China's Alibaba May Inject Assets Into Loss-Making Movie Unit
The e-commerce giant's movie unit notched up a $54 million net loss in 2014.
Chinese e-commerce titan Alibaba is examining ways to incorporate its Taobao Movie online ticketing business and its Yulebao production crowdfunding platform into its loss-making film unit, Alibaba Pictures.
Chairman Shao Xiaofeng said in a filing with the Hong Kong stock exchange that the company initially received a non-binding proposal from its parent firm for the asset injection on March 25 and a more detailed proposal on Tuesday this week.
"The company will evaluate the possible business injection and other possible transactions in light of its new business model," Shao said.
"The company plans to use innovative models to create a demand-driven entertainment experience. This new strategic direction calls for an integrated approach towards the funding, production, marketing and distribution of entertainment content and a further expansion of the company’s business," Shao said. He said the move was not a done deal.
Soon after it bought control of ChinaVision Media Group for $800 million to form Alibaba Pictures in June, it discovered various accounting irregularities, relating to tax and VAT misstatements over the purchase of art works and TV copyrights, as well as certain TV drama production costs.
Founder and executive chairman Jack Ma visited Hollywood in October seeking content and hinting at possible acquisitions.
The group is involved in a slate of films to be produced by Hong Kong filmmaker Wong Kar-wai, including Bai Du Ren, which will be directed by novelist Zhang Jiajia and feature Tony Leung as the lead actor.
The news gave shares in the Hong Kong-traded stock a major boost, closing 37 percent higher in the session after trading resumed.