across the country next month, which is a positive step for the industry in the long term and will be beneficial for everyone. While it will take some time for the new system to settle, we are working with all our partners for its smooth implementation.Coming to ZEE5. With 56 million monthly active users in the month of December, ZEE5 is quickly establishing itself as one of the leading digital entertainment platforms in the country. ZEE5 has already become the biggest producer of Indian content amongst the digital platforms, and the content offering will keep multiplying going forward. Our original content is getting much love from both audiences and critics alike. While Rangbaaz and Karenjit Kaur have helped us -- helped ZEE5 carve a niche in the biopic genre, fast-paced thrillers like Kaali and Date with Saie have set the expectations high for the regional audiences. ZEE5 is the only OTT platform creating content in 6 Indian languages, which will enable it to become the go-to platform for consumers looking for differentiated content across languages. We are expanding our list of partnerships with telcos, OEMs, ISPs and other players in the digital content ecosystem to make ZEE5 accessible to a wider audience. We're also experimenting with innovative pricing and subscription models. In a first-of-its-kind initiative, ZEE5 launched 3 original subscription packs for South Indian users, which enable consumers to watch premium content, including the 4 TV shows and movies in the language of their choice at half the price. In partnership with a leading train-ticketing platform, we also launched a 7-day subscription pack, which allows users to download and consume content on the go. We are confident that our expanding content offerings and partnerships will enable ZEE5 to establish leadership in the digital entertainment space. Now moving to the financial performance of the business. Domestic advertising revenue growth of around 21% was driven by our increased television viewership share and contribution from ZEE5. The outlook for the next year continues to be upbeat, and our endeavor is to outpace the growth of the industry. International advertising growth of 40% was on account of higher traction in Europe, United States and the Asia Pacific region. Domestic subscription growth of 29% was helped by a low base and monetization of phase III markets.EBITDA for the quarter grew by 26.9% to INR 7.5 billion, even as we continue to invest in digital business. Our margins at 34.8% expanded by 250 bps, driven by the strong performance of our broadcast business. Seeing the positive response to ZEE5, we have scaled up our investments in digital business, and the content slate for next year will be significantly bigger than the current fiscal. The cash and treasury investments stand at INR 29.4 billion. On the developments related to the sale of promoter's stake, the discussions and potential partners are progressing well, and we are confident that we'll find a suitable partner for the promoter as well as the company. With this opening comment, we would like to address any questions you may have.
[Operator Instructions] We take the first question from the line of Abneesh Roy from Edelweiss.
My first question is on the advertising domestic. So are you already getting benefit of Karnataka and Tamil Nadu share gains? And in Karnataka, this leadership gain, has it come because of any one-off, movie, et cetera? Or is it because of sustainable fiction content?
So the Karnataka gain is on the back of sustainable fiction content, and therefore, it should sustain going forward as well. We have not yet fully monetized the Tamil gain as well as the Karnataka gain. Karnataka gain is just very recent. And you will see the impact of that coming in the coming quarter itself.
And on the international ad revenue, you were in INR 50 crores to INR 60 crores for many quarters. Suddenly, you have become INR 91 crores. So again, any one-off here? Is it because of Christmas? Of course, that didn't benefit in the -- this quarter. So is this number again sustainable?
I think the drop in numbers was because of the Middle East, and we've seen some recovery happening there. But we have seen great traction for our brand new 2 platforms in the African market, and as well as Zee.One in Germany has given us good returns. And this should be sustainable going forward.
My second question is on ZEE5. Numbers are really good quarter-on-quarter. Only one thing I wanted to ask here, average time spent per user has remained stagnant at 31. So question is, how does it compare to some of your other peers in the top 5? And should it have grown on quarter-on-quarter? So is it a disappointment or is it in line with expectation?
So I think it's a function, Abneesh, that when we push reach, it does compromise that time spent to a bit because the total time spent then gets divided over a larger base. But having said that, there is no -- I'm not concerned about it. I think in the coming quarters, you will see this growing. Also keep in mind that the Diwali and Christmas, just like in television, you will see some drop-off of consumption for the festive period. And that, too, would have contributed the same thing. For the competition, I don't have the number readily available, but we are catching up fast with them.
