BEIJING – Alibaba Group Holding is in talks with a state-owned conglomerate about a potential deal involving its stake in Weibo, as Beijing moves to curb the influence of China’s tech giants in the sensitive media sphere.
China’s e-commerce leader is exploring options for its roughly 30 per cent slice of the Twitter-like social media service, according to people familiar with the matter. The discussions between the technology giant and Shanghai Media Group could lead to the latter purchasing all of Alibaba’s stake in Weibo, the people said.
Regulators are taking a closer look at the enormous reach that tech companies like Alibaba enjoy in online media, part of a broader campaign to curtail the growing power of its largest corporations.
Alibaba and its affiliates have over the years built a sprawling portfolio of media assets that include newspapers, television-production companies, social media and advertising assets. Concerned about the company’s influence on public opinion, the government wants Alibaba to offload some of those holdings, Bloomberg News reported in March.
Alibaba’s shares slid as much as 2.3 per cent on Wednesday to the lowest since Dec 3, while Weibo dropped 1.5 per cent. The Nasdaq Golden Dragon China Index slumped 2.4 per cent.
Deliberations are at an early stage and there’s no certainty they will result in a transaction, the people said.
SMG, one of China’s largest state-owned media and cultural conglomerates, would stand a higher chance of gaining Beijing’s approval than a private acquirer. The group is a controlling shareholder of Oriental Pearl Group, which operates television stations and online entertainment portals, and also owns 20 per cent in Shanghai Disney Resort, according to the firm’s website.
Weibo is among the most influential – and controversial – of Alibaba’s media holdings. The social media site scrubbed posts and took down comments relating to a scandal involving an Alibaba partner last year, fueling concern among officials about how censorship, typically wielded by Beijing over matters of national importance, could be employed by private enterprises or individuals. Since then, regulators have called for a ban on private capital participation in media.
Weibo and its controlling shareholder Sina Corp raised US$385 million from a second listing in Hong Kong this month. The offering came in the midst of Chinese regulators’ relentless tightening of oversight on local firms traded overseas. Weibo is already listed on the Nasdaq stock market and has a market value of US$7.2 billion.
Weibo’s shares, which started trading in Hong Kong on Dec 8, have tumbled about 16 per cent from their offer price of HK$272.80 after regulators fined the website and reprimanded its executives over the site’s content.
Chinese Internet pioneer Sina launched Weibo in 2009, swiftly amassing millions of registered users posting messages of 140 characters or less, and was listed in the US in a 2014 IPO. It had daily active users of about 248 million, compared to 211 million for Twitter.