Monday, December 14, 2015

The SCMP buy does not make sense for Alibaba - Shaun Rein

Shaun Rein
Shaun Rein
For more than a decade the Hong Kong newspaper South China Morning Post has been destroying its image as a quality paper it still was in the 1990. Key journalists were fired or walked away voluntarily. The purchase by Alibaba gives observers new reason for worry. It does not make sense for Alibaba, says business analyst Shaun Rein in the Star Beacon Herald.

The Star Beacon Herald.
During its glory days in the 1980s, the South China Morning Post was one of the world’s most profitable newspapers and was hugely respected for its coverage of mainland China. 
But the internet media revolution and changes in rules on how Hong Kong-listed firms announce company news have caused a drop in readership and profitability. 
The SCMP Group, which gets 68% of revenues from newspaper publishing, made a net profit of HK$136.8m ($17.65m) in 2014, less than the HK$223.7m it made in 2013. The newspaper has a readership of 349,000 people. 
Its website has about four million unique visitors a month, of which two-thirds come from outside Hong Kong and China. 
Those are reasonable figures for a regional Asian newspaper, says Shaun Rein, managing director of the Shanghai-based China Market Research Group, but he does not believe the deal make sense for Alibaba. 
“It looks like they’re a little lost,” he says. “What’s their strategy? Is it to integrate the newspaper into the rest of its business? If so, I don’t see how they would do that given you can’t even read the SCMP in mainland China right now.” 
He adds the deal would make sense only from a strategic, relationship-building point of view. 
“It might be a way of currying favour [with]the Chinese government, for the most important English-language newspaper in Hong Kong to be owned by a pro-Beijing, pro-business company,” he says. 
Over the past year, Alibaba has purchased shares in several media companies, including the China Business Network and Youku Tudou. But its purchase of the SCMP Group is the most controversial yet.
More in the Star Beacon Herald.

Shaun Rein is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers´ request form.

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