PAPER LOSSES

Alibaba is paying millions more for the SCMP than Jeff Bezos did for the Washington Post

Alibaba’s purchase of Hong Kong’s South China Morning Post is being compared to Amazon founder Jeff Bezos’ acquisition of the Washington Post, because both deals involve an e-commerce executive buying up a faltering legacy publication. There’s another similarity as well—the price tag was about the same.

E-commerce giant Alibaba is paying HK$2.06 billion (about $266 million) for the SCMP Group, the parent company said in a filing with the Hong Kong Stock Exchange, or just $16 million more than the $250 million Amazon founder Jeff Bezos paid for the Washington Post in 2013.

Both deals value the newspapers, which are each more than a century old, at far less than new media publications that have sprung up in recent years.

Alibaba’s purchase includes the SCMP Group’s other assets: local versions of ELLE, Harper’s Bazaar, and other magazines, as well as a marketing and billboard advertising business. It’s not clear what those are valued at, but non-newspaper businesses brought in (pdf, pg. 9) 32% of the group’s revenues in 2014, or HK$397.2 million ($51.2 million)—and a whopping 49% of its operating profits.

The Washington Post deal did not include other assets that were part of the Washington Post Group, like TV news networks and Kaplan, its test-prep and tutoring division.

Both newspapers’ parent companies were struggling financially, as profits declined through the past decade.

The SCMP now is healthier, financially, than the Washington Post at the time that deal was done, but it has a much smaller reach:

Ultimately, $266 million is chump change for Alibaba, which has an estimated $12 billion in annual revenue. Even if it can revive the paper’s popularity, the SCMP’s value is more political than financial, and Alibaba appears to be paying a big premium for that political currency. Alibaba vice chairman Joe Tsai said that the SCMP will become a vehicle to correct “the wrong perception of China” that’s put forth by other media —in other words, the paper’s pro-Beijing slant is about to get more pronounced.

home our picks popular latest obsessions search