And my last question is on e-commerce. So 2 factors here. One, e-commerce ads have definitely helped you in the growth. So now with the FDI regulation changing for e-commerce, do you see a risk because next 3 or 4 months is pre-election? I don't see any reprieve happening there. And second is, if the footfall is reduced on, say, Amazon Prime or any of the other retail-led OTT apps, is that good for you? Because Amazon Prime, lot of footfall was happening because of this discount. And if the footfall doesn't happen, does the consumption go down? Or is it a very dedicated consumption anyway?
I don't think we can compare apples-to-apples what happens on competing would it be and how that impacts us. I think the audience base that we get is unique to the content that we are offering, because every content is exclusive to the platform. So what Amazon offers or Netflix offers, I cannot offer. And what I offer is something they can't offer. So I don't think one can just derive behavior patterns based on what happens on one or two to the other. On the e-commerce side, with the regulation changing, I don't expect much change on the advertising front because given that it's already a very small result, between 6% to 7%. And that doesn't really move the needle in a big way for us, barring, probably, us time to work harder to replace that with some other category.
Next question is from the line of Vivekanand from AMBIT Capital.
My questions are centered around ZEE5. You mentioned that you are planning to scale up your investments, so could you just take stock off the current number of shows that you have on ZEE5 versus what you have targeted? You have said 90 shows by March '19. Where are we on that target? And do you have any new targets to outline for fiscal '20? The second question is on the advertising -- ad monetization for ZEE5. Now, Punit, in recent media interviews, you highlighted that the ad monetization engine is what could initially fire for ZEE5. Subscription could come in later. So in that light, where are we on that, and how many advertisers do we have on ZEE5 compared to that off on television? And any thoughts on how one should look at the ad formats, the demands that advertisers have from ZEE5 vis-à-vis your TV advertisers?
Yes, Vivek. On the content side, Vivek, we were able to populate only about 31 pieces of content out of the 90 that we planned for the current fiscal up to December 31. I don't think we'll reach the number of 90. And we cost-corrected and even dropped some of the shows that we were making based on our learnings on consumption patterns. And we were able to do about 38 film premieres on the digital platform up to December 31. Going forward, our endeavor is that in the next fiscal, we should be running at about 6 web series a month that we want to target in the 6 languages that we've talked about. So that 6 in the 12 is -- 72 is the minimum that we want to look at for the coming fiscal. Movies, we are in the pipeline of acquisition so I can't give you a number right now. But that's what it looks like on the content side. Apart from this, we will also be ramping up our international content that we are sourcing from the international markets, not just from Hollywood but from other parts of the world as well. And then we will be commissioning other than that even digital films that will be exclusive to our platform as ZEE5-exclusive and original films. On the advertising front, we're already monetizing the inventory on the video views that we are generating, and we will continue to do that. I think the details that you are seeking, I won't have that readily available. But if you can take it from Bijal and his team offline, that will be better. But we are tracking well on the advertising monetization. So in my opening remarks, the 21% growth that I talked about at advertising is a function of both television as well as ZEE5.
All right. Punit, just one small follow-up. Does the 31 originals, does it count shows like What’s Up Velakkari and What's Up Bai as 2 different shows? Or are they counted as 1 show?
No. No doubt, the version is counted as 2 shows. It's still counted as 1 show.
Next question is from the line of Manish Adukia from Goldman Sachs.
My first question, if you can just provide some initial thoughts on the TRAI tariff order and how that's been progressing, and how do you see the next 3 to 6 months for the industry as a whole and particularly for ZEE. Second question, on the market share gains which you have been consistently doing for the last few quarters, you mentioned that there's more room for growth. If you can just specify which are the pockets that you think could drive that additional market share gains. Would it be the South Indian genres, Kerala and Tamil particularly, or are there other pockets as well? And lastly, if you can give us some color of the underlying television ad and subscription growth, ex of the digital growth that you've shown for both your ad and subscription revenues, that will be very helpful.
