After weeks of speculation, e-commerce giant Alibaba has finally announced its purchase of Hong Kong’s SCMP Group, parent of one of Asia’s oldest and most influential newspapers, the South China Morning Post.
Many reports have focused on the implications of mainland Chinese ownership of a major newspaper in Hong Kong, where editorial standards are much more Western and strict censorship policies like those required by Beijing don’t exist.
In a statement, the Hong Kong Journalist Association expressed concern that the change in ownership would mean “further restrictions on the Post’s reporting on China.”
One thing that has got somewhat overlooked in this debate is what the deal means for Alibaba, and whether it makes sense.
The Alibaba Morning Post
Early reports had indicated that Alibaba founder Jack Ma would personally buy a minority interest in SCMP Group to avoid the sensitive issue of mainland Chinese ownership of a Hong Kong newspaper.
So it was a surprise to many observers when it was revealed that Alibaba the company would be buying all of SCMP Group’s media assets for $266 million, taking over ownership of the 112-year-old newspaper from Malaysian tycoon Robert Kuok, who has owned the paper for more than 20 years.
Alibaba says that one of the reasons behind its purchase is a desire to improve China’s image in the West and offer an alternate to the biased view of Western media. But executives also took efforts to emphasize that the newspaper will continue to exercise its own editorial judgment, and won’t become a mouthpiece for promoting Alibaba.
One of my friends joked that we’ll have to see how the newspaper covers JD.com, Alibaba’s main e-commerce rival, to see if the SCMP will really maintain its editorial independence.
But frankly, I think Alibaba will face much bigger challenges in operating the SCMP and won’t attempt to make big editorial changes for fear of scaring off its already-dwindling number of readers.
The South China Morning Post is facing the same issues as print media throughout the world, with readership and profits declining steadily as younger consumers flock to online news sources.
The parent company’s profits have fallen in each of the last 3 years, and would have dropped by 40 percent in the first half of this year if not for some one-time extraordinary gains. That’s hardly a promising investment.
Driven by pride
In my view this deal was driven almost completely by Jack Ma, whose hubris is his main motivating factor.
Ma was an underdog for much of his career, before rising to become one of China’s richest men through executing a savvy strategy in the nation’s booming e-commerce market.
One of Ma’s top role models is the more cerebral Jeff Bezos, founder of global e-commerce giant Amazon, who made a similar purchase of the storied Washington Post in 2013.
I haven’t heard much about changes at the Washington Post since then. But I do think it was wise for Bezos to buy the newspaper personally rather than using Amazon funds, so that he won’t be accused of burdening his company with such a problematic and also renowned asset.
Ma appeared to be taking a similar approach, based on earlier reports, but changed course and decided to make the purchase through Alibaba. If that’s the case, his motivation is probably a desire to find a place for the newspaper among his small but growing stable of related media assets.
Those assets include a recently formed financial news joint venture with Shanghai’s China Business Network (CBN), and also a major stake in Weibo, often called the Twitter of China.
Alibaba certainly has plenty of experience with Internet businesses and lots of resources at its disposal to try and reverse the SCMP’s decline. The company will need to use those resources and move quickly to revive the paper, but will also be need to be careful of politically sensitive issues.
Potential obstacles will include not only people watching for changes to its coverage of China, but also to the way the newspaper covers Alibaba itself and the company’s rivals.
After all, it’s no secret that private Chinese media are famous for using their platforms to promote themselves and trash their rivals.
The South China Morning Post is facing all the same challenges that dog print media around the world, as well as the extra political sensitivities of covering China from Hong Kong, and the newspaper’s declining fortunes are unlikely to reverse under its new ownership.