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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: LeEco is likely to spin off its new energy car unit by the end of the year following the departure of founder Jia Yueting from the listed company, while it could also close its smartphone division.
LeEco set to spin off car unit?
In what looks like a major turning point for the foundering LeEco(Shenzhen: 300104), the company’s charismatic but embattled founder has relinquished his role as chairman at the publicly listed firm. This particular news came out just as people were leaving home for work last night, so it’s still not completely clear on what exactly has happened.
But it appears that one of the companies that had agreed to provide a major cash infusion, a real estate developer named Sunac (HKEx: 1918) was refusing to hand over the funds because it said certain unspecified conditions weren’t met from its agreement. Thus it appears that Jia’s departure from the listed company, and probably most of LeEco in general, was probably the big sticking point. Read Full Post…
Bottom line: Tencent’s roll-out of time playing limits for teenager gamers for a popular new title looks aimed at preventing a regulatory intervention, while its new TCL tie-up could presage a spin-off of its video business.
Tencent limits teenage gamers
Internet titan Tencent(HKEx: 700) is in a couple of headlines as the US observes its Independence Day holiday, starting with word that it’s limiting teenagers from playing too much of a very popular new title. The other headline has the company teaming up with TV stalwart TCL (HKEx: 1070; Shenzhen: 000100) in a new smart TV tie-up.
The only real common thread to these headlines is that they both involve Tencent, though each does spotlight a certain pattern that’s quite typical for China’s most successful Internet company. In the first case, the game story spotlights Tencent’s strong record at developing and operating games, which are its largest source of revenue. The TCL story highlights Tencent’s fondness for making strategic minority investments, often with mixed results. Read Full Post…
Bottom line: The resignation of Xunlei’s founder as CEO, even as he retains his chairman’s title, could indicate a sale is coming soon, with the most likely buyer as Xiaomi.
Big shifts happening in Xunlei boardroom
The incredible shriveling online video company Xunlei (Nasdaq: XNET) is making a tiny splash in the headlines as we head toward the weekend, with word that its founder is relinquishing his position as CEO. The move seems potentially significant, since one of the main obstacles that keeps more companies from being acquired in China is resistance by their founders to relinquish their “empires” to someone else.
In this case, Xunlei’s empire is rapidly vanishing, as it gets overtaken by larger rivals like Baidu’s (Nasdaq: BIDU) iQiyi and video services operated by Tencent (HKEx: 700) and Sohu (Nasdaq: SOHU). That may mean that no one really wants Xunlei anymore, including ordinary stock investors. The company’s shares have been on a downward trajectory since its Nasdaq IPO three years ago, and now trade at $3.24 apiece, about a quarter of their IPO price of $12. Read Full Post…
Bottom line: JD.com is likely to pass Baidu this week and become China’s third most valuable internet company, while Weibo’s stock is likely to enter a period of correction while it awaits an official live broadcasting license.
JD on cusp of overtaking Baidu
The era of the Internet triumvirate of Baidu (Nasdaq: BIDU), Alibaba (NYSE: BABA) and Tencent (HKEx: 700), often called the BAT, is on the cusp of ending, as up-and-comer JD.com (Nasdaq: JD) looks set to pass Baidu in terms of market value. Meantime, I suspect the end of another era is coming for the soaring Weibo (Nasdaq: WB), which had some of the wind knocked out of its sails following some strict words from China’s heavy-handed regulator.
We’ll focus mostly on the Baidu/JD transition here, as that really does seem to mark a changing of the guard in China’s dynamic Internet sector. That move has seen Baidu experience a longer-term stagnation, as its core search business comes under assault from a few other newer players and it fails to find new revenue sources to offset the loss. On the other hand, JD.com seems unable to do any wrong these days, and is starting to resemble US titan Amazon (Nasdaq: AMZN) in the sense that people don’t really care whether it makes money. Read Full Post…
Bottom line: Ongoing crises being faced by LeEco-backed Yidao and Coolpad are likely to deepen in the month ahead, as each company gets abandoned by its major stakeholder and is forced to grapple with rapidly deteriorating business.
Coolpad releases preliminary 2016 results
Two companies snapped up by former online video superstar LeEco (Shenzhen: 300104) are in the crisis headlines this morning, with smartphone maker Coolpad (HKEx: 2369) and car services operator Yidao both driving rapidly towards financial collapse. The first headline has Coolpad announcing preliminary results for 2016 that look quite alarming, as an ongoing back-and-forth with its auditor adds more worries to its story.
The second story has Yidao promising its increasingly unhappy unpaid drivers they will finally get their money late this month, as it tells the world it’s in the process of raising new funds. And if you believe that one, I have a nice bridge to sell you in Brooklyn. Read Full Post…
Bottom line: Sohu could privatize and sell itself after its Changyou buyout, while LeEco’s mass layoffs could presage a shuttering of all its newer operations as it reverts to its original online video business.
LeEco slashes jobs
Two relatively large pullbacks are in the headlines as we reach the midpoint of the week, led by the latest privatization bid for online game specialist Changyou (Nasdaq: CYOU) by parent Sohu (Nasdaq: SOHU). That news is coupled with the unrelated by equally large retrenchment by struggling online video company LeEco (Shenzhen: 300104), which is making mass layoffs in its bid for survival.
