'World's Biggest Entertainment Company' Alibaba Keen to Expand Reach in Hollywood

Jack Ma Illo - P 2014
Illustration by: Lars Leetaru

Jack Ma Illo - P 2014

Hollywood shouldn't expect easy money from China

Alibaba's Jack Ma is gung-ho on expanding the company he founded, which he says is already "the biggest entertainment company in the world" — but Hollywood should not expect deals with the e-commerce giant to be an easy ride, industry sources said.

His own pockets bulging from his company's September IPO, Ma was named China's richest man (again) by Forbes magazine yesterday and is leading an assembly of his top people to Hollywood looking to expand the group's entertainment business.

"I want to come here looking for partners," he told a Wall Street Journal Digital Live conference on Monday.

The trip includes meetings with Lionsgate, Walt Disney, Paramount Pictures, Warner Bros., Sony and Universal. Meetings are expected to include Paramount Chairman Brad Grey and Michael Lynton, CEO of Sony Entertainment.

Read more Alibaba's Jack Ma Reportedly Meeting With Hollywood Studios to Buy Online Content

"The talks are focused on buying a 34 percent stake in Lionsgate, but they are looking now for who they should be buying it from. And it's not just Lionsgate they are talking to, so they are juggling a lot," said one industry source, who runs an international film fund and has a production company that has dealings in both the U.S. and China, but asked not to be named.

The source said that companies like Alibaba and Wanda were the new wave of Chinese investors coming in, and to each deal they brought the "Chinese abacus", a distinctive approach to doing business.

While there were parallels with the days when the cash-rich Japanese came knocking on Hollywood's doors back in the 1980s, people should not expect a golden goose.

"People should be wary about assuming that these Chinese investors are just coming with the money. Look at the AMC deal, what a good deal Wanda got with that, with Wang Jianlin doubling his money and getting a great foothold in America. The Chinese abacus is always there, it's not always evident, but it's always there," said the source.

Ma is clearly open to all kinds of acquisitions, and with references to The Godfather and his personal favorite, Forrest Gump, peppering his comments there was a strong Hollywood flavor to his U.S. remarks.

He also pointed out the appeal of China, with its middle class of 200 million people. Ma also said he's open to working with Apple, Inc. on mobile payments, driving Alibaba's shares to a new $100 high, and expressed his admiration for Apple CEO Tim Cook.

Alibaba's online payments service Alipay dominates the Chinese market.

Read more Alibaba's Jack Ma Could Get the Biopic Treatment

While his team includes Liu Chunning, vice president of Alibaba’s digital and entertainment unit, and Zhang Qiang, the former second-in-command at China Film Group who now heads up Alibaba Pictures, he has reportedly beefed up the crew with some other key senior figures.

The initial focus is to get Hollywood content for his TV set-top boxes, but he is also seeking studio stakes, with the Lionsgate talks reportedly the most advanced.

The record-breaking Alibaba stock listing Sept. 19 valued the company at an estimated $25 billion with a market value of roughly $230 billion, showing just how much cash the company has to fund expansion.

Wanda said earlier this month it would invest $163.4 million to bring movie and television production to a planned multibillion-dollar studio project it's developing in the Chinese coastal city of Qingdao.

In June, Ma set up Alibaba Pictures with the purchase of ChinaVision Media Group in Hong Kong for $804 million, then appointed Zhang Qiang to run the new production studio.

Read more Alibaba Leads China's Multibillion-Dollar Plan to Take on Hollywood

Alibaba Film Group has said it plans to invest in eight to ten films every year, three to five TV dramas and the same number of web-only dramas.

Alibaba and founder Ma's Yunfeng Capital paid $1.22 billion for a stake in the Chinese online video firm Youku Tudou Inc, and in April agreed to purchase a 20 percent stake for $1 billion in the Internet TV company Wasu Media Holding.

Meanwhile, Chinese conglomerate Fosun International bought a $200 million stake in Jeff Robinov's Studio 8 to bring Hollywood expertise to China.

Other film interests include Yulebao, a crowdfunding-like service that lets ordinary Chinese make micro-investments in upcoming movies via their smart phones.

Jack Liu, senior vice-president at Chardan Capital Markets in New York, told China Daily newspaper that Ma was interested in following the route charted by Amazon.com in adding original television shows to its Prime Video on-demand service.

"Because of its vast database of consumer transactions, Amazon has developed some unique insights into consumer behavior and tastes," he told the paper.

"This enables the company to develop media content that is likely to draw a large audience. Alibaba will probably be able to do the same thing with its database in China. Providing original programming is really a natural extension of the online retailing platform," said Liu.

"Alibaba could become a trusted partner for the US studios and give them a secure way to distribute their content in China," said Liu.