Bottom line: CMC’s purchase of a stake in the parent of the Manchester City soccer club looks at least partly political, and could be followed by similar purchases by Alibaba or LeTV next year as companies try to earn goodwill from Beijing.
CMC buys into global soccer
Anyone who thought the entrepreneurial China Media Capital (CMC) might represent a new breed of market-oriented Chinese investors will be disappointed to learn the company’s latest purchase looks quite political and aimed at pleasing Beijing. That investment has the Shanghai-based CMC teaming up with the financial giant Citic Group, another highly political animal, to buy 13 percent of a company whose prize asset is the Manchester City soccer club.
I’m probably being slightly unfair in calling this move purely political, since China is certainly a soccer-crazy country that could benefit from the expertise that CMC will get through its investment in City Football Group (CFG). But the timing of this deal looks quite suspicious, as it comes just weeks after Chinese President Xi Jinping visited the team during a tour of Britain, where he released a plan to turn China into a soccer powerhouse. Read Full Post…
Bottom line: Xiaomi’s newest product launch focused on cheap smartphones and LeTV’s scrapping of an IPO for its film-making unit reflect fading prospects for these former superstars due to stiff competition.
Xiaomi rolls out more bargain phones
Former Chinese superstars Xiaomiand LeTV (Shenzhen: 300104) are in the headlines with new setbacks, reflecting the meteoric rises and equally fast falls that China is producing in its own version of the dot-com bubble. But this bubble has distinctly Chinese characteristics, and is coming in a more mature Internet where rampant competition and copycatting make it very difficult to make profits.
The first headline has Xiaomi rolling out 3 of its newest smartphones that are decidedly low-end, representing a big setback for the company’s drive to produce higher-end models that have fatter profit margins. The second headline has LeTV scrapping a plan to make a separate listing for its filmed entertainment unit, a year after hyping a new IPO that it hoped could mimic the meteoric rise in its own stock earlier this year. Read Full Post…
Bottom line: A deal for Alibaba to buy a minority stake in Hong Kong’s SCMP looks logical despite dubious sourcing in reports on such talks, and could help to revive the group’s flagging fortunes by bringing in new partnerships and other resources.
Alibaba eyes traditional media with SCMP investment rumors
Just days after word emerged of a major shake-up in the newsroom of the South China Morning Post (HKEx: 583), new reports are saying that Chinese e-commerce giant Alibaba(NYSE: BABA) may be interested in a major investment or even outright purchase of Hong Kong’s leading English-language newspaper. Sourcing on the reports is quite flimsy, which I’ll describe shortly and makes me slightly dubious that such talks are happening.
But such a move also has a certain logic, since the SCMP’s current owner is reportedly looking to sell the newspaper that has a relatively modest current market value of about HK$2.8 billion ($360 million). What’s more, Alibaba has also been moving aggressively into the media and entertainment spaces, including its recent purchase of leading online video site Youku Tudou(NYSE: YOKU) and formation of a joint venture with a leading mainland financial newspaper. Read Full Post…
Bottom line: Beijing needs to accelerate reform of traditional media in the face of rising challenges from players like Alibaba and Baidu, or risk seeing many of these state-run companies fall into irrelevance.
Alibaba challenges traditional media to speed up reform
A wave of mega-mergers sweeping through China’s Internet over the last 2 years saw its biggest deal to date announced late last week, when e-commerce leader Alibaba (NYSE: BABA) offered $4.6 billion for the more than 80 percent of leading online video site Youku Tudou (NYSE: YOKU) it doesn’t already own. The move marked the latest challenge to China’s traditional media industry, which has been monopolized for years by state-run broadcasters and printed publications.
If this latest mega-deal gets completed, a new Youku Tudou with access to Alibaba’s cash and other vast resources will almost certainly accelerate its challenge to traditional media by aggressively rolling out compelling new on-demand products and premium content. Read Full Post…
Bottom line: Disney’s Uniqlo tie-up highlights its new focus on China retailing as the opening of its Shanghai Disneyland draws near, and could be followed by a major film-production tie-up in the next 1-2 years.
Disney in new China retailing tie-up
Entertainment and retailing juggernaut Disney (NYSE: DIS) is turning up the volume of its advance into China, with Shanghai emerging at the epicenter of its campaign. In the latest move on that front, the company has just announced it will launch a new concept store in China’s commercial capital in partnership with Japanese fast-fashion retailing juggernaut Uniqlo. That particular move comes just 4 months after Disney opened its first China Disney store in the heart of Shanghai’s financial district. That store was also Disney’s largest in the world.
This sudden retailing push comes as Disney prepares for the main event in the first half of next year, which will see it open its first mainland Chinese Disneyland, also in Shanghai. That opening will cap years of lobbying and planning, and will be the first new Disneyland since the last one opened in Hong Kong a decade ago. Read Full Post…
Bottom line: Rupert Murdoch could soon announce a new China film tie-up after meeting with President Xi Jinping, while Warner Bros’ new China production venture could see mixed results due to the market’s challenging nature.