Each of these stories is interesting because the future existence of a major company is at stake. In the first case, the Changyou privatization could signal a future privatization and sale of the company’s parent, Sohu, one of China’s oldest Internet players. The LeEco story represents the latest twist in the downward spiral for this company, which appears to be rapidly slimming down or closing most of its operations outside its original core online video service. Read Full Post…
Bottom line: Stellar earnings by Weibo and new funding for services from Toutiao and YY reflect the rapid rise in live broadcasting and short videos, in the latest boom for China’s internet that will end with a bust in around 2 years.
Live streaming sucks up big funds
A trio of stories in the headlines are nicely spotlighting the oh-so-typical Chinese pattern of industries that suddenly become hot, leading people to pump huge amounts of cash into them in a fight for market share. Internet watchers will probably guess that I’m talking about the recent crazes in live broadcasting and short videos , which have thrust three companies, YY (Nasdaq: YY), Toutiao and Weibo (Nasdaq: WB) all into the headlines.
Leading those headlines are the latest results from Weibo, whose profit has risen nearly 7-fold in its quarterly report, igniting a 25 percent rally for its already-inflated stock. The other two headlines have YY and Toutiao pumping big new funds into their live broadcasting and short video services, $70 million and $140 million to be exact, respectively. Read Full Post…
Bottom line: A tussle that resulted in injuries to a Tencent worker by a Youku peer at an industry event reflects the big tensions that exist in China’s online video sector due to years of stiff competition that shows no signs of easing.
Wine glass incident reflects tensions in online video
Stiff competition in a wide range of online industries is pretty much par for the course in China, but a scuffle between employees of Tencent (HKEx: 700) and Youkuat an industry event is underscoring just how high tensions can get. This particular case won’t really mean much for either company beyond a few sensational headlines in the next few days, and perhaps some internal emails at both companies. But it does show how tough things are in the online video space, where everyone is looking for the elusive formula for profits.
This particular story looks quite similar to another one that happened in February, in which a video of brawling take-out deliverymen from rivals Meituan and Ele.me went viral. (English article) That particular story had a very blue-collar feel, since most of these deliverymen are migrants from the countryside with relatively low education and who tend to stay at their jobs for relatively short periods. Read Full Post…
Bottom line: Baidu’s sale of its mobile game unit represents a broader shedding of non-search assets as it moves into artificial intelligence, though it’s far from clear how AI will provide a future business model.
Baidu continues AI migration
Search giant Baidu (Nasdaq: BIDU) is in yet another headline today that reflects its latest attempt at transformation from its original search business to an artificial intelligence (AI) specialist. This time the development is relatively incremental, with word that Baidu has formally sold off its inconsequential mobile games division for an equally inconsequential sum of 1.2 billion yuan ($174 million).
This particular news comes just days after Baidu founder Robin Li issued a letter to all employees talking about the first official change to his company’s mission statement in its 17 year history. (English article) That move seemed a bit overly dramatic to me, and resembled Li’s similar talk about putting all his energy into mobile search a few years ago. It all seems to be part of Li’s broader personality, that leaves him itching to do something new every 2 or 3 years. Read Full Post…
Bottom line: LeEco’s scrapping of its Vizio purchase may be due to currency controls, but should be welcome by the company as a cash conserving move, and could presage a withdrawal of its investment in electric car maker Faraday Future.
LeEco scraps Vizio purchase
The first major pullback for cash-challenged LeEco (Shenzhen: 300104) is coming in the US, where the company is confirming the abandonment of its $2 billion agreement to buy no-name TV maker Vizio. At the same time, unconfirmed reports citing knowledgeable insiders are saying the company is cutting one-third of its headcount in the US. It’s not really clear if this pair of items are related, though both are certainly cost-cutting moves in a market where costs are quite high.
The next big move perhaps will see LeEco abandon its backing for Faraday Future, the electric car-making venture that’s building a $1 billion plant near Las Vegas. That deal is a bit more futuristic than the Vizio TV deal that’s now being abandoned, and is probably a bigger pet project of LeEco founder Jia Yueting. But the reality is that the company needs to conserve cash, and also that China’s foreign exchange regulator is making life difficult for anyone who wants to move money out of the country. Read Full Post…
Bottom line: LeEco’s debt-for-equity deal with Compal and the looming collapse of its Vizio purchase are welcome developments that show it could quietly jettison some of its newer businesses and eventually emerge from its current cash crunch.
Picture dims on LeEco’s Vizio purchase
The unwinding of former online video superstar LeEco (Shenzhen: 300104) continues to unfold, with two major developments that could help to slow the company’s rapid decline. The first of those has one of LeEco’s largest creditors, Taiwan contract manufacturer Compal (Taipei: 2324), agreeing to swap out the huge amount of money it’s owed for LeEco shares. The second has a major deal last year that had LeEco agreeing to pay $2 billion for US television brand Vizio apparently unraveling due to China’s recent clampdown on money leaving the country for offshore M&A. Read Full Post…
