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The USD 28 M financing plan of Baidu’s video unit fizzles out

Baidu Headquarters

Dalian-based entertainment company Zeus announced on Monday that it will terminate its investment attempt in tech giant Baidu’s independent video subsidiary, an entity which was spun off in April. The investment from Zeus was going to be as much as RMB 192.5 million (USD 28.8 million) and was stopped for policy reasons, as Zeus put it.

Zeus said in an announcement last Wednesday that it is a joint venture company, and that according to China’s new Internet video policies, only state-owned or state-controlled companies can apply for licenses to broadcast or stream video online.

As Zeus’s planned investment would have been to the disadvantage of Baidu’s video subsidiary company, Xiaodu Entertainment (Xiaodu Huyu). Zeus announced that this was another factor in its decision to terminate its investment.

Sina Tech said in its report on Monday that Baidu Video’s profits were RMB 45 million in 2015, and that the company aimed to go public within three years of its independence from Baidu.

Baidu’ video platform has gathered 580 million videos and 300 million users. The independent subsidiary company now consists of three parts: Baidu video, Baidu-backed online video streaming platform iQIYI, and Baidu’s group-buying platform, Nuomi.

Chinese authorities issued regulations on September 9 restricting Internet audio-visual programs services, influencing both video websites and live streaming platforms. Tencent Tech said in a report on Sunday that there are now only seven licensed video websites in China.

Whether it goes public or not, Baidu’s video subsidiary has to get licensed first, and the clock is ticking.

The case may put more pressure on Baidu, since its latest financial report shows a YoY net profit decrease of 34.1%, a decrease which has been attributed to its earlier medical ads scandal.

On Sunday, Baidu fired 30 staff involved in 17 corruption cases. 10 of the 17 cases were related to Nuomi; other Baidu departments involved included Customer Development, Business Cooperation and Tieba, Baidu’s prominent BBS.

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