Alibaba to sell stake in Chinese TV network at an estimated US$350 million loss

Alibaba Group Holding will divest its entire equity stake in a Chinese shopping and entertainment television network at an estimated loss of 2.3 billion yuan (US$356 million), according to a corporate filing to the Shenzhen Stock Exchange published on Friday.Mango Excellent Media Co, which runs the commercial assets of streaming platform Mango TV, said that Alibaba plans to sell all of its 5.01 per cent stake in the company – equivalent to 93.6 million shares.The e-commerce giant made the investment last December at a price of 66.23 yuan per share via a transfer agreement. On Thursday, shares of Mango closed at 41.31 yuan, down 37 per cent from Alibaba’s purchase price, which translates to a loss of 2.3 billion yuan.Prosecutors drop sexual assault case against ex-Alibaba managerMango said Alibaba is trying to waive its one-year lock-up agreement, without naming a potential buyer.No Alibaba representatives have joined Mango’s board of directors since last year’s investment.Alibaba, which owns the South China Morning Post, said on Friday that the company has no further information to reveal beyond Mango’s announcement.The planned divestment comes at a time when Chinese authorities are tightening control over the country’s tech sector to curb the “irrational expansion of capital”. While Beijing has, in the past, tolerated some attempts by Big Tech to commercialise and privatise media operations, the government is increasingly strengthening state control and guidance over the media sector.Alibaba, in addition to being the owner of Hong Kong-listed Alibaba Pictures Group and video-streaming company Youkou Tudou Inc, also holds stakes in various Chinese media assets, including microblogging platform Weibo, video-streaming site Bilibili and TV show producer Beijing Enlight Media. Between 2011 and 2020, the tech titan invested in over 40 Chinese media companies.Alibaba became the first Big Tech company to come under investigation by Chinese antitrust regulators last December. It was slapped with a record US$2.8 billion fine in April for engaging in the monopolistic practice of forcing online merchants to choose only one platform as their exclusive distribution channel.China’s anti-graft watchdog champions Big Tech antitrust driveAlibaba’s divestment of Mango marks the tech giant’s first major sale of a media asset since the investigation concluded. The company is expected to dispose of more investments, said Cao Lei, director of the Hangzhou-based China E-commerce Research Centre.“Under the current tightening supervision of the internet industry, with Alibaba, Tencent and Meituan being the focus, it’s likely that Alibaba will continue to sell investments that are not closely related to its core business or those that do not make money, in a low-key manner,” said Cao.The Chinese government’s enhanced scrutiny of celebrities and the entertainment business has also weighed on the stock price of Mango. Huo Zun, a Chinese pop singer who was originally a key guest on Mango TV’s much-hyped music competition Call Me By Fire, quit the show in August after his ex-girlfriend accused him of cheating on her.