Alibaba media holdings are latest pressure point for Jack Ma

Alibaba is reportedly facing pressure from the Chinese government to reduce its holdings of media assets such as the South China Morning Post and Weibo, in another potential source of conflict for its founder Jack Ma

Alibaba media holdings are latest pressure point for Jack Ma
Jack Ma has another problem to think about as China is reportedly pushing Alibaba to reduce its media sector holdings. File picture: Reuters 

(ATF) Alibaba faces pressure from the Chinese government to reduce its exposure to media assets that range from a big stake in online platform Weibo to Hong Kong’s long-established South China Morning Post, according to reports from the Wall Street Journal and Bloomberg on Monday March 15.

Media holdings are not a significant portion of Alibaba’s overall business, but an attempt to force a sale of assets would represent another threat to Jack Ma, Alibaba’s founder.

Alibaba has a roughly 30% stake in Weibo, the social media platform that has over 500 million users, and it is 100% owner of the venerable South China Morning Post, the largest English-language paper in Hong Kong. It also owns stakes in mainland Chinese firms Yicai Media and Caixin Media.

The removal of posts about a senior Alibaba executive on Weibo drew attention to the potential influence of the firm and may have prompted the most recent move to clip the wings of Jack Ma, whose status – and day-to-day whereabouts – in China remain the focus of intense speculation.

Alibaba and its financial services affiliate Ant Group are also seeing management turmoil as the firms try to reach an accommodation with newly aggressive politicians and regulators in China.

Ant Group CEO Simon Hu unexpectedly resigned last week in the most significant management exit since its $37 billion initial public offering was pulled late last year.

Hu, who was named chief executive in 2019, will be replaced by company veteran and chairman Eric Jing, Ant said in a statement on Friday.

Transition to financial holding company

Hu’s exit from the company came as Ant is working on plans to shift to a financial holding company structure following intense regulatory pressure to conform to rules and capital requirements similar to those for banks.

US-listed shares in Alibaba dropped almost 4% early on Friday before recovering. The reports on Monday of a forced sale of media assets helped to push down Alibaba’s US shares by another 2% on the day.

Hu’s departure is the first major management change since the IPO was scrapped. He was one of the key executives responsible for managing the company’s planned mega dual-listing in Hong Kong and Shanghai.

Ma’s business empire has been at the centre of a crackdown following an October 24 speech in which he blasted China’s regulatory system.

Regulators have since been tightening scrutiny of the country’s technology sector, with Alibaba taking much of the heat. The regulator launched an official anti-trust probe into Alibaba in December.

Monday saw another regulatory warning for Alibaba as the State Administration of Market Regulation said it will "adopt more powerful supervision methods this year and deploy a series of actions" to clear up "prominent problems in the online market".

Ant’s financial holding structure is expected to weigh on its valuation, as the fintech firm was valued as a technology firm in its previous fundraising rounds. Valuations are normally much higher for technology firms than financial companies.

Staff frustrated

The change in management also comes days after some Ant staff expressed frustration on social media for not being able to sell the company shares they own after Chinese regulators halted the company’s market debut.

Jing told Ant employees that the company would review its staff incentive programmes and roll out some measures starting from April to help solve their financial problems, according to people who saw the messages, Reuters reported.

The listing in November of Ant, whose businesses include consumer lending and insurance products, would have made some of the company’s employees millionaires or billionaires.

Although Ma has stepped down from corporate positions and earnings calls, he retains significant influence over Alibaba and Ant and promotes them globally at business and political events.

Hu joined Ant in 2005 and worked in various roles in the group as well as at Alibaba, according to his LinkedIn profile.

Jing has been Ant’s executive chairman since 2018 and before that he held various positions at the company including president and chief operating officer. He joined Alibaba in 2007.

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China Alibaba Jack Ma media holdings Eric Jing Simon Hu Staff discontent Ant IPO Regulatory crackdown company rejig Financial holdings structure