So Manish, on the last part, please excuse me, I will not be able to give you that number breakout for competitive reasons. And I've said that over a period of time, we will share with you detailed P&Ls for digital separately and broadcast separately. You have to bear with me for a couple of quarters more on that. On the tariff order side, I think we are working closely with all the DPOs, whether it be on satellite or on cable. We believe that there will be some hiccups for the next 3 to 6 months, but both the cable companies and the DTH companies, they're ramping up fast enough to help put out bouquets in the market. So they also believe that rather than being an a la carte model, it will be bouquet model that will prevail, and that's beneficial for the industry overall. How it plays out, we will only know on 31st midnight or 1st morning, when actually we will have to switch off the pay channels as per the regulation. And we will know what the conversion rates are going to be after that. If you recall, Manish, during DAS implementation also, it was a function of -- the consumer doesn't make the choice until the day the actual thing switches off and he can get his favorite shows or favorite content. So I do expect that large conversion to happen only post switch-off, and that's in line with our that DAS strategy also that we have gone with. Sorry, I forgot the middle question?
Sure. I was just checking about the market share gains that you highlighted, right? So I mean, you said that there's more room for growth there on the market share. So what are the pockets that could drive those market share gains? Any of the...
So when I push Mr. Punit Misra, I push him for every single channel market share gain. So it's not as if we expect it to come from one's order or the other's order. We push for market share gains across the portfolio of our bouquet. Some fire. Some do not fire. It's a portfolio, of course, that we play on. So I can't comment where will it come from. I hope all of them fire and I get maximum.
Right. That's very helpful, Punit. Just a quick follow-up. And while I appreciate that at this point in time, you don't want to disclose the split between television and digital, but for the underlying industry, has the ad revenue growth remained in that range of low to mid-teens? Is that fair to say? And you've grown faster than that?
Yes, we believe so. That's what it is.
Next question is from the line of Karan Taurani from Elara Capital.
Sir, my question was pertaining 2 things. The first one was the margin or headwinds that you would have from year on going ahead, given the digital context which is there. So can you lay out some content investment plans? What is the kind of expense you will do on digital and how will this exactly impact the margin negatively?
Well, I have guided earlier, Karan, that we expect even the next fiscal to maintain our margin guidance to be at 30% plus, despite the investments that we are putting in the digital space.
Okay. The second question would be on the subscription revenue. So this year primarily looks a very good year, primarily because of catch-up revenues. What kind of growth can we expect next year in FY '20 and FY '21?
I think you're safe to build in a low to mid-teen margin growth, kind of in the low-teens kind of numbers. Safe to build that.
Great. Just last one, on the ad revenue front. So you've been outperforming industry averages since a long time now, almost about 6 quarters of very good performance. What is the thing from here on? What kind of growth can we expect, in line with industry average? Or do you still target above-industry average growth given the pricing which you guys engage which you can have in the digital portfolio?
We will endeavor to be above the industry growth, definitely, Karan. And that could depend on what kind of market share gains that we have. So that's our endeavor and that we'll always try and achieve that.
Can you please highlight some of the key genres which will drive for that kind of ad growth within your digital portfolio?
It's a combination of both Hindi movies, regional GECs, the free-to-air market. I mean, I can't pinpoint 1 genre. It's broad-based across the network.
Next question is from the line of Rajiv Sharma from SBICAP Securities.
Punit, just got a couple of very strategic questions. One is on the -- when you compare the print sector with TV, so print has seen lower multiples -- depressed multiples after the Internet became popular, and it struggled to create a profitable model in the OTT space mixed the digital space. So how do you see TV could be different? Even though long-term earnings, say, are 10%, 12%, why not TV multiples may still remain depressed? Just trying to understand your thoughts on this. And second, a strategic partner will be looking to leverage your production capabilities for digital. So I know you have a ZEE5 and you're already leveraging that, but if you can just give some more color on that, it'll be very helpful.
So on the multiple side for television, you see, it's a function of whether television is growing as a medium or not. If you look at today, television penetration has reached just about shy of 200 million homes, right? And pay TV out of that is about 160 million homes. So -- and that number is growing anywhere between 4% to 6% given the year and how the economy is going. So I think TV penetration itself is driving the growth for television. If you look at print, if you dissect it by language, like English, or if we look at just the vernacular, they're also getting very healthy growth of double-digit or low double-digit kind of numbers. So from my perspective, I think it's not about television or digital. It's about video as a model. I think the days for text are gone and the next generation are all looking for video content, whether it be for news or for entertainment. And as long as that format of content remains, whether it be on TV or on the digital platform, it will succeed.
So one other part of this was print has found it very difficult to monetize on the digital side except in U.S. We have the New York Times believing in a subscription revenue and doing something. But in India, we've seen the newspapers are struggling on that. So in TV, you mentioned the TV-OTT space. We're already seeing lot of money being spent, but do you think -- or what do you think will drive profitability in this, apart from consolidation?
