China’s rapidly weakening advertising market may be undermining Focus Media’s (Nasdaq: FMCN) ongoing privatization bid, with word that one of the companies underwriting the buyout may have backed out of the deal. The news, if true, underscores the fact that this kind of privatization is never easy, and that China’s wobbly economy may make future similar buyouts even more difficult. But at the end of the day, I do suspect this privatization bid will probably succeed since many offshore investors are still quite bullish on China. What’s more, Focus Media, despite a recent restructuring, is in the enviable position of being one of China’s leading outdoor advertising services firms.
Tag Archives: CCTV
Youku Tudou Off To Bumpy Start 优酷土豆合并后艰难开始
Leading video sharing site Youku Tudou (NYSE: YOKU) has just released its first earnings report since its formation through the merger of the nation’s top 2 players, and the results aren’t impressing anyone too much. The numbers themselves are a bit messy, which is often the case with a newly merged company where accounting differences need to be resolved and year-ago comparisons are difficult. (results announcement) But what these results seem to show is that Youku may have overpaid significantly for Tudou. What’s more, the results also show that Youku Tudou remains highly dependent on advertising for the big bulk of its revenue, a bad sign as China’s ad market shows signs of significant slowing.
Advertising Winter Enters Deep Freeze 中国广告行业进入严冬
Leading Chinese media company CCTV has been trumpeting the results of its annual advertising auction for 2013 held over the weekend, which saw spending increase by 11.4 percent despite the recent slowdown that has hit the sector. But from my perspective, these results look very gloomy indeed for reasons I’ll explain shortly, meaning advertising-dependent Internet leaders like search engine Baidu (Nasdaq: BIDU), web portal Sina (Nasdaq: SINA) and video sharing site Youku Tudou (NYSE: YOUKU) won’t have much to cheer about in 2013.
CCTV’s Latest Web Tie-Up: Who Cares? 奇虎联手央视料难成功
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
Xinhuanet IPO Sets Stage For Media Listings 新华网IPO或将开启媒体上市热潮
There’s an interesting report in the media space that the Xinhua News Agency plans to publicly list its news web site — a development with hugely symbolic overtones that could foreshadow a long-awaited liberalization in this highly sensitive sector and portend a major new round of IPOs for big media firms. Foreign media are citing unnamed sources saying that Xinhua is planning a domestic listing for its news portal, Xinhuanet, in a deal that would see it raise around 1 billion yuan, or more than $150 million. (English article) The size of the offering is really of little or no significance since Xinhua, as the Communist Party’s main mouthpiece, already receives most of its funding from the government and is unlikely to need such funds. What’s much more important is that Xinhua is making this IPO at all, as ownership of the media, which has the power to influence public opinion, has been a highly sensitive matter in the past, even as most other sectors were allowed to make public offerings paving the way for private ownership. This move by Xinhua, if it really happens, would send an important signal to China’s other major media groups, including CCTV, Shanghai Media Group and other major players, that it’s ok for them to list some of their major assets, paving the way for an interesting new round of possibilities for investors with huge growth potential. Such a development would, in fact, extend a recent trend that has seen a growing number of movie and TV show makers, many of them owned by regional media companies, make a string of low-key public offerings as they hope to tap emerging demand from not only traditional TV stations, but also an fast-rising group of content-hungry video sharing websites like Youku (NYSE: YOKU), Tudou (Nasdaq: TUDO), Sohu (Nasdaq: SOHU) and PPLive. (previous post) Xinhua, as one of China’s oldest media, already sets the tone for the rest of the nation’s TV stations, newspapers and websites in terms of news coverage, and this latest move would indicate that public ownership of the media is ok, at least on domestic stock markets. The timing of a Xinhuanet listing is still unclear, meaning it could still be months or years away. But if and when such a listing occurs, look for many more to follow as a wide range of regional and local media groups clamor to raise funds to expand their national reach.
Bottom line: A pendiing IPO for Xinhua’s web portal could auger a flood of new domestic listings for big Chinese media firms, providing an interesting investment option with strong growth potential.
