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Media/Entertainment
youngchinabiz.com : latest Business news about Media – Entertainment in China by expert / journalist Doug Young : more than two decades of experience in writting about Chinese Companies
Bottom line: Sohu is likely to combine its online video service with Tencent’s in an ongoing consolidation of the Chinese sector, and the tie-up could presage a Tencent-backed privatization bid for Sohu later this year.
Sohu, Tencent in video merger?
More consolidation could be coming in China’s online video sector, with word that web portal Sohu(Nasdaq: SOHU) may soon sell a major stake in its video service to social networking giant Tencent (HKEx: 700). The move would follow a similar tie-up between this pair in the online search space, and might lead some to wonder if Tencent may even be preparing an eventual bid for Sohu itself. I’ll end the suspense on that matter by saying such a sale seems unlikely, for reasons I’ll explain later. But the pair could still ultimately do more deals together
This particular tie-up would mean that China’s online video sector is firmly consolidating around the country’s 3 biggest Internet companies and a handful of others. Leading search engine Baidu (Nasdaq: BIDU) is closely associated with Qiyi.com, a leading player, while Alibaba (NYSE: BABA) last year purchased Youku Tudou, another leader. The other major player is LeEco (Shenzhen: 300104), formerly known as LeTV, and state-owned broadcasters in Shanghai and Hunan are also making big pushes into the space. Read Full Post…
Bottom line: Jin Jiang’s Accor investment reflects its global aspirations and could result in a strategic partnership, while SMG’s new Imagine Entertainment investment reflects its increasing focus on film production.
Jin Jiang boosts Accor stake
Two major overseas investments are in the headlines from the leisure and entertainment sector, with hotel operator Jin Jiang (HKEx: 2006; Shanghai: 600754) and Shanghai Media Group (SMG) making major purchases in Europe and the US, respectively. The first deal has the acquisitive Jin Jiang boosting its stake in Accor (Paris: AC) to 11.7 percent, making it the French hotel giant’s second largest shareholder. The second has SMG’s China Media Capital (CMC) unit signing on as one of several new investors in Imagine Entertainment, the Hollywood production company co-founded by director Ron Howard.
Both stories reflect China’s recent drive to form global tie-ups in the leisure and entertainment sectors, as companies try to capitalize on the nation’s booming domestic market and also a growing flood of Chinese tourists traveling overseas. Jin Jiang has been China’s most acquisitive hotel company, while CMC has also been very active in forming tie-ups and investing with big names both at home and abroad. Perhaps it’s no coincidence that both of these companies are based in my adopted hometown of Shanghai, which is also China’s commercial capital. Read Full Post…
Bottom line: Wanda Group founder Wang Jianlin and other major Chinese entrepreneurs intent on building wide-ranging conglomerates should look to the western failure of such firms instead focus on their core business areas.
Wanda’s Wang buys Carmike Cinemas
Billionaire deal maker Wang Jianlin was back in the acquisition headlines last week, when his increasingly diverse Wanda empire announced it would buy US-based Carmike Cinemas (Nasdaq: CKEC) as part of it its dream of building the world’s biggest theater chain operator. But theaters are just one of a growing number of items on Wanda’s recent list of mega-projects, which has also included plans for a multibillion-dollar European theme park, a major e-commerce venture, and investments related to sports and its core real estate products and services.
The sudden diversification looks similar to ones by other cash-rich Chinese companies, most notably e-commerce giant Alibaba(NYSE: BABA), and reflects a desire to move beyond their original businesses into new growth areas. While such a strategy seems logical, western experience has shown that such rapid diversification more often results in dysfunction rather than synergies, and frequently ends with the eventual break-up of such companies into smaller units focused on individual areas of expertise. Read Full Post…
Bottom line: Cautionary comments from Caixin and Ele.me about investments from Alibaba and its affiliates reflect a growing wariness from companies at accepting money and yielding control to the e-commerce giant.
Alibaba’s Ant invests in Caixin
The voracious Alibaba (NYSE: BABA) is in 2 new M&A headlines as we head into the end of the week, led by word that its Ant Financial affiliate was an investor in a new fund-raising round in Caixin, one of China’s best respected financial media. A second headline has take-out dining pioneer Ele.me denying reports that Alibaba, which is already one of its biggest shareholders, will devour the company completely. Instead, Ele.me is saying it will continue working closely with Alibaba’s own take-out delivery service called Koubei.
Both headlines reflect a growing resistance by founders of these companies to outright ownership by Alibaba-related companies. In the first case, Caixin was quick to issue a statement saying Ant was only one of several new investors in its new funding round. Ele.me’s case is similar, quashing earlier speculation that it would ultimately get swallowed up by its cash-rich backer. Read Full Post…
Bottom line: Qiyi’s new tie-up with Universal Music could presage its purchase of Baidu’s music unit, while Qihoo’s new video campaign is likely to stumble due to intense competition from existing players.
Qiyi ties with Universal Music
A couple of new reports are casting a spotlight on the rapid colonization of the video and music spaces by new media companies. The most intriguing of those has Qiyi.com, the online video site affiliated with search leader Baidu (Nasdaq: BIDU), taking a major step into the music space through a tie-up with global entertainment giant Universal Music. The second has the aggressive Qihoo 360 (NYSE: QIHU) making a late but big push into the online video space via a major new hire.
Both of these stories reflect the big challenge that private companies are now posing to traditional TV and radio stations, as they rapidly challenge a state-owned establishment that held a monopoly on China’s entertainment sector for decades. The resulting boom in video and music services has been great for consumers. But in usual Chinese fashion the explosion has sparked another cycle of hyper-competition that has pushed everyone deeply into the red, and is almost certain to end with the typical bust in a few years. Read Full Post…
Bottom line: Wanda Group’s newly announced 3 billion euro Paris theme park is the latest in a string of its massive new investments, many of which are likely to collapse or get sharply scaled back due to lack of resources.
