The Standard - Latest NewsToday, 11:13 AM
Alibaba is rumored to be "in discussions" to invest in SCMP Group (0583), operator of the South China Morning Post, after the e-commerce giant poured billions of dollars into mainland media organizations.
The rumor surfaced after Alibaba announced it would take over domestic online video provider Youku Tudou as SCMP revealed a new editor-in-chief, China Daily reported.
Both Alibaba and SCMP said they would not comment on market rumors. Trading of SCMP shares have been halted since 2013 due to a high concentration of shareholding by Kerry Group Limited and Silchester in the firm.
"Alibaba may want to fully take over SCMP from Kerry, but will start as an investor and let the stock resume trading first,"said Andrew Wong Wai-hong, an independent commentator.
Wong said introducing Alibaba will help SCMP expand in the mainland as the local media market continues to shrink.
Kerry, controlled by the family of Robert Kuok Hock-nien, may prefer hanging on to the property asset of SCMP and leaving the media business to Alibaba, Wong said. He said a full takeover by Alibaba may take two to three years.
"Alibaba has a strong customer base while SCMP is a news provider, they can therefore cooperate with each other," said Jun Yang Securities chief executive Kenny Tang Sing-hing.
But Tang said Alibaba is more likely to come in as a strategic investor rather than fully control SCMP, as the internet firm lacks experience in running media firms. Also, on most of its media investments, Alibaba has acquired a stake but not taken over the entire company.
The newspaper's staff were surprised by Alibaba's interest, given the difficulties faced by traditional print media.
One worker, requesting anonymity, said a takeover would explain some of the cost-cutting that has left the daily desperately short of staff in some areas. It is understood that at least six people in the editorial department are leaving in the next two months.
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