Warner, Murdoch salivate at China film market
Media heavyweights Rupert Murdoch and Warner Bros are both in the headlines, each snooping around the fringes of China’s film market in search of ways to exploit the nation’s booming box office. In the latest sign that Murdoch may be set to re-enter the market after an earlier withdrawal, the aging head of Twenty-First Century Fox (Nasdaq: FOX) was in Beijing late last week where he got a rare private meeting with Chinese President Xi Jinping. That meeting was chronicled in an upbeat report by the People’s Daily, the official newspaper of the Communist Party.
Meantime, Warner Bros was doing its own dance with China’s state establishment, announcing a film-making joint venture with a private equity fund owned by the nation’s second largest traditional media company. That deal saw Warner and China Media Capital (CMC) announce the formation of Flagship Entertainment Group, which will produce films in China for both the domestic box office and also overseas markets. Read Full Post…
Bottom line: Huayi Bros could be moving towards an eventual goal of becoming China’s first major Hollywood-style studio through its massive new 30 billion yuan partnership with Ping An Bank.
HUayi goes to the movies with Ping An
It’s become quite common in China these days to see non-entertainment companies pour millions of dollars into entertainment-related ventures, most notably film-production deals. Everyone’s goal is to repeat the success of recent box office hits like “Monster Hunt”, which are earning big money by drawing on a fast-growing Chinese box office that could pass the US to become the world’s largest in the next decade.
But even I was surprised to see the size of the latest mega tie-up, which will see Ping An Bank pair with the highly successful independent movie producer Huayi Bros (Shenzhen: 300027) in a massive partnership with 30 billion yuan ($4.7 billion) in investment. That’s quite a large sum of money for the entertainment space, and is roughly comparable to how much e-commerce leader Alibaba (NYSE: BABA) said it would pay last week for 20 percent of retailing giant Suning (Shenzhen: 002024). Read Full Post…
Bottom line: SMG’s Whaley Tech division has become the focus of its drive into the new media realm, following Li Ruigang’s departure from his post as group chairman to focus on the unit’s development.
SMG chief tries hand at smart TV
I don’t generally hold out much hope for traditional Chinese broadcasters for making the transition to new media, since most are bureaucratic, state-run outfits staffed by an older generation that doesn’t really understand the emerging industry landscape. But 2 companies that have the potential make the transition are Shanghai Media Group (SMG) and Hunan Satellite TV, which are both making big drives into digital products delivered in on-demand formats over the Internet.
Of the pair, my favorite is Hunan Satellite, since the company has a strong track record of innovation that has helped it to build a national audience despite its location in the relatively backward interior Hunan province. But SMG’s longtime chief Li Ruigang is also trying to show he can take his company into the new media era, with word that he’s formally quit as chairman of his group to focus on development of its new media businesses. Read Full Post…
Bottom line: Tujia’s new fund raising reflects strong investor confidence in its business model and market positioning, which could help the company to post strong growth before an IPO in the next 1-3 years.
Tujia raises $300 mln
It seems like hot Internet sites only need to say they’re looking for new money these days, and they can automatically attract big investor interest that allows them to raise huge funds and get lofty valuations. The latest company to follow the pattern is Tujia, a site that allows homeowners to rent out their vacant properties to travelers, using a similar model to popular US site Airbnb. Just a month after media reported that Tujia was finalizing a new funding round worth $250 million (previous post), the latest reports say demand was so strong that it ended up raising $300 million. Read Full Post…
Bottom line: Oriental Pearl’s new purchase of a stake in a set-top box and TV maker is part of a broader series of recent moves that could help position it to emerge as a viable rival to China’s private online video companies.
SMG buys into TV maker MTC
State-run broadcaster Shanghai Media Group (SMG) is wasting no time telling the world who it sees as its main rivals, with word that the company is buying a major stake in a TV and set-top box maker after completing an overhaul of its own digital TV assets. Anyone who follows the industry will know that the high-flying LeTV (Shenzhen: 300104) appears to be the major target of this new SMG tie-up, which is seeing the company’s newly launched Oriental Pearl (Shanghai: 600637) digital video unit purchase a major stake in a Shenzhen-listed company called MTC (Shenzhen: 002429) for 2.2 billion yuan ($350 million). Read Full Post…
The following press releases and media reports about Chinese companies were carried on June 20-23. To view a full article or story, click on the link next to the headline.
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SMG’s Oriental Pearl (Shanghai: 600637) Enters Internet TV After Reorganization (Chinese article)
Sina (Nasdaq: SINA) Joins Consortium in E-House (NYSE: EJ) Privatization Plan (PRNewswire)
Hershey (NYSE: HSY) Cuts Annual Profit Forecast After China Growth Slows (English article)
JD.com (Nasdaq: JD) Responds to Short Seller Attack, Calls Report Misleading (Chinese article)
AirMedia (Nasdaq: AMCN) Announces Receipt of “Going Private” Proposal (PRNewswire)
