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SCMP Reporter

Deal with Li Ka-shing's group has not helped business development in China

Ming Pao Enterprise Corp, the publisher of Chinese-language Ming Pao Daily News, planned to buy back a 50 per cent stake in regional news weekly Yazhou Zhoukan from Li Ka-shing's media flagship Tom Group, sources said yesterday.

The proposed transaction may pave the way for Tom to take a stake in a local newspaper company.

Yazhou Zhoukan has been jointly owned by Ming Pao and Tom Group since 2001.

Ming Pao sold the 50 per cent stake in the loss-making title to Tom for $60 million. Its weak financial performance led Tom to write down the carrying value of the magazine to zero in the annual results of 2002.

The magazine has recorded net losses for the past five years. The loss for the year to March last year was $7.35 million, narrowed from $10.7 million for the fiscal year 2004.

'It's not a secret that Tom wants to sell the stake,' one source close to the deal said.

Tom is negotiating with Ming Pao on the settlement of the deal. 'The valuation of the magazine has not come out yet and the deal needs some time to conclude,' the source said.

Ming Pao may issue new shares to Tom for the consideration. In turn, Tom will build up links with the local newspaper market through the transaction.

It has been rumoured for a long time that Tom wants to acquire a local newspaper to broaden its media assets portfolio. But no deal had been made.

'Mr Tiong's [Ming Pao's chairman Tiong Hiew-king's family] should maintain the controlling stake and the management team of Ming Pao,' the source said.

Mr Tiong holds a 64.01 per cent stake in Ming Pao, while Ming Pao founder Louis Cha holds 10 per cent, according to stock exchange information. Sources said Tom did not expect to hold more than 10 per cent of Ming Pao after the deal.

A Tom spokeswoman said the company was still holding a 50 per cent stake in Yazhou Zhoukan. The company would not comment on market rumours, she said.

Ming Pao had hoped the alliance with Tom would help its China business development but there had been no benefit.

'It is a natural step for Ming Pao to take back full control of the magazine as they have established their own China publishing business without the help of Tom,' a market analyst said.

Ming Pao has also partnered with former Time Asia senior executive Peter Brack to form One Media Group in 2004. Ming Pao has injected its magazine business into One Media Group and now publishes five titles in China. Yazhou Zhoukan has secured a limited circulation in the China market.

Yazhou Zhoukan's regional circulation is about 100,000 copies per week.



Ming Pao to buy back weekly stake from Tom