The South China Morning Post has become the latest commodity to change hands, courtesy of Alibaba.
The world's largest e-commerce company acquired Hong Kong's largest English-language circulated daily newspaper and associated media assets from the SCMP Group for an undisclosed sum on Friday.
“The agreement combines the heritage and editorial excellence of the SCMP with Alibaba’s digital expertise to provide comprehensive and insightful news and analysis of the big stories in Hong Kong and China,” according to a press release on the SCMP's website.
In other words, Alibaba wants to own a platform to deliver more news about its home market. For a company that found it more convenient to list in the US than Hong Kong, this might seem a little rich.
However, Alibaba is in a unique position. It is without doubt China's most famous, and certainly successful, brand. And it is a private company in a world that finds reason to be sceptical about every move made by China's state-owned companies.
The decision of Malaysia's Kuok family, via Kerry Media, to sell the newspaper is no great surprise. Media publications across the world have come under enormous financial pressure from the advent of internet-based rivals that are either free, or markedly cheaper to view.
The SCMP, while more profitable than many, has been no exception. Last year it reported a profit of HK$136.77 million ($17.6 million) off of HK$1.24 billion of revenue, the fourth consecutive annual drop in profit. Dozens of experienced reporters have reportedly left the newspaper during 2015.
Alternative viewpoint
Joe Tsai, executive vice-chairman of the Alibaba Group, said in a press release about the takeover that the company wanted “to expand the SCMP’s readership globally through digital distribution and easier access to content”.
“Our vision for SCMP is to build a global readership,” he added. “It is not just for expats or senior executives or companies in Hong Kong but it is for anybody who cares to know more about China and to understand China.”
Tsai also argued that Alibaba's “technological expertise and digital assets” will enable it to distribute news to a far greater international audience. As part of this effort, the company is pulling down the pay-wall that had encircled the SCMP's articles for more than a decade.
He is no doubt correct; with Alibaba as an owner, the SCMP has many more options when it comes to distributing its news.
But for what purpose, exactly? Tsai argued to the SCMP in an interview that China is the world's second-largest economy, yet western media outlets tend to take a certain perspective when covering the country, with the idea of it being a communist state being the beginnings of this viewpoint.
Tsai said the SCMP offered more nuanced coverage and stressed the point that Alibaba would leave the SCMP's editorial integrity intact. Cynics might take this to affirm past claims that the SCMP has not always been as robust in its coverage of China's government as it might have been.
Of course, Alibaba is aware of these claims. Alibaba's press release and Tsai in his Q&A directly addressed concerns about editorial integrity: “At the core of a news property, we have to have the readers' trust,” he said. “That will depend on reporting that is objective, balanced and fair. If we don't have that trust, we cannot build up our readership.”
Yet inevitably, questions arise about just how hands-off a corporate owner will be, particularly if it wishes to promote more global interaction about China. Alibaba's founder and chairman, Jack Ma, is well connected with Chinese government officials, while the company has succeeded in part by becoming an effective monopoly in many areas of e-commerce (Alipay, its mobile payments system, accounts for 87% of such payments in China), without disturbing China's antitrust regulator.
It seems hard to believe Alibaba would let its newly acquired media organ have a completely free editorial say, if that say were to espouse views antithetical to the political interests on which its future success depends.
Media moves?
Bankers and investors may find other questions to be of more importance than those about editorial integrity.
One will be whether the SCMP Group remains listed, now its key assets have been sold. A second might well be: is this the start, or the end, of Alibaba's media aims? There are certainly no lack of struggling media outlets in the world. If Alibaba decides it wants to become a China-headquartered media-running giant to compete with the likes of Rupert Murdoch's News Corporation empire, it has the capabilities.
The idea of creating an international media champion would resonate well with China's overall internationalisation aims. The Communist Party dislikes its portrayal in western media but is no doubt smart enough to know that its state-owned enterprises would fail in any attempt to promote its views directly.
However, a company like Alibaba might well be a clever compromise. It's popular, well-known and has a smart and highly successful founder and chairman in the form of Jack Ma, who happens to speak English. Were Alibaba to buy further international media assets it would merely round out the e-commerce conglomerate's desire to get into multiple industries and it's unlikely such acquisitions would be detrimental to the Party's image – at least within those outlets.
It will be fascinating to see whether the acquisition of the SCMP is a one-off, conducted by Alibaba for an apparent mixture of cultural and political reasons, or if it instead presages far more ambitious plans on behalf of Tsai and his boss, Ma.
Ma has had his own run-ins with the SCMP. He complained in 2013 that the SCMP misquoted him as saying former president Deng Xiaoping made the right call to order the Tiananmen Square massacre in 1989. Ma claimed he was attempting to describe the difficult decisions he made as chief executive of Alibaba and that the remarks did not reflect what he told the reporter. Wang Xiangwei, the editor-in-chief of the SCMP, said the newspaper stood by the story.
However, the newspaper announced on November 5 that Wang was stepping down from the editor-in-chief role and returning to Beijing on January 1, 2016. Tammy Tam, who has been deputy editor since joining in 2012, is taking over the top role – assuming that is what Alibaba wants.
