Morgan Stanley values Star TV at USD 11.2 billion

According to the global brokerage firm, Star TV contributes 11.3 per cent to the overall fair market value of 21st Century Fox. Mukesh Ambani-owned TV18 Broadcast is valued at USD 824 million.

Global brokerage firm Morgan Stanley has valued 21st Century Fox's subsidiary Star TV at USD 11.2 billion, higher than all its listed rivals in the country. In comparison, India's most valued listed media and entertainment company Zee Entertainment was valued at USD 5.6 billion on the Indian stock markets as of Friday. The Zee Group's cable TV arm, Dish TV, is valued at USD 1.6 billion, based on its closing price on Friday. The Mukesh Ambani-owned TV18 Broadcast is valued at USD 824 million.

In a report, Morgan Stanley estimated the fair market value of Star TV on the basis of rising ad revenue from India and said the firm contributes 11.3 per cent to the overall fair market value of its American parent. This comes amid slowing ad revenue for the media giant from developed markets.

The Morgan Stanley report follows senior officials of 21st Century Fox making a presentation to analysts in August. They forecast that Star TV's earnings before interest tax, depreciation and amortisation (Ebitda) would exceed USD 1 billion by the end of the decade.

"I think we're still very much on track to see USD 0.5 billion or so of Ebitda in India, within the next three years or so, and a real velocity towards USD 1 billion of Ebitda shortly thereafter, around the end of the decade or the beginning of the next," says James Murdoch, CEO of 21st Century Fox.

As of June this year, Star TV's earnings from the entertainment business alone stood at about USD 300 million (Rs. 1,920 crore). Zee's profits for the year ended March 2015, stood at Rs. 831 crore; its revenue was Rs. 3,426 crore.

On the company's India business, Murdoch said with investments in sports businesses and the USD 375-million all-cash acquisition of regional channel MAA TV, the company was on its way to high profitability and boosting its Asia business. "Remember, earlier, it (Star) was big and a heavy loss-maker. I think through the past 15 years, we were able to kind of organically invest in programming, organically invest in some new channels in certain areas, and got to a pretty good place. I think, at this point, we're really seeing the scale of sports investment, which is really a bigger organic investment than anything we've done there in the past," Murdoch said.

"We have good visibility on revenue growth around the business. So, I think when we look at 2017, 2018 or beyond, one can see real operating leverage in terms of profits in the India business come through," he added.

Star India has acquired media rights for the Board of Control for Cricket in India's domestic and international matches in India through 2018. It has also acquired the digital rights for the Indian Premier League through 2017.