Why ex-English teacher Jack Ma could be next publisher of SCMP

November 10, 2015 16:41
In 2012, protesters accused the South China Morning Post of intensifying its self-censorship. Photo: HKEJ

Li Ka-shing, along with HSBC Holdings plc (00005.HK), once owned it.

Then, global media baron Rupert Murdoch did.

Now Hong Kong-based Malaysian developer Robert Kuok Hock Nien does.

Who's next?

We are talking about the South China Morning Post Group (00583.HK), which China Daily reported is rumored to have been in talks with Alibaba Group Holding Ltd. -- just as the Post announced Wang Xiangwei is handing over the reins as editor-in-chief to his deputy, Tammy Tam, next year.

How likely is it that Alibaba chairman Jack Ma Yun, a former English teacher turned king of e-commerce in the mainland, will become publisher of the century-old paper?

Both companies made no attempt to quash the rumors, giving rise to more speculation as to what might happen to the venerable media franchise.

Does a possible investment in SCMP by Alibaba, mainland China's dominant e-commerce player, make sense?

Well, yes, if one believes the new economy is the way to solve old problems.

For 15 years, the SCMP -- which once boasted it was the world's most profitable newspaper -- has been trying, but failing, to find ways to grow its business after Hong Kong switched from being a British colony to become part of China.

The paper has had problems finding a caretaker, recent editors each lasting a couple of years or so (Wang's stint, which began in February 2012, is in fact remarkable for its longevity).

Above all, it is the internet that has eaten into the group’s advertising and circulation revenues, which have been pretty stagnant in the past decade.

Online behemoth Alibaba, on the other hand, is an ambitious and aggressive company with soaring financial resources.

It can buy just about anything quickly and easily.

Alibaba just acquired mainland video giant Youku Tudou and is rumored to have its sights on leading web portal Sina.com and its ubiquitous Weibo social media platform.

Leveraging its pre-eminent brand, Alibaba has bought listed firms and revamped them into diverse subsidiaries like Ali Health Information Technology Ltd. (00241.HK) in healthcare and Ali Pictures Group Ltd. (01060.HK) in entertainment.

Given that Ma once paid a billion yuan for half of the Guangzhou Evergrande football team after drinks one night with its owner, snapping up SCMP Group, with a market cap of HK$2.7 billion (US$350 million), would be peanuts for Alibaba, which is valued at US$210 billion.

And the favorable exchange rate between the renminbi and the Hong Kong dollar makes everything look like it's discounted 20 percent in yuan.

SCMP Group  has been suspended from trading since February 2013 because of an inadequate public float amid a failure by its two leading shareholders, Kuok's Kerry Media and British fund manager Silchester, to agree on a privatization offer by Kerry.

The group recently announced its acquisition of mydress.com, a local online retailer of women's clothing.

The firm's expansion into e-business follows a series of recent acquisitions of women's and lifestyle magazines in an effort to diversify away from its fading newspaper business.

Now in its 112th year, the English-language daily may still be an undervalued asset, however.

Despite all the criticism and complaints it attracts from its readers, many of whom lament a perceived hardening of a bias in favor of Beijing, it is one of the few readily available windows on China for foreigners or English-speaking residents of Hong Kong. 

Adding to the brand's value is the city's changing political environment, which delivers a significant “political premium” to existing newspapers at a time when more pro-establishment groups are jumping on the media bandwagon in an attempt to mitigate social hostility and create a "new balance" among the media.

Now, the question remains: will Kuok sell the Post?

At 92, the billionaire sugar and property king is not in need of money.

But neither does he need the ownership of a credible paper to enhance his political stature in front of China’s leadership, as evidenced by the choice of his Shangri-La Hotel in Singapore as the venue for the cross-strait meeting between President Xi Jinping and Taiwan's President Ma Ying-jeou last weekend.

Time for a new owner for SCMP?

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EJ Insight writer