Web software firm Qihoo 360 (NYSE: QIHU), which has recently come under a short seller attack for allegedly inflating its user figures, is trumpeting a new tie-up with the online unit of CCTV, China’s leading TV broadcaster, to jointly create an online video platform — a development that looks great in the headlines but one that leads me to ask a simple question: Who cares? (English article) I’ve previously stated my belief that Qihoo is a company prone to exaggeration, and in all fairness I can’t really blame Qihoo for wanting to hype this latest development, as obviously CCTV is a big name in video content. In fact, my skepticism would be better directed at CCTV, which is trying hard to become more commercial along with other big state-run media giants like Xinhua and People’s Daily, which are both in the process of doing IPOs for their websites in an effort to earn money and become more self sufficient. (previous post) Put quite simply, CCTV and Xinhua have launched a seemingly nonstop stream of similar tie-ups in the last few years with names like China Mobile (HKEx: 941; NYSE: CHL), Tencent (HKEx: 700) and Bloomberg, none of which seems to be particularly successful. The reason for the muted success, and one reason I’d caution investors against getting too excited, is relatively simple: the average Chinese still sees CCTV, Xinhua and People’s Daily largely as propaganda tools of the communist party, and aren’t all that interested in spending their web surfing and mobile browsing time reading or viewing more of their material. What’s more, these mammoth state-run media giants, no matter how hard they try, simply lack the instincts to be true commercial companies as their first priority will always be to propaganda officials and everything else will come second. Qihoo shareholders seem to have liked the news, bidding up the company’s shares 8 percent in Tuesday trading on Wall Street. But I’d caution any excited buyers not to hold out too much hope for this new CCTV tie-up, despite the broadcaster’s big name, and would likewise give a similar warning to any other company that does future similar deals with CCTV or Xinhua. On the other hand, I wouldn’t extend my skepticism to all media companies, and in fact do believe that certain aggressive regional players like Shanghai Media Group and Hunan Broadcasting might make much more interesting media partners.
Bottom line: A new tie-up between Qihoo 360 and CCTV will produce lackluster results, as will similar partnerships involving CCTV, Xinhua and other media outlets with strong central government ties.
Related postings 相关文章:
◙ 360Buy Heats Up E-Books, People’s Daily Goes to Market 京东商城高调进军电子书,人民网开启上市进程
◙ Xinhuanet IPO Sets Stage For Media Listings 新华网IPO或将开启媒体上市热潮
◙ PPLive, Phoenix Video Initiatives Offer News Alternative 凤凰新媒体与PPLive的新尝试
