Alibaba picks up digital content stake

$1.1 billion for piece of Wasu Media part of recent buying spree

An investment firm controlled by the founders of e-commerce conglomerate Alibaba Group Holding Ltd agreed Tuesday to buy a 20 percent stake in a Chinese Internet-television company for about $6.54 billion yuan ($1.06 billion), a move that will allow Alibaba to expand into the digital-content market.

The investment in Wasu Media Holding Co was announced within a week of Alibaba founder Jack Ma's paying 3.3 billion yuan to take the control of Chinese financial software developer Hundsun Technologies Inc.

Alibaba and its founders have embarked on a buying-up spree as the e-commerce empire heads to an eye-catching initial public offering in the United States later this year.

According to a statement from Wasu on Tuesday, Alibaba will provide a loan to the investment firm led by Alibaba co-founders Ma and Simon Xie and billionaire Shi Yuzhu to help finance the purchase.

Ma and his partners' investment in Wasu occurred as a strategic partnership between Alibaba and the Internet-TV company was inked on the same day. Under the terms of the partnership, the two companies will work together on digital content that can be presented on TV platforms.

"Wasu Group provides digital TV and broadband service with a network of 20 million subscribers, and its extensive user base will serve as one of Alibaba's distribution channels for digital entertainment content," the company said in a statement.

The investment in Wasu is not Alibaba's first foray into the media sector. In mid-March, Alibaba agreed to pay $804 million for a 60 percent stake in ChinaVision Media Group Ltd, which has a rich business portfolio ranging from print media to television and films to mobile games.

As compared to the digital content that ChinaVision Media will provide to Alibaba, Wasu is expected to empower the e-commerce giant in other ways. Lu Zhenwang, an independent Internet expert and chief executive officer of Shanghai-based Wanqing Consultancy, said the Internet TV license as well as other licenses Wasu has gained from the government will help pave Alibaba's way into the video entertainment industry.

There is no doubt that Alibaba has been gearing up to expand its footprint by pouring money into a string of companies, including department stores, television production, travel booking, cloud storage, messaging and finance.

As wide as Alibaba's interests seem to be, Lin Wenbin, an analyst with IT consultancy Analysys International, said that its investments are focused on one thing: building a strong company in the Internet era.

"Many traditional services, such as finance, can be shifted online now. Alibaba is no longer an e-commerce company. It just did what it had to in order to stay strong in this rapidly changing tech world," Lin said.

Timeline

Alibaba and founder's purchases in 2014

Feb 10

Alibaba offered to buy the remaining shares of AutoNavi Holdings Ltd, a digital mapping company listed in the United States, after it acquired a 28 percent stake in the company for $294 million last May.

March 12

Alibaba agreed to pay HK$6.24 billion ($804 million) for a 60 percent stake in the Hong Kong-listed China Vision Media Group Ltd, which has a rich business portfolio, including print media, television and films, and mobile games.

March 20

Alibaba invested $215 million in the California-based mobile chat application Tango.

March 31

Alibaba agreed to invest as much as HK$5.37 billion ($692.2 million) in the Hong Kong-listed department store operator Intimae Retail (Group) Co Ltd. The overall capital injection will give Alibaba about a 9.9 percent equity stake in Intimae and the retailer's convertible bonds worth HK$3.71 billion. Once the bonds are converted into shares in three years, Alibaba will have no less than 25 percent of Intimae's equity.

April 3

Zhejiang Finance Credit Network Technology Co, which is 99 percent owned by Alibaba's founder Jack Ma, agreed to pay 3.3 billion yuan ($531.78 million) to take the controlling stake of financial software firm Hudson Technologies Inc.

April 8

An investment firm controlled by Alibaba founders agreed to purchase a 20 percent stake in digital-television company Wasu Media Holding Co for about 6.54 billion yuan ($1.06 billion).