Profitability for OTT platforms, we'll be doing from more advertising as well as subscription revenue. I mean, if we do not have a subscription model in place when we hit the vertical mass, then it's going to be really difficult for you to sustain this only on advertising because the reach of digital will never be comparable to the reach of television. However, never is a strong word. Sorry, let me change that. Any time soon, you can't expect the digital reach will reach to the level of television anytime soon. So therefore, it will remain a small -- smaller than television kind of a market. And therefore, we -- one has to look at a subscription model here as well. Just to give you a little perspective, print in India is very different from print in the rest of the world. I know of very few countries that I can talk about, and you may know more than me, where newspaper is delivered to your doorstep for INR 2 a day. I mean, in New York you don't get newspaper delivered to your doorstep. You have to go and pick it up from the newsstand, and you're probably paying $5, $6 kind of price points for a New York tax. In that scenario, the business model of having an online subscription service works. But India, that's a bit different compared to that. So I don't think you can compare them rightly.
Yes. My second question was on your production capabilities, which -- or strategic partner maybe you're looking at today in terms of leveraging for digital. You're already doing ZEE5, but just a broader understanding, some more color on that side.
So I mean, yes, we do have significant production capabilities within the ecosystem. And while we do leverage it on our own platform, but it will be available for -- even for the strategic, if they wanted us to create content for them which not necessarily goes on our platform, it goes on their platform, we will be happy to do that for them.
Next question is from the line of [ Siddharta Bera ] from Nomura Securities.
My first question is on the ZEE5. So is it fair to assume that we have started booking revenues from the telecom operators like Airtel in this quarter? Or they [ already ] to come in?
No, we have started booking revenues.
Okay, okay. So sir, initially, we had indicated that the EBITDA losses for the ZEE5 will be in the range of 300 to 400 bps in this year. So given that now we have started cutting revenues from both the telecom operators and ad revenues, so will it be safe to assume that despite higher investments next year, our EBITDA losses will be in the same or a lesser range?
No, I don't think we can assume that. As I said in my opening remarks, we will be increasing our investments in ZEE5. Of course, I'll give you our fresh guidance when we close the year out and what to expect in the coming year. But I will still maintain that despite our heightened investment, I still expect EBITDA margin for the company, consolidated, to be 30% plus.
So the losses for the ZEE5 will be in the same 400 -- 300 to 400 bps range?
No, I'm not saying that. I'm simply saying that despite whatever the losses on ZEE5 will be, I will deliver this year to 30% plus EBITDA margin.
Okay, okay. Got it. Sir, the second question is on the traditional TV. We have done commendable performance with very high improving market share. So how has been the scenario in the past? I mean, is there a material scope of expansion from even these levels also? Or -- I just wanted to understand historically what has been our peak and where are we now.
Well, it's difficult to say what the peak or the feeling is because when we started 6 years back, we were in the 12% plus share. And today, if you ask me the same question when I was at 12%, will I achieve 20%? I would have probably said it's a mammoth task. But having achieved 20%, who knows what the feeling is? And let's see what Punit Misra and his team can deliver, how high they can go.
Okay, okay, okay. So sir, lastly, my question is on the asset sale. So sir, just wanted some color -- I mean, we understand that you are in talk with the -- to sell off some of these assets. But some color, if you can highlight where in the process you are in terms of the sale of these 3 assets, that will really help.
Which 3 assets are you referring to?
So the road and infra and power sales, which...
I think that those asset sale are on track for, as planned. And we should expect it to happen soon. Beyond that, on this call, I can't give you much color. We can take it offline. We'll give you the [ full line ].
Okay, okay. Sir, lastly, in other income, we have seen a sharp jump in the quarter. Can you just highlight what is -- what does it -- or is it more at present?
Rohit, can you take that?
Yes, sure. So the other income includes rent and interest income. And this quarter, we have a onetime miscellaneous income, which has come from sale of our licenses. So that's what has taken the other income to a heightened level. Yes.
Okay. So that will be how much, sir, what -- the onetime sale of licenses?
So overall, onetime would be -- yes -- so definitely, I mean, we won't -- don't want to quantify. But yes, that explains a large part of it. There are 2 things, sale of export licenses and also there is [ rent income ] which is what explains the higher other income.
