Sony India PAT up 6% YoY in FY23, but ad revenue declines 5% YoY

Sony India has reported a 2% decline in its revenue for FY2023, while profit after tax (PAT) grew 6% YoY, as per a report by Elara Capital. The report further stated that Sony India’s ad revenue declined 5% YoY in FY23 to Rs 33 billion.

Elara Capital has compared the performance of Sony India and Zee Entertainment Enterprises Ltd (ZEEL) in FY2023. The two media giants are in the process of finalising a merger, which is expected to become the second-largest broadcaster in India in terms of market share.

According to Elara Capital, Sony India is well ahead of ZEEL, which posted a drop in revenue of 1% YoY and a PAT dip of 76% YoY in FY23. In FY23, advertisement, subscription and total market share of the combined entity – Z/Sony (subject to approvals) – stood at 24%, 16% and 20%, respectively.

ZEEL’s ad revenue too fell 4% YoY to Rs 41 billion on the back of inflationary pressures and cut in ad spend by new age & commerce verticals.

Subscription revenue for ZEEL remains flat YoY, whereas Sony’s grew 15% YoY, as Sony outperformed ZEEL due to strength in the urban genre, sports properties, and OTT price hikes. Sony’s PAT stood at Rs 10,420 million, up 6% YoY, in FY23 with a PAT margin of 15.5%, whereas ZEEL’s PAT stood at Rs 2,514 million, down 76% YoY in FY23, with a PAT margin of 3%, as ZEEL faced pressure on the content cost front, investments in digital, and some write offs.

Content cost of Sony has come off and PAT margin grew 110bp YoY. In FY23, Sony and ZEEL’s ad revenue market share stood at 10.7% and 13.3%, respectively, whereas subscription revenue market share stood at 8.0% and 8.4%, respectively.

In terms of the total TV industry, Sony and ZEEL had a market share of 9.1% and 10.4%, respectively. Hence, the combined entity (subject to regulatory approvals) had an advertisement, subscription and total market share of 24.0% YoY, 16.4% YoY and 19.4% YoY in FY23 and the is the second-largest entity in India in terms of market share after Disney Star India. SonyLIV, the OTT platform of Sony India, currently has 33.3 million users and provides 40,000 hours of programming in eight different languages; its YouTube channel is the third-most subscribed channel in the world, with 156 million global subscribers, the Elara Capital report stated. ZEE5, an OTT platform of ZEEL, had 112 million average monthly active users (MAU) and 11.3 million daily active users (DAU) in FY23, whereas ZEEL’s YouTube channel Zee Music has 134 million global subscribers currently.

The merger would expand content creation as well as provide cost synergies, benefiting both firms. It is likely to go through this year, subject to regulatory approvals.