Tencent’s media ambitions are on full display
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Tencent’s media ambitions are on full display

Tencent is one of China’s “Big Three” internet companies, along with Baidu and Alibaba, meaning it has some very deep pockets. This month, the company decided to spend some of that hard won wealth with a new investment: a 27.64% stake in Chinese production house New Classics Media. The deal, which set Tencent back by $524 million, is latest in a string of moves designed to help it blossom into a media powerhouse. But will it succeed?

Tencent’s share price is up by 15% so far this year

graph 1903 tencent

SOURCE: Yahoo Finance

Tencent has been assembling a powerful media portfolio in recent years. It includes minority stakes in leading Chinese studios Huayi Brothers Media and Bona Film Group and movie ticketing service Maoyan – and that’s just locally. Internationally, Tencent adds a number of other big names to the list (Skydance Media, STX Entertainment, Global Road). All of these investments are shored up by Tencent’s own growing film and television outlets, which make up the final piece of the puzzle.

A big motivating factor in these deals is to develop a funnel of high-quality, exclusive, content for Tencent’s “flagship streaming video platform” Tencent Video. According to the company, it will enter into a business cooperation agreement with New Classics “when appropriate to ensure that Tencent Video can secure rights to the top TV dramas.”

Speaking about its new purchase, Tencent said that New Classics was “one of the few companies possessing top-tier TV drama production capabilities with a successful track record of over ten years,” and said that its investment “gives Tencent Video more control over its content portfolio long-term and more competitive advantage over competitors.”

Disclosure

Dominion holds Tencent in its Global Trends Ecommerce Fund.


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