Related postings 相关文章:
◙ Jishi the Latest in Low-Key Media Listing Parade 吉视传媒加入中国媒体低调上市大军
◙ 2011: A Breakthrough Year in Copyright Protection 2011年：中国版权保护取得突破的一年
More Internet Froth in Alibaba Valuation, Dangdang Price War 阿里巴巴估值奇高凸显网络泡沫
The latest signs of froth in China’s bulging Internet bubble are popping up in several places this week, with new investors in e-commerce leader Alibaba Group boasting a ridiculously high valuation for the company, while the latest price war by Dangdang (NYSE: DANG) underscores the overheated competition. And in perhaps the most revealing of the new developments, even state-owned dinosaur CCTV is jumping on the e-commerce bandwagon, with the launch of its CNTV Mall. (English article) Let’s begin with Alibaba, which has received new investment from a group of blue-chip investors including Singapore’s Temasek, private equity firm Silver Lake Partners and Russia’s Digital Sky Technologies (DST), which are boasting their investment values the company at as much as $32 billion. (English article) This sounds ridiculous for a company that analysts were estimating was worth around $10 billion just months ago, and is reminiscent of DST’s estimate earlier this year shortly after it and others invested $1.5 billion in e-commerce site 360Buy that that company was worth up to $10 billion. (previous post) I wouldn’t be surprised if DST was the one giving the $32 billion figure for Alibaba, and would advise DST’s chief Yuri Milner to take a course in remedial finance before throwing out more such overinflated numbers in the future. In terms of Dangdang, the company is reportedly pressuring consumer electronics companies that sell on its site to lower their prices below those of comparable products on 360Buy, in a campaign that a Dangdang insider says has been named “operation decapitation”. (English article) The name of the campaign itself reflects the hyper competition that has appeared in China’s e-commerce space following the infusion of billions of dollars in new investment over the past year. But the biggest sign of a bubble in my view is the arrival of China Central Television, better known as CCTV, to the market. You know that when a slow-moving dinosaur like CCTV finally joins the game, the party is almost over.
Bottom line: A sky-high new valuation for Alibaba Group and the latest cut-throat campaign from Dangdang are the latest signs of a looming burst for China’s Internet bubble.
本周种种迹象表明，中国互联网泡沫正在成形。阿里巴巴市值被投资者吹捧到高得离谱，当当网(DANG.N)近期打响价格战凸显行业竞争白热化。最能说明问题的莫过于CCTV也进军电子商务领域，推出中国网络电视台商城（CNTV Mall）。首先，来谈谈阿里巴巴。该集团近期获得多家蓝筹投资机构投资，包括新加坡淡马锡控股、私募公司Silver Lake Partners及俄罗斯风投公司数字天空科技（DST）。这些机构称，他们对阿里巴巴的投资，促使该公司市值高达320亿美元。这听起来十分荒谬，因为仅在数月前，分析师估算的阿里巴巴市值仅为100亿美元左右。这不禁让人想起今年早些时候，DST与沃尔玛和百度向京东商城投资15亿美元后不久，就对京东商城估值100亿美元。如果是DST提供阿里巴巴市值320亿美元的数据，我一点也不会感到惊讶，我会建议，DST执行长米尔纳（Yuri Milner）以後夸大这类数据前，应先学会补齐财务知识。有报导称，当当网正向其消费电子产品供应商施压，要求其售价应低于京东商城同类产品，当当网内部人士透露，此举被命名为“斩首行动”。这一名字本身就反映了中国电子商务行业竞争白热化的现状。该领域过去一年来获得了数十亿计美元的新注资。但我认为，中国互联网泡沫的最大迹象是CCTV进军该市场。要知道，像CCTV这样行动缓慢的庞然大物加入时，游戏就基本结束了。
一句话：对阿里巴巴集团估值过高，当当网启动“斩首行动”，这些都是中国互联网泡沫破裂的最新迹象。
Related postings 相关文章:
◙ Muddy Waters, Taobao Mall Wake Up to China E-commerce Hype
