China’s e-commerce giant Alibaba announced to buy Hong Kong’s oldest English newspaper the South China Morning Post (SCMP) and other media properties for an undisclosed amount on Friday.
Joe Tsai, executive vice chairman of Alibaba Group wrote a public letter to SCMP readers to explain Alibaba’s motivation in the purchase.
“We see a compelling business case for the acquisition because we believe that Alibaba is best positioned to take the SCMP to the next level. The foundation for this work must be the quality of the content. And what underpins this will be editorial excellence: a clear pre-requisite to maintaining readers’ trust and, ultimately, achieving commercial success,” wrote Tsai.
“Yet, the news business is in a state of flux. It has already gone digital and is now moving from online destination to other forms of distribution, in particular social media and mobile. Media now has a global audience and the challenge is to reach it in the most efficient and reader-friendly way. With proven expertise in digital distribution, especially on mobile devices, Alibaba is in an excellent position to leverage technology to create content more efficiently and expand distribution without borders.”
Tsai added that Alibaba’s vision is to help grow the newspaper’s readership globally. They aim to make the SCMP more readily available. Once Alibaba takes over operations, the paywall on SCMP.com will be taken down to make sure readers being able to access its content for free on the Internet and on mobile devices.
Chinese media has taken great interest in the purchase deal when it was still a rumor. AllChinaTech offers insights based on Shanghai-based daily ThePaper’s report.
The South China Morning Post confirmed in late November that a third party approached its parent company, South China Morning Post Group, to initiate early negotiations on the purchase of its media assets. The Wall Street Journal published a report on the same day, claiming the mysterious buyer to be Alibaba Group, which is allegedly in talks to acquire a controlling stake in the SCMP Group.
At present, the Malaysian billionaire Robert Kuok is the largest shareholder in the SCMP Group with 73.99% of shares. Kuok also owns a significant amount of real estate and hotels throughout China.
In the past few years, SCMP’s readership and revenue have dropped significantly. The SCMP Group’s Q2 earnings report for 2013 showed that net profit has declined 40% compared with the year before. The earnings report showed that net profit for the first half of 2013 was $105.2million, compared with $177.7million for the same period in 2012.
Jack Ma has previously had interactions with SCMP, which ended unpleasantly. In May 2013, SCMP published an interview with Jack Ma that stirred up a media storm. The interview included Jack Ma’s comments on the sensitive subject of China’s 1989 Tiananmen Square incident. Alibaba asked the SCMP to retract its commentary but the paper refused.
Jack Ma’s ambition to explore the media business is strategic. His e-commerce empire has seen him invest in the media sector and he has publically spoken about his interest in the sector.
Jack Ma told Bloomberg TV during an interview in November that Alibaba needs the media to promote SMEs (small and medium-sized enterprises). He said the media can report financial news more accurately using Alibaba’s data.
Below is a list of media organizations that Jack Ma and Alibaba have invested in:
- In April 2013, Alibaba made a strategic investment in e-Business review, a Chinese magazine modeled after the Harvard Business Review.
- In March 2014, Alibaba took a 60% USD $800m stake in China Vision Media – now renamed Ali Pictures.
- In May 2014, Alibaba’s subsidiary Yunxin Investment Management Ltd. was reported to have acquired a 40% stake in Huxiu.com, one of China’s leading technology blogs for business information and commentary.
- In June 2015, Alibaba invested RMB 1.2 billion for a 30% stake in China Business News, a financial TV and newspaper company that is part of the Shanghai Media Group.
- In September 2015, Alibaba began cooperating with Chinese financial magazine company Caixin to launch Wujie Media, an online-only news provider.
- In October 2015, Alibaba partnered with Sichuan Daily to launch the online media property Fengmian Media.
(With contributions from Mochou Lee)