20 April 2019
Jimmy Lai could be thinking about how to preempt a takeover  of his Next Media empire by pro-Beijing groups. Photo: Reuters
Jimmy Lai could be thinking about how to preempt a takeover of his Next Media empire by pro-Beijing groups. Photo: Reuters

Why Jimmy Lai quit

It’s hard to imagine Apple Daily without Jimmy Lai. After all, he has been closely involved in every aspect of its operations from the newsroom to the boardroom.

But make no mistake about it. The man isn’t going away.

With a 75 percent stake in Next Media, Apple Daily’s listed parent, Lai controls the newspaper and other media assets.

His resignation as chairman, announced Sunday, just hours before he was arrested for illegal assembly in Hong Kong’s two-month-long democracy protests, simply means he is no longer involved in the running of the business.

Sources close to the group say Lai considered stepping down for some time owing to his growing involvement in the democracy campaign.

Senior executives view his exit as a way to reduce his influence on the business, leaving it to professional managers.

The immediate effect of Lai’s resignation is the separation of management and ownership and perhaps a more independent editorial direction.

Since he founded the group in 1990, Lai has been aggressively supporting pro-democracy groups through his newspaper and increasingly critical of mainland China.

In recent months, critics have accused him of funding these groups on behalf of unnamed foreign entities and with his own money.

In August, Hong Kong’s anti-graft agency raided his home as part of an unspecified investigation.   

There’s no evidence these directly led to Lai’s departure. In a stock exchange filing, he merely said he plans to spend more time with his family and pursue his personal interests. 

Theoretically, it’s an opening for Next Media to present a more balanced editorial policy. In turn, Lai can be a bigger, more important player in the democracy campaign without having to worry about any adverse impact such a role might have on Next Media.

But that is apparently not how Lai and interim chairman Cheung Ka-sing see it.

Lai is committed to keeping control of the group and Cheung said its pro-democracy stance will not change.

So why did Lai quit in the first place? Is he expecting something big?

Next Media is not only a listed company. It’s also one of the most influential in Hong Kong and Taiwan.

Last year, Lai scrapped the sale of his Taiwan business after learning that one of the buyers was Want Want Group, controlled by pro-Beijing Taiwan tycoon Tsai Eng-meng.

The failed Taiwan deal showed Lai’s business decisions are driven in large part by political considerations.

In Hong Kong, there have been rumors that senior mainland officials have been encouraging some pro-Beijing groups to make a play for Next Media.

But even if they start buying the stock in the open market now, they have to deal with Lai sooner or later.

Still, that does not mean Next Media is immune to a takeover from a regulatory standpoint. A determined Hong Kong government, with the blessing of the central authorities, could create conditions that would make Lai want to sell.

Lai could be thinking about how to preempt such an outcome.

He might be looking at Britain’s The Guardian newspaper, which is controlled by Scott Trust Ltd. The trust appoints the editor of the newspaper but does not interfere in his decisions.

By distancing Next Media from his personal politics — even if it pursues a pro-democracy agenda — Lai might be hoping a takeover by a pro-Beijing group would not be worth the bother.

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EJ Insight writer

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