NetEase CEO: news division not spun off for lack of profits

William Ding, the founder and CEO of NetEase, publically dispelled the rumors that the company was spinning off its internet news operation because the news was not making money, leading Chinese media Sina reported on Tuesday.

“That’s not true. NetEase News makes RMB 400-500 million (USD 50-74 million) every year. From this aspect, NetEase News is equivalent to a domestic second-tier satellite TV station,” said Ding.

NetEase, a NASDAQ-listed internet company, is China’s leading internet and online gaming service provider.

In early September, Bloomberg reported that NetEase was planning to spin off its news business for the latter’s initial public offering (IPO), and was about to raise USD 300 million for NetEase News with the spinoff.

On October 3, NetEase officially announced that its internet media arm NetEase Media had submitted a draft registration statement to the U.S. Securities and Exchange Commission (SEC), in preparation for NetEase Media’s IPO.

Industry analysts say that NetEase Media’s potential IPO will bring more financial support to its operation and development.

Online games are NetEase’s main profit engine. According to its Q2 2016 financial report, the company achieved a net revenue of nearly RMB nine billion; of this, online games contributed over RMB six billion.

On top of online games, net revenues from advertising services were more than RMB 500 million. Revenues from other operations – e-mail, e-commerce and others – were nearly RMB two billion.

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