We take the next question from the line of Alankar Garude from Macquarie Group.
My first question is, it's been 11 months now since we launched ZEE5. And now based on the subscriber adoption so far, are you comfortable with the ZEE5 subscription price? So basically, what I want to ask is, as things stand, are you open to either increasing or reducing the subscription rate depending on the offtake?
So Alankar, actually, the subscription service launched only in July. So it's just been 6 months. I think it's too early for me to start questioning whether it's the right price point or not. The feedback from consumers helped us in launching this regional-backed strategy and that also is aiding the growth of subscription take-up in the market. So we will track it for another 2 quarters before coming to that discussion.
Understood, sir. And on that, can you share an update on the app's progress in the international markets?
Well, we have soft-launched it in the international market so far. Our first commercial launch will be in the Asia Pacific region within this quarter, and then we will be entering other markets starting first quarter. Barring the United States, by the end of first quarter, next fiscal, we should have launched in the other territories commercially.
Okay. And any indication on the pricing?
The pricing ranges between $2 to $10, depending on territory.
Okay. My second question, Punit, is how has been the initial response to Zee Keralam? And what is the number of original programming hours? And what has been the reach to your weather channel so far?
Well, the total original hours we launched with is about 49. And we have grown that now to about 52 hours of original content. {indiscernible], do you have the reach numbers? And so we had the opening reach of about 42% plus, and since then, it's only grown from there.
Next question comes from Kunal Vora from BNP Paribas.
First is on -- can you share your thoughts on how the advertiser sentiment you are seeing is now? I mean, certain sectors such as auto are seeing signs of slowdown. Also, consumer companies will have like a higher base, which they will deal with. So if you can share your thoughts on ad revenue first going forward?
Yes. So far, we are not seeing any. We continue to see good traction on the ad revenue front. And then we will [ ready ] continue to remain pretty high. And also, the out -- I mean, the product launch which we are seeing in the market is pretty -- I mean, very decent. So at this point of time, I mean, overall ad growth output remains pretty good. In fact, I mean, you mentioned auto. Auto has gone pretty well during third quarter itself. So right now, we don't see much reason to change our -- I mean, we don't see much -- I mean, much reason why low-teen and low double-digit growth for the market cannot be delivered for FY '19.
Just to add to that Kunal, you've mentioned auto is slowing down. But for us, auto as an overall sector is not relevant. Two-wheelers is more relevant for us than the overall sector. So if you look at the 2-wheeler segment, that has shown good traction.
Okay, great. Second question, sir, on -- you mentioned 6 launches per month, OTT, 6 different languages. Does it imply 1 new show per month per language? And do you think that's enough to maintain customer stickiness?
Well, I don't know anybody else who's doing even that much. But from where we are today, we believe this will definitely drive stickiness. And we can only get to know the actual outcome once we do it. So we'll be tracking it closely and taking calls on whether it's enough or too much or optimum.
Sure. And last one, on margins. You seem to be on track for well above 30% margin. Is it possible that we may see a repeat next year as well? Or do you think since the investment will be much larger, we should be building in some margin declines next year?
As of now, we are factoring in a repeat next year. If there's any change to that guidance, I'll come back to you. Until then you can factor in what we have guided for, 30% plus.
So but this year, you will be like well above that? It looks like the sales will be well above it. So should we expect a decline next year compared to the levels which we are seeing right now?
Kunal, the year is not over yet.
Next question is from the line of Rohit Dokania from IDFC Securities.
A few questions from my side. Firstly, is there any sort of number that you want to quantify in terms of catch-up revenue that is sitting in the domestic subscription ad growth -- or sorry, revenue growth?
We generally don't do it, Rohit, but it's a recurring thing for us. But it will be in the range of about INR 40 crores to INR 55 crores.
And also, I mean, it does not mean that it relates to a previous year. I mean, a good part of that will be relating to FY '19 itself.
Yes, obviously. So basically, it's not a one-off for the year but for -- more so for the quarter. So just to understand that number. Great. This is very helpful. The other thing was, if you can just very quickly highlight, so where exactly are we booking the telco revenues on the ZEE5 that you would be receiving? In which line item are you booking it? It's in the domestic subscription revenue front?
Yes, absolutely.
Okay. And Punit, would you have any updates on Free Dish matter? I mean, has the government taken any view and if you were in the know on that?
