An exhibition booth at LeTV Sports' press conference in Beijing on Wednesday (Photo/GT)
Platform obtains capital from consortiums linked to Wanda, Jack Ma Yun
Leshi Internet Information and Technology Corp (LeTV)'s sports affiliate said on Wednesday that it has completed an 800 million yuan ($128.8 million) fundraising round to further its presence in the country's booming sports industry.
LeTV Sports Culture Develop (Beijing) Co, which claims to have an estimated value of 2.8 billion yuan, raised the money from two consortiums led respectively by Wanda Investment under Chinese conglomerate Dalian Wanda Group and private equity firm Yunfeng Capital, partly owned by Jack Ma Yun, founder of e-commerce giant Alibaba Group Holding, according to a press release issued by LeTV Sports on Wednesday.
"The fund will be mainly used to purchase more sports broadcasting rights and help the company further improve its technological basis as well as seek new sports-related businesses," Lei Zhenjian, CEO of LeTV Sports, told reporters at a press conference held in Beijing on Wednesday.
Lei noted that they are open to another round of fundraising in the future but refused to say whether they will consider an IPO.
LeTV's stock price rose 1.93 percent and closed at 82.93 yuan on Wednesday.
The accumulation of content is very crucial for LeTV Sports, if the recently founded company wants to lure users away from rivals in China, Zhang Yi, CEO of Guangzhou-based market consultancy iiMedia Research, told the Global Times Wednesday.
"Burning money to buy costly content will be common in the online sports streaming industry in the coming years," Zhang said, noting that Tencent will be a strong competitor for LeTV sports.
In late January, Tencent signed a five-year partnership deal with the NBA to broadcast NBA programs and games via Tencent's online video Web platforms and mobile apps, according to a joint press release. The value of the deal, effective on July 1, 2015, was not disclosed in the press release, while according to media reports, it cost at least $500 million. Previously in 2010, Sina reportedly signed a three-year deal with the NBA worth $7 million.
Despite the competition, the one-year-old LeTV Sports has displayed ambition in China's sports industry. The company had hired Qiu Zhiwei, former senior executive at the NBA, as LeTV Sports vice president in responsible for sports event operations and Liu Jianhong, a renowned commentator on the CCTV program "Soccer Night," as the chief of content operations.
Liu said at the press conference that LeTV Sports has obtained the exclusive rights to digitally broadcast FIFA's seven big sports events in China in the next two years.
LeTV Sports said it plans to build up a sports ecosystem or business model involving sports event management, content streaming platform, and sports-related smart device development, and value-added services such as sports lottery and online games distribution.
"Such a business model will be an illusion unless LeTV Sports can cultivate a large and loyal user base," He Wenyi, executive director of the China Institute for Sports Value under the Peking University, told the Global Times Wednesday.
Other platforms also face the same issue as LeTV Sports does, as many Chinese people aren't loyal to specific sports and do not consider sports to be such a big part of life like Western people, said He.
But analysts said that driven by government support, China's sports industry, expected to be a new driver for the slowing economy, will surely take off.
In October 2014, the State Council announced a guideline to boost the country's sports sector and promote three types of ball sports - soccer, basketball and volleyball - in an attempt to help the sports industry reach a value of 5 trillion yuan by the end of 2025.
He said that LeTV Sports has the chance to stand out from its competition, as it can attract users via smart devices, such as handsets and televisions, developed by Leshi Internet.
Upon the completion of the fundraising, Leshi Internet's stake in LeTV Sports has been reduced to 10 percent.
