Alibaba is seeking to sell its stake in Mango Excellent Media, a pop culture media company backed by a local state broadcaster, at a loss of USD 356 million as regulators scrutinize big tech companies and the entertainment industry.
Alibaba’s investment arm, Ali Venture Capital, now holds roughly a 5% stake in Mango, which it acquired for RMB 6.2 billion (USD 959 million) nine months ago. Alibaba will lose about RMB 2.3 billion (USD 356 million) if it spins off the holding at the current market price, as Mango’s stock is now at a low point.
The announcement didn’t reveal the identities of potential buyers, but industry insiders believe they include state-owned entities with long-term investment plans, according to an unnamed source quoted by local newspaper Securities Daily.
Alibaba has built up a media empire in the past decade by investing in or acquiring at least 110 media companies in China, according to data compiled from open-source reports. These holdings include microblogging platform Weibo, video streaming service Youku, Hong Kong-based English-language newspaper South China Morning Post, and KrASIA’s parent company 36Kr.
The media sector generates sizable revenue for Alibaba. According to the company’s 2021 fiscal report ended on March 31, 2021, its revenue from the digital media and entertainment sector was RMB 31.1 billion (USD 4.7 billion), an increase of 7% compared to the same period in 2020 and accounting for roughly 4% of Alibaba’s total income.
But the business environment for conglomerates empowered by technological innovation is changing. In March, regulators ordered Alibaba to spin off some media assets to temper its overwhelming influence on public opinion, according to The Wall Street Journal.
Earlier this week, Alibaba fintech affiliate Ant Group announced that Huabei would share all of its users’ credit records with the central bank. Ant is expected to separate its loan business from Alipay and set up a joint venture with state-owned entities to handle this line of business.
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