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Indian broadcaster Zee Entertainment Enterprises posted a fall in second-quarter adjusted profit on Friday, although a sharp drop in expenses lifted its margins, sending shares to close 5.3% higher.

Zee, whose $10 billion merger with Sony's Indian unit fell through earlier this year, reported a core profit margin of 16% for the quarter ended Sept. 30, compared to 13.6% a year ago, as expenses fell 20%.

Since the deal's collapse, Zee implemented a slew of measures to reduce costs and losses in its businesses, including cutting 15% of its workforce. Zee is targeting a margin of 18%-20% for fiscal year 2026, it said in May.

Zee reported a profit before exceptional items and tax of 2.76 billion rupees, down 9.4% from last year. However, its net profit rose 70% as the year-ago quarter was hurt by a one-time charge of 1.2 billion rupees.

The company's revenue fell 19% to 20.34 billion rupees. Advertisement revenue, which makes up nearly half of the total, dropped 7.9%, its ninth quarterly decline in ten.

Analysts noted that advertising sentiment remained muted, with consumer goods makers — typically the biggest spenders on advertising — continuing to curb such expenses, as they face muted demand for their products amid rising living costs.

However, Zee's subscription revenue grew 9.3% to 9.7 billion rupees, helped by the implementation of a new tariff order which gave broadcasters more leeway to increase prices of TV channels.

India's media and entertainment landscape has seen players vying to increase their share of the pie and consolidate their presence.

Recently, giants Reliance Industries and Walt Disney won approval for an $8.5 billion merger of their Indian media assets, to create India's largest entertainment player.

The media company also re-appointed its MD & CEO Punit Goenka for a five year term.