No, Rohit. We are as clueless as you are, probably more because we don't track it on a daily basis. The government policy, they were supposed to come out with it last month, but I have no idea as to when they're going to announce it. So still waiting and seeing what is going to happen.
Sure. And then just one last question from my side on the stake sale that -- the promoter stake sale that you had announced earlier. So would we say, now that the time is passing by, would we say that we are pretty confident that the earlier time lines that we had mentioned, you would be announce something concrete by then?
I think so. We should be able to do that in the same time line.
Next question is from the line of Jay Doshi from Kotak Securities.
First, a bookkeeping question. Where do you recognize the revenue for the content that you sell to Amazon Prime or Netflix, for instance, Dhadak as a movie? So will it be other sales and syndication revenue, or will it be part of domestic subscription or?
No, Jay. it will just be other sales as well.
Understood. Second is -- Punit, I don't know if you've clarified earlier, maybe, I don't know. I was not on the call for the entire time. Are you open to financial investor for promoter stake sale? Or should we -- it will be strictly a strategic investor only?
Jay, as of now, we are only talking to strategics.
Very helpful. And finally, just a suggestion, if maybe starting next quarter or first quarter of FY '20, if you could start sharing daily active users and perhaps a split between app and web for ZEE5.
We'll take your suggestion on the project. Thank you.
Next question is from the line of Aliasgar Shakir from Motilal Oswal Asset Management (sic) [ Motilal Oswal Securities ].
My first question is on subscription revenue outlook in the medium term. So just wanted to understand the drivers to growth for this low-teens number -- or growth that you mentioned from the point of view of your phase III monetization. Is that largely complete? And do you see ARPU increase potential? Or -- so what other drivers you see basically for this low-teens growth?
Yes, Ali. I mean, there are several drivers. So number 1 is, as Punit mentioned in the call, there is 2% to 5% growth in television home itself. And the gap between people who are not having television right now is fairly large, so that itself is a secular growth driver. That's number one. Number two, we have -- I mean, as DTH is giving more and more HD boxes, so that will be one or another important driver in overall subscription. And we will not be surprised if the 25% or 30% of the India television or pay TV base becomes HD in 5 year's time. So you know that HD rates are at least 2 to 3x what we get for standard definition. So that will be one big driver. And third driver would be ARPU increase itself. We are fairly hopeful that the industry having consolidated so significantly and with this tariff order and -- we are most likely -- I mean, we'll see that acceleration in ARPU growth and that the acceleration in ARPU growth will also help us. So all the things put together, we'll see M&E will be able to deliver that kind of growth. And also as of now, as we speak, full benefits of digitalization is yet to be realized, as you are seeing in phase III benefits we are realizing right now. That itself, phase III, phase IV will last for a while. So overall, low teens -- I'm sorry, low double-digit to low-teens kind of growth is quite sustainable.
Okay. Quick follow-up over here. So if we share -- ARPU increase sort of is at risk, then would you say this, I mean, low teens probably would go down to single digit? Or the point I'm trying to understand is that how much relevance or importance is this ARPU increase in terms of your overall low-teens growth guidance?
So I mean, of course, it will go down a bit but not very significantly because what ARPU growth we are right now talking about for our low-teens guidance is subscription. It's not really very large. And in fact, if the tariff order is implemented as it is, then probably, in the medium-term gain on account of ARPU growth could be larger.
Got it. This is helpful. Second is -- just quickly on the OTT side. So you -- Punit mentioned that we are seeing a very strong traction in the ZEE5 and we will scale up investments over there. On the other hand, you also mentioned that the target for 90 shows is sort of not possible to reach. And in fact, you will be doing about 72-odd in the next year. So maybe, on one hand, investments going up, but the number of shows are reducing. So does that, in a way, say that maybe the investment will be more towards high-cost and pull sort of the programs, which is what we probably also see more in your peers like Netflix and Amazon?
Yes, Ali. So the 90 shows that we have planned was a combination of multiple formats of shows. And we quickly realized within 3 to 4 months of content being launched on the platform what kind of content is actually getting traction. So we have kind of repositioned our content strategy to pursue that. And we will we doing a lot more of tentpole. I think we have talked about 1 tentpole a quarter, but we will be doing a lot more tentpole in multiple languages going forward now.
