HONG KONG: Chinese internet giant Alibaba will pay $266 million for Hong Kong’s South China Morning Post, the newspaper said Monday, far higher than analysts’ estimates in a deal that has sparked fears the paper will lose its independent voice.
The business had been valued at half that amount, and some observers said the hefty price tag reflects Alibaba’s desire to control media in the semi-autonomous territory.
The deal comes as concern over press freedom grows after attacks on journalists, reports of pressure on editorial staff from authorities and increasing self-censorship.
Alibaba “has agreed to purchase the media business of the (SCMP) Group for a cash consideration of HK$2,060,600,000,” the newspaper said in a statement to the Hong Kong Stock Exchange.
The group also owns the Hong Kong editions of magazines Esquire, Elle, Cosmopolitan and Harper’s Bazaar.
The Chinese firm announced the purchase on Friday, saying it would use its “digital expertise” to provide “comprehensive and insightful news and analysis of the big stories in Hong Kong and China.”
In a letter to the newspaper’s readers following the announcement of the sale, Alibaba executive vice chairman Joe Tsai vowed the SCMP would be “objective, accurate and fair.”
However, in an interview published on the paper’s website, Tsai accused western media of bias against China, saying that Alibaba would “see things differently.”
Francis Lun, chief executive of Hong Kong brokerage GEO Securities, said the inflated price handed to the paper’s Malaysian owner, tycoon Robert Kuok who bought a controlling stake in 1993, reflected a political motivation.
“Mr. Kuok really hit the jackpot because certainly they overpaid for it . . . the outlook is grim for a newspaper,” Lun told Agence France-Presse.
“If your purpose is trying to control the local media, it has its value. The actual economic benefit is doubtful,” he said, echoing views that Ma’s close ties with Beijing will inevitably affect coverage and promote a China-centric view.
Analyst Jackson Wong agreed the sale was “very expensive” but said Ma had splashed out in order to capitalize on the SCMP brand and online presence as Alibaba extends its reach in the region where it is on a buying spree.
“It would be extremely difficult for a new media company to establish the name,” said Wong from Simsen Financial Group.
“Alibaba has not only made investments in e-commerce . . . they have been buying different kinds of companies,” he said, adding that the SCMP could help Ma “broaden his business reach in various aspects in Asia Pacific.”
The once globally renowned English-language paper was founded in 1903 and has long given international readers an insider’s perspective on Hong Kong and the mainland, but profits and sales have in recent years been hit by an industry-wide decline.
Though it has a relatively small readership, with around 104,000 print and digital subscribers by the end of 2014, it retained an outsize influence for its coverage of the mainland and willingness to broach controversial topics such as the 1989 Tiananmen Square protests in Beijing.
But readers’ trust has dipped over a more pro-Beijing editorial policy, a shift which took place after Kuok took control.
Media tycoon Rupert Murdoch had taken the SCMP private in 1987.
Hong Kong is semi-autonomous after being handed back to China by Britain in 1997 and retains freedoms unseen on the mainland, but there are fears those are being eroded.
Ma is not the only internet tycoon to venture into traditional print media — Amazon founder Jeff Bezos bought the respected Washington Post two years ago, vowing to revitalize the loss-making newspaper through digital expansion.
Some say the SCMP could prosper from the same Midas touch.
Ma launched Alibaba in 1999 and under his stewardship it has become China’s biggest e-commerce company, operating consumer-to-consumer platform Taobao, which is estimated to hold more than 90 percent of the mainland market.
It has also branched out, buying ChinaVision Media in 2014 and renaming it Alibaba Pictures, today China’s biggest film company, which produced this year’s blockbuster “Mission: Impossible — Rogue Nation.”