Alibaba to Buy South China Morning Post in Hong Kong

Alibaba Group Holding Ltd has agreed to buy Hong Kong's flagship English-language newspaper, the South China Morning Post (SCMP), in the most politically sensitive acquisition by the e-commerce giant to date.

Alibaba and SCMP Group Ltd announced on Friday that the Hangzhou-based company would buy the 112-year-old newspaper and other media properties for an undisclosed amount.

The purchase, which follows a string of media deals by Alibaba, is likely to raise concerns in Hong Kong, where the South China Morning Post occupies an important position among the English-speaking elite who still dominate the former British colony.

Chinese-language dailies may be more influential than the Post, but changes in its editorial direction are seen as a barometer for press freedom under Chinese rule.

Alibaba has acquired or invested in a growing portfolio of media and content companies in recent years. In June, the company agreed to pay $194 million (GBP 128 million or roughly Rs. 1,302 crores) for an undisclosed stake in the China Business News, the domestic financial media firm.

"The SCMP has iconic status in the region, with a strong reputation internationally for the quality and credibility of its journalism over the years," Joe Tsai, executive vice chairman of AlibabaGroup, said in a letter to SCMP readers.

"Like many print media, however, the SCMP faces challenges amid the dramatic changes in the way news is reported and distributed. But these changes play to Alibaba's strengths, which is why we believe the two companies complement each other well."

Alibaba Chairman Jack Ma is no stranger to controversy at the newspaper.

In 2013, a reporter for the Post quit after quoting Ma as having made remarks in support of Beijing's violent crackdown on pro-democracy protesters in Tiananmen Square in 1989. Ma denied at the time that he had made such an assertion.

Tsai sought to address concerns about editorial independence in his letter.

"In reporting the news, the SCMP will be objective, accurate and fair ... day-to-day editorial decisions will be driven by editors in the newsroom, not in the corporate boardroom."

However, some SCMP staff members said the takeover was unlikely to have much impact over the publication's content, and greeted the news with resignation.

"The SCMP has not had an editorial balance for more than a decade. We don't think that will change under a mainland Chinese owner," said an editor who has worked at the newspaper for more than a decade.

"You can expect a Chinese angle on every story."

Friday's agreement includes SCMP Group's other media assets, such as licenses to the Hong Kong editions of Esquire, Elle, Cosmopolitan and Harper's Bazaar.

In November, the publisher said it had received a preliminary approach by an unidentified third party interested in its media properties, and media outlets had reported Alibaba was the potential buyer.

Financial terms of the deal were not disclosed.

SCMP has a market value of HKD 3.04 billion, or $392 million (roughly Rs. 2,632 crores), according to Thomson Reuters data.

© Thomson Reuters 2015