Jack Ma has little prior experience in the movie business, so people from the film industry would be a great help to Alibaba Pictures
Chinese actress Zhao Wei and her husband Huang Youlong have purchased a 9.2% stake in Alibaba Pictures, the entertainment unit of Chinese e-commerce giant Alibaba. Gold Ocean Media, owned by Zhao’s husband Youlong, said in a filing with the Hong Kong stock exchange that it acquired 1.93 billion shares of Alibaba Pictures at an average price of HK$1.60 apiece on December 20. It means the couple paid a total of HK$3.09 billion ($398 million) for the stake.
Alibaba founder and Zhao are ‘pretty close’
Hong Kong-based RHB Research analyst Li Yujie told Bloomberg that Jack Ma and Zhao are “pretty close.” Alibaba founder has also actively participated in Zhao’s charity work to help disadvantaged children. Zhao’s acting credits include Red Cliff, Shaolin Soccer, and Painted Skin. Last year, Alibaba invested $800 million to buy 60% stake in ChinaVision, which was later named Alibaba Pictures.
In December 2014, the audit firm PricewaterhouseCoopers (PwC) found that Alibaba Pictures had misstated tax payments and the impact of convertible bonds. The studio was required to pay interest on charges. Alibaba was quick to put the blame on the movie company’s previous management, but it raised questions about the online retailer’s due diligence before signing a deal.
Alibaba Pictures warns of FY2014 loss
Alibaba Pictures has warned investors that it expects to report a loss of up to HK$600 million ($77.4 million) in 2014. The company is struggling with delayed projects and impaired assets. Its revenue declined last year largely due to a drop in magazine circulation and advertising revenue, and delays in the distribution of TV drama series. A fair value change in warrants and an asset-impairment provision also weighed on earnings.
The company had stated last month that net profits for the first half of 2014 were expected to decline by HK$324 million due to asset write-offs resulting from accounting mistakes in 2012 and 2013. Shares of Alibaba Pictures rallied 5.10% to HK$1.65 after Zhao Wei disclosed a minority stake in the company.