Disney+ Hotstar and JioCinema have arrived at the value higher than old-school television companies of their parent organizations. EY and BDO have estimated Viacom18 at Rs33,000 crore and Star India at Rs 26,000 crore, says ET after reviewing the valuation docs.
Reliance industries and Disney agreed a deal on February 28 this year to viacommerge Star India and Viacom18 share capital was at Rs 70,352 crore with Rs 11,500 crore capital from RIL being infused. Both companies employed CCM as a method of valuation, which is a method that estimates value as a function of a multiple of the business or subsidiary’s earnings and/or leverage.
Valuation, Star’s Entertainment Business
Consequently, based on this method of valuation, BDO estimated entertainment business of Star to be at a revenue multiple of 1. 75 times its actual revenue, or INR 15,999 crore while its digital business Disney + Hotstar was valued at a revenue multiple of 3. 81 times (INR 16,040 Cr). BDO arrived at the valuation of Star India until December 31, 2023 from its TTM revenue, which was INR 9,142. 2 Cr from linear/entertainment & INR 4,210. From digital revenue alone, it earned 6 Cr, the report said.
MxM met with Uday Misra, Business Head, Viacom18, to discuss the company’s response to the new MVC: The new MVC will cost Viacom18 approximately 8 per cent of its television revenues, while the incumbent broke the network’s back: Viacom18 36. One per cent for STAR India and 2 per cent for other TV channels other than STAR India. Government spending 3 per cent on RIL: the report added.
Video Entertainment Industry
Media Partners Asia predicts that the video entertainment market will equal $13 billion by 2028 of which, over-the-top (OTT) platforms will account for half of the market’s new valuation. For Viacom18 it has used a consolidated revenue multiple related to both linear television and streaming service.
At this time EY set Viacom18’s enterprise worth at Rs 32,955 crore and Star India at Rs 25,926 crore. Star India was valued with reference to its cash position; it is likely that this company does not possess any sources of debt. They portray a picture of 46% holdings while integrating the EY valuation report with RIL’s Rs 11,500 crore fund infusion.
Conclusin
As per an ET report, EY was engaged by Viacom18 to conduct the valuation process before the signing of the merger deal, while BDO was hired by Star India, which Walt Disney owns. RIL and Disney signed a deal on February 28 to merge Star India and Viacom18, forming an entity valued at INR 70,352 Cr, which includes an INR 11,500 Cr fund infusion by RIL.