Okay. And a quick follow-up over there is, like, you mentioned that even in terms of the monetization for OTT that you have seen has probably surprised you. I don't know if surprised, but at least the growth in terms of ad subscription revenue has been very healthy, that you mentioned, has contributed from there. So does that also -- I mean, given that you mentioned that your overall margin guidance of plus 30% remains there, so then, your intensity of investment has a possibility of further increasing from your -- that you will probably use whatever you make in terms of your incremental growth or towards investment over there?
Yes, that's right. So I mean, I did not say I was happy with the traction on the revenue side yet. I just said that it's started to happen. I think there's a long way to go for us to drive that to a significant number for the company over the next 3 to 5 years that I've guided for. But having said that, we will be investing back all of the revenues as well as more cash flows behind the different content and offering.
Next question is from the line of Vikash Mantri from ICICI Securities.
Punit, just wanted to understand, with the stake sale of Zee Entertainment, have we been able to narrow down to 1 or 2 people that we're talking? Or are we still talking to a large bunch?
Well, large is a relative term, Vikash. We are talking to more than 1 or 2, but not to a very large number.
And [Audio Gap] saying by March, we should be able to come out with some...
Sorry, Vikash. We lost you in the middle.
Even so that if we've done more, we're not able to complete these by then, then we remove ourselves from the block and go solo? Or it's just that we want to give ourselves the time? And I just wanted to know if we can -- is there a possibility we will not do any sale?
No. Regarding that, no, that's not a possibility. And I'm pretty confident that by March, April of '19, we should be able to have a concrete deal for announcement.
We take the next question from the line of Sanjay Chawla from JM Financial.
My first question is, Punit, just broadly, if you compare the digital platform and the TV broadcasting platform, what is your sense of where do you think we are in the -- in terms of the ad loading ratio for certain amount of hours of consumption on digital and the same amount of time consumed on TV? Where is the ad impression, ad loading ratio between the 2, and where could this be over medium- to long-term time frame? That is the first question. And the second question is on the -- broadly, if you could give us a sense approximately where we would be in terms of the core broadcast EBITDA margins ex OTT in the third quarter. Are we closer to 35%? Are we closer to 40%?
So Sanjay, on the first part, one, the digital ad inventory is much lower planned than the television inventory, because as you will know, that television is programmed for 12 minutes per clock hour; whereas on digital, it will be -- per show, it will be at best of 3 ads that we sell. Even at today's level, we will see that 50% of fill levels are on the digital side.
54%.
54%, sorry, fill level. Whereas on the TV, it will be upwards of 90% fill levels on the ad loading.
But is it 3 ads per hour you're referring -- sorry, per half hour of per program, right -- or sorry, per hour?
Content piece. Per content piece or per stream, whatever you want to call it.
So content on the [ order ] is primarily our catch-up TV, which is around 22-minute series, on which you get to see -- I mean, you have to see 3 ads.
Okay, understood. And this is how you define the inventory level, right? And the fill rates will be a percentage of that?
Correct.
And over the medium to long term, do you that think this figure could go up in terms of number of ads the viewer is bombarded with on digital?
No. I think the digital ecosystem doesn't support more than this, and we want to stick with this kind of a number. If you look at what we have defined for ourselves, it's very different from the other digital ecosystem where 3 seconds counts as an impression. We have programmed it for 6 seconds as impression count. So it's far more friendly for advertisers compared to other mediums -- other digital mediums. The fill levels definitely will improve over a period of time. I think we can expect it to be reaching the 80% to 90% levels in the coming year itself. But I do not expect to increase the load of inventory, at least in the foreseeable future.
Understood, understood. And on the second question, where would we be in terms of the EBITDA margin, ex OTT?
Sanjay, give us -- be patient for a couple of more quarters. You'll start getting it.
Okay, okay. And just last, a housekeeping question. What are the cash and cash equivalent as of the December end, and the receivable figure and also the content inventory, if you can share?
Bijal?
So as Punit mentioned, that cash stands at around, I think...
INR 29.4 billion.
INR 29.4 billion. The rest of the thing, you can take offline because I don't have those numbers readily available with me.
Well, ladies and gentlemen, that was the last question for today. On behalf of Zee Entertainment Enterprises Limited, we conclude today's conference. Thank you all for joining us. You may disconnect your lines now. Thank you.