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Monday, December 14, 2015, 17:15

Alibaba pays US$266M for SCMP

By Sophia Luo / chinadailyasia

Alibaba pays US$266M for SCMP
In this file photo taken on Dec 12, 2015, a pedestrian walks past a closed newsstand designed with the logo of the South China Morning Post (SCMP) in Hong Kong following its acquisition by Chinese internet giant Alibaba of the English -language newspaper. (AFP PHOTO / ANTHONY WALLACE / FILES)

HONG KONG - E-commerce giant Alibaba is buying Hong Kong's South China Morning Post for HK$2.06 billion (US$266 million), it said Monday.

The Chinese e-commerce giant is paying cash for the newspaper and the SCMP Group's other media assets, including magazines, outdoor advertising and digital media, the company said in a filing to the Hong Kong stock exchange. The deal was announced on Friday but no amount was given for the transaction.

The 112-year paper has a wide international following for its China coverage. The Post, whose current owner is Malaysian sugar tycoon Robert Kuok and his family, has won awards for coverage of political scandals and rights in China.

The deal is the latest media-related acquisition for Alibaba as it diversifies beyond its core business of online shopping.

The SCMP said in its filing that traditional publishing has an "uncertain" future and Alibaba "will be able to unlock greater value from the content and brand than a traditional media business."

Alibaba Executive Vice Chairman Joe Tsai said in a letter to readers last week that the company wants to build a China-focused media brand with an expanded international audience. He dismissed concerns that editorial independence would be compromised, promising that coverage would "objective, accurate and fair."

Alibaba Group’s headline-grabbing deal to acquire the media assets of SCMP group, including the South China Morning Post, is likely just another step toward building a media empire, a Hong Kong-based analyst believes.

"The SCMP acquisition is just one of the building blocks, if not a vital one, for Alibaba’s growing media empire and ecosystem,” said Hanna Li Wai-han, a strategist at UOB Kay Hian (Hong Kong) Ltd. “(Alibaba founder-chairman) Jack Ma himself has long taken a keen personal interest in media assets, given the e-commerce behemoth’s fruitful track record of buying media properties.”

Statistics show that at least 24 media organizations, from mainland financial news outlet China Business Network to online video giant Youku Tudou Inc, are owned or invested in by Alibaba and its affiliated companies.

Li believes Alibaba’s purchase of SCMP’s media assets  constitutes just a tiny part of its massive business landscape and will have little impact on its financial situation and earning performance.

It may be noted that the SCMP, with its 112-year history as a prestigious English-language daily and once the envy of the industry in terms of profitability, has been feeling the pinch in recent years amid the rampant rise of free online publications.

The struggling traditional media group, which used to rely on foreign advertisers as revenue generators, may in fact see this buyout as "financially positive", as it can expect to capitalize on Alibaba's network to get easier access to  many more cash-rich mainland advertisers, added Li.

The Hong Kong-based newspaper group in a statement on Monday announced the purchase by Alibaba, a move reminiscent of Amazon founder Jeff Bezos' US$250 million buyout of The Washington Post in 2013.

This is not the first buyout of a century-old newspaper seen this year. In July, Japan’s biggest media company Nikkei agreed to buy the Financial Times from Pearson for US$1.3 billion.

With agency inputs
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