Phoenix Media founder sells almost all his shares to Beijing-backed publisher and Pansy Ho’s Shun Tak in deals worth US$149.2 million
- Liu’s Today’s Asia has agreed to sell a 21 per cent stake to Bauhinia Culture and a 16.9 per cent stake to Common Sense, which is owned by Shun Tak
- At 61 HK cents per share, the deals represent a 21.8 per cent discount to Friday’s closing price of 78 HK cents
Liu Changle, the founder and chairman of Hong Kong-based Chinese broadcaster Phoenix Media Investment, has agreed to sell almost all of his stake in the company via two deals worth HK$1.156 billion (US$149.2 million) in total.
Today’s Asia, a company wholly-owned by Liu, signed a conditional framework agreement for the sale of 1.05 billion shares – a 21 per cent interest – to Bauhinia Culture Holdings on Thursday, and another agreement for the disposal of 845.44 million shares – a 16.93 per cent stake – to Common Sense on Friday, the company said late on Saturday. Today’s Asia will no longer be a shareholder after the share disposal.
According to a filing with the Hong Kong stock exchange on Sunday, Bauhinia is buying the stake for HK$640 million and Shun Tak, which owns Common Sense, is buying its shares for HK$516 million, both at 61 HK cents per share. The sale price per share represents a 21.8 per cent discount to Friday’s closing price of 78 HK cents.
The filing did not say whether Liu would remain Phoenix’s chairman and executive director after the transactions.
“The board does not expect the proposed [shares transfers] will have any negative impact on the business operations of the company,” Phoenix said in the filing on Sunday.
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Intensifying competition from an ever-increasing amount of online news and commentary for advertising dollars has also posed additional challenges for traditional media companies in recent years.
Phoenix posted a net loss of HK$1.04 billion (US$133.8 million) last year, including a HK$585.7 million write-down on its internet media investments. Its operating loss narrowed to HK$502 million last year from a loss of HK$728 million in 2019, due to cost cutting.
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“Following the acquisition, the group shall benefit from advanced insights and on-the-pulse perspectives gained, that can complement its vision of enriching its tourism-based offerings across China,” Shun Tak said in a filing on Sunday. It added that the acquisition was in line with its “tourism plus” approach to diversification.
The spokesman for Bauhinia Culture could not be reached for comment on Sunday.
Liu, 69, owned 1.9 billion shares, or 38.08 per cent of Phoenix, according to disclosures to Hong Kong Exchanges and Clearing. Today’s Asia has sold 1.89 billion shares, or a 37.93 per cent stake.
Even with its new well-heeled shareholders it remains to be seen if Phoenix can turnaround its losses, given the competitive operating environment, said Louis Tse Ming-kwong, the managing director of Wealthy Securities.
Property-to-hospitality conglomerate Shun Tak is chaired by Pansy Ho Chiu-king, daughter of the late casino magnet Stanley Ho Hung-sun. Bauhinia Culture, which is chaired by former Hainan province executive vice governor Mao Chaofeng, is a news publishing, films, television broadcasting, arts and culture enterprise administered by the Chinese central government.
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Besides running the pro-China Bauhinia magazine, Bauhinia Culture owns Sino United Publishing (Holdings), Hong Kong’s largest publishing conglomerate formed in 1988 with the merger of several book publishing houses.
“Having a Beijing-backed publishing company as its largest shareholder would strengthen Phoenix’s status in the mainland’s news industry,” said Kenny Tang Sing-hing, chief executive of Royston Securities. “It may help boost advertising and sponsorship revenues, and bolster its finances.”
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A privately owned broadcaster, Phoenix was founded by Liu in 1996. As one of the largest Chinese-language broadcasters, Phoenix TV has amassed a global audience of 360 million viewers across six channels, according to its website.
It derived about half its revenue from its internet media business, including a popular personalised news mobile app that was sold last October, raising US$135 million in net proceeds for Phoenix.