Chinese billionaire Wang Jianlin to builld Paris theme park
Billionaire real estate tycoon Wang Jianlin is growing fond of the “b” word these days, with yet another announcement of a multibillion-dollar investment. This time the Wanda Group chief is announcing plans for a $3.3 billion theme park in Paris that would rival the existing nearby resort owned by Disney (NYSE: DIS), which just happens to be revving up to launch its own first theme park on Wanda’s home turf in China.
If I sound just a little skeptical, it’s because I’m growing increasingly suspicious that Wang has become addicted to making big announcements that may never get completed. This particular deal comes less than 2 months after Wang said he would buy Hollywood film studio Legendary Entertainment for $3.5 billion. (previous post) Many are also guessing that Wang may bid aggressively for a strategic stake worth $1 billion or more in Hollywood major Paramount Pictures, which announced just last week it is looking for such a partner. (previous post) Read Full Post…
China’s growing love affair with Hollywood is reaching new peaks, with word that major studio Paramount Pictures may be preparing to sell a stake of itself to a Chinese buyer. Such a deal would be the highest profile investment yet in an ever-growing string of Chinese tie-ups with Tinseltown over the last 2 years. In some ways the movement looks strangely similar to Japan’s invasion of Hollywood more than 25 years ago, which saw Universal and Columbia Pictures sold to Japanese buyers.
That parallel may lead some to wonder if this latest Chinese drive into Hollywood could end with similarly disappointing results that saw both studios sputter under Japanese ownership. Prickly US-China relations could also add an element of discomfort to this new budding love affair, since Beijing enjoys a far less friendly relationship with Washington than Tokyo. Read Full Post…
Bottom line: Baidu’s shares could see some upside through the rest of the year if it executes on reported plans to spin off its money-losing businesses, while NetEase could post lackluster performance unless it gets more aggressive in M&A.
Baidu stock jumps after results
Two of China’s top Internet companies have just released their latest quarterly results that both look pretty good, even though investor reaction was quite different to the latest financials from leading search engine Baidu (Nasdaq: BIDU) and NetEase (Nasdaq: NTES), China’s second largest game operator. Baidu’s shares jumped 11 percent in after-hours trade after the release of its latest results that largely continued recent trends, while NetEase’s shares plunged 15 percent after its results came out.
In both instances, investors seem to be focused on the company’s financial strategy going forward rather than actual numbers in their latest reports. In the case of Baidu, investors are eagerly awaiting execution of a plan that will reportedly see the company spin off many of its newer non-search businesses that are losing big money. In the case of NetEase, investors may be disappointed that the company has been a non-player in China’s Internet M&A scene, even though it has quite a lot of cash in its coffers. Read Full Post…
Bottom line: Visual China’s investments in 2 major western photo suppliers could raise some concerns about censorship, but mostly reflects a broader Chinese pattern of investment in western companies in decline.
Visual China invests in photo suppliers Getty, Corbis
Two deals that are attracting relative muted attention are seeing a Chinese company take major steps into the global photo market, reflecting the difficult state of affairs in an increasingly shared economy where the value of copyrighted material is shrinking fast. At the same time, the latest investments by Visual China (Shenzhen: 000681) are also raising some concerns about censorship, since the Chinese company will have growing influence over 2 of the world’s largest photo distributors, Corbis and Getty Images.
I do find Visual China’s sudden series of investments in copyrighted photos somewhat ironic, since China is notorious for piracy that often sees media and other publishers rampantly copy each others’ materials, often verbatim and without permission. But from a broader perspective, the current difficulties confronting big names like Corbis and Getty are the result of similar global trends that are seeing many owners of copyrighted materials undermined by free equivalents on the Internet. Read Full Post…
Bottom line: Tencent’s sharp focus, strong management and savvy strategic tie-ups make it China’s best Internet investment for the long term, though its shares may feel some short-term pressure due to high valuation.
Tencent builds empire on SNS
This week the series on my favorite Chinese stocks takes us to the “Big 3” of Baidu (Nasdaq: BIDU), Alibaba(NYSE: BABA) and Tencent(HKEx: 700) , sometimes called the BAT super trio because they’re the country’s biggest Internet companies by quite a large margin. I’ll end the suspense right away by saying my favorite among these 3 is Tencent, the only one that’s listed in Hong Kong.
I’ll look briefly soon at some financials comparing this trio, but will openly admit my Tencent attraction is less based on market fundamentals and instead is tied to its corporate personality that differs quite a bit from the others. These “personalities” are a direct reflection of each company’s founder, since all 3 are relatively young and the founder of each is still quite clearly in charge. Read Full Post…
Bottom line: A new integrated car-ordering platform being rolled out by Lyft and Didi looks like a smart and low-cost move to expand their geographic reach, while LeEco’s electric car venture with Aston Martin is likely to sputter.
Lyft co-founder John Zimmer in Beijing for Didi announcement
Two of China’s top Internet companies are in car-related headlines today, led by a rapidly cozying relationship between Didi Kuaidi and US counterpart Lyft that has the pair preparing to roll out a joint platform for their signature hired car services. The other news has online video giant LeEco (Shenzhen: 300104), formerly known as LeTV, rolling out a joint venture to make electric cars with super luxury brand Aston Martin.
Both of these deals are incremental, since the original Didi-Lyft partnership was formed last year when the former invested in the latter. Likewise, LeEco was rumored to be near a tie-up with Aston Martin as early as last April. From a broader perspective, both moves show a growing confluence between the Internet and cars, which has opened up a wide range of new services that often incorporate GPS technology. Read Full Post…
