Ku6-YouTube Tie-Up: China Hype Alive and Well 酷6网和YouTube合作恐难成正果

By newsdoug on January 18, 2012

Ku6-YouTube tie-up looks empty I want to start today with a silly story that shows that despite the recent confidence crisis for US-listed Chinese stocks, anyone with a good China story to tell can still earn a fast buck on Wall Street. The story I’m referring to involves battered video sharing site Ku6 Media (Nasdaq: KUTV), which has announced a tie-up with YouTube that will see the global giant start a new channel to bring Ku6’s content to a global audience. (company announcement; Chinese article) The announcement contains no additional details, but that didn’t stop investors from getting excited enough over a good China story to boost Ku6’s Nasdaq-listed shares by a whopping 140 percent on Tuesday. Cynics like myself will note that even with the jump, Ku6 shares are still at less than half of their highs from last May, when a broader sell-off began for US-listed China stocks due to a series of accounting scandals. Let’s sit back and think about this new deal for a minute. Sure, YouTube is a huge name in online video and there are certainly plenty of people outside China who might be interested in watching more China-generated content. But nowhere in Ku6’s announcement is there any mention of exclusivity, and if this tie-up is even remotely successful I suspect YouTube will quickly start looking for more China partners with bigger content libraries, such as Youku (NYSE: YOKU) and Tudou (Nasdaq: TUDO), which undoubtedly would be happy to enter into such alliances. What’s more, Ku6 is a company with a bit of an identity crisis, having undergone a number of major changes in its management and strategic direction over the past year at the instigation of its fickle controlling shareholder, Shanda Interactive (Nasdaq: SNDA). In fact, I strongly suspect this new announcement is the work of Shanda founder and chairman Chen Tianqiao, who has proven himself a master at making headlines that sounds exciting but mostly lack substance. At the end of the day, I seriously doubt this new tie-up will rescue Ku6, although it could theoretically become a more attractive takeover target for one of its larger rivals. At the end of the day, all this just shows that western investors will always love a good China story, regardless of how much substance it has — or lacks.

Bottom line: A new tie-up between Ku6 and YouTube will bring minimal benefits to Ku6, but a huge jump in Ku6 stock shows that western investors will always love an good China story.

Enjoy this blog? Please spread the word :)