Alibaba Buying SCMP – The World’s Most Profitable Newspaper – From Robert Kuok?

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Nov 12 2015
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At least one person disagrees that China’s economy is going south, if it’s true that the superpower is indeed having financial problem in the first place. If China’s “Singles Day” sale is any indicator, Jack Ma would be laughing at the slight idea that his country is in trouble. His e-commerce Alibaba has broken its own record yesterday.

Alibaba Singles Day Sale 2015 Dashboard

Alibaba Singles Day Sale 2015 Dashboard - Jack Ma Reaction

By the close of trade yesterday, the site had seen sales worth 91.2 billion Yuan (US$14.3 billion; £9.4 billion; RM62.5 billion), a 60% increase from last year’s US$9.3 billion. That’s a mind-boggling shopping spree by the Chinese in one day. In comparison, United State’s biggest online shopping day – Cyber Monday – only hit a paltry US$2.4 billion in sales.


Alibaba predicts that it would need 1.7 million couriers, 400,000 vehicles and 200 planes to deliver the products sold. Not bad for an idea (Singles Day on Nov 11 to celebrate single life) which started only 6-year ago in 2009 by Alibaba. However, Jack Ma was quick to play prudent game by saying that next year could be challenging.

Alibaba Singles Day Sale 2015 Dashboard - Workers Packing and Logistic

But the awesome 24-hour sale was not what raises financial analysts and business community about Alibaba. The jaw dropping rumours are whether Alibaba following Amazon.com footsteps – buying newspapers and online media. Last year, Amazon chief executive bought “The Washington Post” for US$250 million.


China Business News, a television and newspaper company that’s part of the state-owned Shanghai Media Group Inc., is now part of Alibaba’s empire after Jack Ma paid 1.2 billion Yuan (US$193.5 million; £128 million; RM846 million) for the influential business media last year. Now, Alibaba could be eyeing Hong Kong-based newspaper SCMP.

South China Morning Post SCMP - Newspaper Kiosk

SCMP (South China Morning Post) has its root stretched as far back as Qing dynasty when it was founded in 1903. Listed on the Hong Kong Stock Exchange in 1971, it was privatised by Rupert Murdoch’s News Corporation in 1987, relisted in 1990 and later sold to Malaysian richest man – Robert Kuok.


Despite its relatively low circulation of 107,426 copies a day together with its Sunday edition, the Sunday Morning Post, which reached 89,669 copies, SCMP Group remains the most profitable newspaper in the world on a per reader basis. It registered HK$549.3 million in revenue and net profits of HK$208.7 million (US$26.9 million; £17.7 million; RM117.7 million) for the first six months of the year (2015).

South China Morning Post SCMP - Reading Newspaper

While China Daily reported that Alibaba refuses to comment on market rumours about snapping up SCMP, Shanghai-based The Paper reported that Alibaba is in talks to take a stake in Sina Corp, the company behind online news site sina.com.cn and Weibo, the Chinese version of US-based Twitter.


Industry observers are perplexing that since June, Alibaba has thrown billions of dollars acquiring media organizations, including last week’s US$3.7 billion purchase of online video giant Youku Tudou Inc (the YouTube of China with over 500 million monthly unique visitors). But what’s the long term plan of Alibaba with such acquisitions?

South China Morning Post SCMP - HQ Office Building

When asked, Alibaba simply replied that its strategy was “to leverage both companies’ Internet technology and media resources in order to penetrate China’s financial information services industry.” It believes it has a gigantic silo of customer data, e-commerce statistics, and sales trends that could help enterprises make investment decisions.


While refusing to give a direct answer when asked during his interview with Bloomberg, Alibaba founder Jack Ma said that investing in a media company (such as SCMP Group) would make sense for Alibaba’s business strategy. “People say the internet destroyed the offline retail business. I say, well, if you can do better, if we work together, we can do better, so we want to make an example.” – said Jack Ma.

Robert Kuok - Malaysian Richest Man

Perhaps now is the perfect time for billionaire Jack Ma Yun to prove what he claimed about being happier as an English teacher earning US$12 a month than as a billionaire today. Robert Kuok has been looking at disposing his SCMP Group which has a market value of about HK$2.76 billion. So, if money is not an issue, Jack should just buy it without any concern for the pricing.


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