Zee’s EBITDA margin is 3.2% amid FIFA-related content spending

In Q2 FY’27, Zee Entertainment Enterprises Limited reported a 3.2% EBITDA margin after FIFA programming, wider content and marketing for new digital initiatives lifted operating costs 18% year on year. EBITDA was Rs 70.8 crore and profit after tax was Rs 45.6 crore, while management said the margin excluding higher new-initiative spending would have been mid- to high-single-digit.

Why was Zee’s Q2 FY’27 EBITDA margin 3.2%?

Zee’s 3.2% EBITDA margin reflected higher programming costs for FIFA, an expanded content slate and increased advertising and publicity spending across platforms in Q2 FY’27. Overall operating costs rose 18% year on year, leaving EBITDA at Rs 70.8 crore. Management also said the company increased marketing investment in sports, Bullet and KidZ as part of its subscriber-growth strategy.

The cost increase exceeded the pace implied by operating revenue growth of 13% year on year, reducing the conversion of revenue into EBITDA during the quarter. Management said the reported margin would have been in the mid- to high-single-digit range without the higher spending on new initiatives, but did not quantify the excluded costs. Zee nevertheless reported Q2 FY’27 profit after tax of Rs 45.6 crore.

How did FIFA affect Zee’s digital business?

FIFA helped Zee’s digital revenue more than double year on year and rise 37% sequentially to Rs 630 crore in Q2 FY’27, its highest quarterly revenue in that vertical. Management attributed the increase to the football tournament, revised FIFA pricing and multilingual content offered through ZEE5.

The tournament reached more than 400 million viewers across Zee’s platforms, with full-tournament reach up about 41% from the previous FIFA World Cup despite match timings in India. About 83% of FIFA viewership was live on ZEE5. Zee released 34 shows and movies during the quarter, including nine original series on ZEE5, while digital EBITDA was Rs 41.6 crore after investment in sports and newer digital products.

Management told analysts that FIFA revenue was mainly subscription-led on both linear television and digital platforms because football has limited advertising airtime. Zee did not disclose FIFA revenue, its split between linear television and ZEE5, or the cost of the tournament rights. The company also acquired Bundesliga and Serie A rights for the Indian market, alongside other sports properties, as part of its sports offering.

Can FIFA subscriber retention support Zee’s second-half revenue?

Zee said 35% to 40% of subscribers who joined its platform for FIFA had been retained after the tournament, supporting its expectation of an accrual benefit in Q3 and Q4 of FY’27. Management said most FIFA packs were quarterly subscriptions, with a smaller share on annual plans, and that customers had renewed for another quarter or longer.

Subscription revenue increased 30% year on year in Q2 FY’27, driven by higher average revenue per user, or ARPU, digital subscriber growth and higher linear-business pricing. Management said subscription growth would not continue at the same 30% rate, but expected a faster trajectory than prior normalised levels from the second half, helped by retention and the ZEE5 content line-up.

The impact on linear subscription revenue is expected later than the digital effect. Management said existing linear distribution agreements were already in place in FY’27, limiting the immediate standalone benefit from sports. It expects the fuller effect of Bundesliga, Serie A and other rights to be visible in the next financial year as agreements are renegotiated.

What changed in Zee’s advertising, studio and music businesses?

Zee’s advertising revenue was flat year on year in Q2 FY’27 but rose 20% sequentially, aided by FIFA, Sa Re Ga Ma Pa and other programme launches. Management said the festive season moved to Q3 this year, while easing geopolitical uncertainty in the Middle East and fresh content improved advertiser demand during the quarter.

Zee said it expected advertising revenue to avoid a further decline in the second half of FY’27, but gave no numerical target. Its linear network share was 20% as of week 24, which management described as its highest in seven years. The company also said its omni reach across genres exceeded 800 million monthly, although industry television ratings measurement had not resumed.

Other sales and services fell 36% year on year because Zee Studios released fewer films and the base quarter had a larger syndication deal. The studio released six films in Q2 FY’27, comprising one Hindi release and five in other languages. Zee Music recorded more than 59 billion video views and over 179 million YouTube subscribers, but Zee did not provide separate music revenue or profit figures.

Does Zee have funding for its investment programme?

Zee reported cash and treasury investments of Rs 2,570 crore as of September 2026, after receiving Rs 740 crore as the first tranche of proceeds from preferential warrants allotted to promoters. The balance included Rs 530 crore of bank deposits, Rs 1,100 crore in fixed deposits and other investments, and Rs 940 crore in mutual funds.

Management said receivables were cyclical and had not materially affected cash generation in the first half of FY’27. It said the foreign currency convertible bond, or FCCB, and dividend payout had a larger effect on cash balances during the quarter. Zee also said some inventory represented shows scheduled for release in coming quarters, with inventory slightly lower than in the preceding quarter.

Zee has not set a timetable for segment-level disclosure of music, sports or other verticals. Management said it was considering reporting segments holistically rather than individually, but cited the investment phase of several businesses as a reason not to commit to timing. That leaves the Rs 70.8 crore group EBITDA without separate profitability figures for digital, sports, music and newer initiatives.

Conclusion

Zee’s Q2 FY’27 figures show that digital and subscription expansion came with higher near-term spending. Digital revenue reached Rs 630 crore, while FIFA programming, expanded content and marketing contributed to an 18% year-on-year increase in operating costs and a 3.2% EBITDA margin. The company remained profitable with Rs 45.6 crore of profit after tax and held Rs 2,570 crore of cash and treasury investments at September 2026.

The next measure will be whether the 35% to 40% retention of FIFA-led subscribers and the Q3 and Q4 ZEE5 content slate sustain subscription revenue after the tournament. Management also expects the larger linear subscription effect of newer sports rights to emerge in the next financial year, when distribution agreements can be renegotiated, while it has not provided a deadline for segment reporting.