Disney+ Hotstar And JioCinema Valued Higher Than Parent’s Linear TV Businesses: Report

OTT platforms Disney+ Hotstar and JioCinema have reportedly crossed their parent companies’ linear TV businesses, with EY and BDO having valued Viacom18 at INR 33,000 Cr and Star India at INR 26,000 Cr.

According to documents seen by ET, 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.

Both firms conducted the valuation using the Comparable Companies Multiples (CCM) method, which determines value based on multiples derived from valuations of comparable companies.

According to BDO’s valuation, Star’s entertainment business was valued at a revenue multiple of 1.75 times (INR 15,999 Cr), while its digital business, Disney+ Hotstar, was valued at a revenue multiple of 3.81 times (INR 16,040 Cr). BDO assessed Star India’s valuation based on its trailing twelve months (TTM) revenue until December 31, 2023, which included INR 9,142.2 Cr from linear entertainment and INR 4,210.6 Cr from digital revenue, the report said.

BDO’s assessment resulted in an enterprise value of INR 31,992.9 Cr for Star India, based on the revenue multiples. After adjusting for liabilities related to the sports business, the equity value was reduced to INR 25,900.2 Cr, or INR 524.5 per share.

“This transaction reaffirms that digital businesses command valuations twice as high as traditional businesses, thanks to their flexibility and broader scope in distribution and revenue generation,” said media expert Rajesh Sethi told ET.

He noted that the valuation of sports content is set for reassessment as the industry shifts from a three-player to a two-player competition.

In October last year, it was reported that Reliance was evaluating Disney’s India assets, encompassing the Disney+ Hotstar streaming service and Star India, at a valuation ranging from $7 Bn to $8 Bn. During the same period, Disney valued these operations at $10 Bn. 

However, following the dissolution of the Sony-Zee merger, Disney Star’s valuation reportedly suffered a significant decline, potentially amounting to $2 Bn. 

This also comes at a time when Disney is reportedly close to finalising an agreement to sell 60% of its Indian media business to Viacom18, valuing the operation at $3.9 Bn—less than its value when Disney acquired it in 2019.

This follows a December agreement between Reliance and Walt Disney to merge their Indian media operations, with Reliance set to purchase Disney’s India assets in a cash and stock deal.