Alibaba goes to Hollywood, for content

Alibaba's Jack Ma is on the prowl for entertainment it can sell to Chinese consumers through its set-top boxes. Photo / AP

Billionaire Jack Ma is stepping up his Hollywood dealmaking push, leading a team of Alibaba Group Holding executives meeting with studios to acquire online content, people with knowledge of the situation said.

Alibaba founder Ma will meet in coming days with Lions Gate Entertainment, Walt Disney, Viacom's Paramount Pictures, Time Warner's Warner Bros, Sony and Comcast's Universal, said the people, who asked not to be named because the talks are private. Hangzhou, China-based Alibaba will seek deals that give it the right to distribute US movies and TV shows at home, or invest in studio stakes, the people said.

Armed with $25 billion from a September initial public offering, Alibaba is on the prowl for entertainment it can sell to Chinese consumers through its set-top boxes, which also offer goods from its e-commerce site, the world's largest.

Like Chinese peers Fosun International and Dalian Wanda Group, Alibaba has expanded ties in Hollywood while navigating challenges such as piracy and censorship in mainland China.

"Entertainment and film is a very important part of Alibaba's ecosystem," said Alex Wang, a Beijing-based analyst at Internet consulting group IResearch. "The film industry is a really lucrative business, which will become an important growth driver for Alibaba."

Fosun, which invested $200 million in Jeff Robinov's Studio 8 in June, has held talks to invest in Lions Gate, according to people with knowledge of the situation. Alibaba reached an agreement in July to stream titles like The Hunger Games films and the TV series Mad Men in China from the studio, run from Santa Monica, California.

Wanda, which controls US cinema chain AMC Entertainment Holdings, acquired land in Beverly Hills, California, in August to set up an office to do deals in Hollywood.

Accompanying Ma to Los Angeles will be Liu Chunning, vice president of Alibaba's digital and entertainment unit, and Zhang Qiang, head of Alibaba Pictures, one of the people said. They are expected to meet with some of Hollywood's most senior executives, including Paramount Chairman Brad Grey and Michael Lynton, chief executive officer of Sony Entertainment.

Florence Shih, a Hong Kong-based spokeswoman for Alibaba, declined to comment. Officials at the US studios either declined to comment or didn't respond to requests for comment.

Hollywood is looking for ways to tap into the growth in China, now the second-largest theatrical market in the world, forging partnerships for individual films and sometimes larger deals. China's market for online video probably will reach 17.8 billion yuan (US$2.9 billion) this year and then double to 36.6 billion yuan in 2017, according to IResearch.

Studios that control films and TV shows sell distributors such as Alibaba the rights to show them online or on TV for a fee, often by territory. Users of Alibaba's set-top boxes can watch TV channels and high-definition movies, shop online and play games on the device.

In April, Alibaba led a $1.22 billion investment in online video site Youku Tudou.

Alibaba agreed in March to pay HK$6.24 billion ($800 million) for a 60 per cent stake in ChinaVision Media Group, according to data compiled by Bloomberg. Alibaba said in August it discovered accounting irregularities at the company, now called Alibaba Pictures Group.

China's set-top box industry is facing increased government scrutiny. Alibaba's Tmall MagicBox notified users in August that it would update its system and delete some applications in accordance with regulations from the State Administration of Press, Publication, Radio, Film and Television.

The deleted third-party applications included video apps from Sohu.com, Youku Tudou, IQiyi.com and others, the Beijing Morning Post reported in August.

- Bloomberg