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Jack Ma To Buy South China Morning Post
Perspective | 24 November 2015

Jack Ma likes to make quick decisions quickly, as befits a billionaire Internet mogul operating in a world that changes at warp speed. Perhaps too quickly, sometimes.

Among a flurry of deals in 2014, Ma’s Alibaba bought control of a Hong Kong movie and TV producer that it renamed Alibaba Pictures. Five months later, accounting flaws and misstated tax payments were found, raising questions over the company’s due diligence. Also last year, the Alibaba founder said he took 15 minutes to agree to an investment in China’s most popular soccer team, Guangzhou Evergrande Football Club, a deal with debatable benefits for the e-commerce company.

“China’s soccer industry needs somebody to help stir up things,” China’s second-richest man explained at a briefing to announce that deal.

Now Ma may be ready to pull the trigger again. It’s the newspaper business that appears to be in need of stirring up this time. Alibaba’s chairman is in talks to buy a stake in the publisher of Hong Kong’s South China Morning Post, people familiar with the matter told Bloomberg News.

Alibaba shareholders dubious about the advantages of buying into a struggling company in an industry in structural decline can relax. Unlike the Guangzhou Evergrande purchase, Ma would be using his own money rather than the company’s, this time. The cost is hardly likely to be prohibitive in any case. SCMP Group shares last traded at HK$1.95 in February 2013, giving the company a market value of about HK$3 billion (US$390 million) — chump change for a businessman with net worth of US$29.7 billion, let alone a business with a market value of close to US$200 billion.

Ma’s motivation for pursuing the purchase is harder to fathom. Like newspapers in the U.S. and elsewhere, the South China Morning Post has suffered from the migration of readers and advertising to the Internet. The company’s return on assets fell to 3.9 percent last year, the lowest since 2003 (though it rebounded to 9.4 percent in the first half), according to data compiled by Bloomberg. Ebitda was HK$238 million last year — it was never lower than HK$445 million in the 1990s, in the days when the South China Morning Post was reputed to be the world’s most profitable newspaper.

If the investment metrics hold out little hope of reward, the politics of the purchase promise nothing but pain. The SCMP, established during Hong Kong’s colonial rule by Britain, remains one of a limited number of sources for English-language news and information on mainland China. Robert Kuok, a Malaysian-Chinese billionaire, bought control of the paper from Rupert Murdoch in 1993, as the 1997 handover to China loomed. Since then, the SCMP’s reporting has been scrutinized constantly for signs of increasing Chinese influence. With Hong Kong society still polarized by last year’s Occupy protests, that scrutiny will only intensify should the paper fall into the hands of a mainland Chinese businessman.

So what’s Ma’s angle? A native of the eastern city of Hangzhou, where Alibaba is based, he now has close ties with Hong Kong. Rich people like to own sports teams — Ma has one of those now. They also like newspapers — think Jeff Bezos and the Washington Post. Ma has shaken up and reinvigorated businesses from retail to banking to fund management to logistics in China. After two decades of stagnation, perhaps a mixture of self-confidence and a sense of civic duty has persuaded him he can do the same for traditional print media in his adopted city.

Then again, it’s hard to get away from political considerations. To hear him tell it, Ma has consciously steered away from politics throughout Alibaba’s rise. It’s easy to appreciate why. In 2013, activists started an online petition calling on Ma for an apology after he was quoted in a newspaper interview as saying China’s rulers made the “most correct decision” in their handling of the Tiananmen Square crackdown. Alibaba said the chairman was “quoted inappropriately.” The newspaper  in question? The SCMP.

Whatever Ma’s motivation, this is a decision that bears thinking over carefully, rather than rushing into.

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