China’s Alibaba Pictures removes senior board director ensnared in graft investigation as large deals loom
Reshuffle sees president, COO named board members as company on verge of landmark deals including rumoured purchase of Paramount stake
Alibaba Pictures, the entertainment subsidiary of e-commerce giant Alibaba Group, has ousted Patrick Liu Chunning from its board of directors, more than six months after the executive was detained by Chinese authorities for alleged corruption while still employed by Tencent Holdings.
Liu, who also served as president of Alibaba’s digital entertainment unit, was removed pursuant to Ali Pictures’ articles of association, the company said on Thursday.
In a filing with the Hong Kong stock exchange, Ali Pictures chairman Shao Xiaofeng pointed out that the company has been unable to contact Liu.
It announced in July 9 that Liu was detained by China’s Public Security Bureau over “an investigation into alleged receipt of bribes during his employment with Tencent”.
Shao said Liu has not reported for his duties as a company director, and “failed to attend any board meetings and general meetings of the company for a consecutive period of more than six months since June 11, 2015 without special leave of absence from the board”.
He added that Liu’s removal will not have any adverse impact on Ali Pictures.
The company posted interim revenue of 22.94 million yuan (US$3.52 million) at the end of June, down from 49.11 million yuan in the same period in 2014, as it continued to make strategic investments in film and television productions, digital distribution and entertainment e-commerce.
On Thursday, Ali Pictures announced the addition of company president Zhang Wei, chief operating officer Deng Kaming and Alipay president Fan Luyuan to its board of directors. Shao and chief executive Zhang Qiang are the other members of the board.
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The company said it has also completed the acquisition of parent Alibaba’s movie ticketing business and Yulebao crowd-financing platform. Alibaba is based in wealthy Hangzhou in east China’s Zhejiang province.
Liu’s dismissal and the recasting of its board of directors has come at a time when Ali Pictures is poised to strike major deals that would further expand its business.
Ali Pictures last month agreed to invest US$86 million as a partner in a consortium that plans to acquire and take private Bona Film Group, a Nasdaq-listed Chinese movie studio and distributor. The terms of this proposed buyout valued Bona at US$1 billion.
The other backers of Mountain Tiger International, a special-purpose company formed for the acquisition of Bona, included Tencent subsidiary Willow Investment, Bona chairman Dong Yu, Fosun International and affiliate Orrick Investments, Sequoia Capital China, SAIF Partners, and Skillgreat and Vantage Global.
Gamco Investors, which holds the second-largest voting shares in Viacom behind media mogul Sumner Redstone, urged the US company to sell a stake in Paramount to Alibaba as a way to generate fresh funds and drive efforts to make more movies in China.
“If Alibaba is going to be serious about getting into the entertainment industry, Viacom should sell [Alibaba founder and executive chairman] Jack Ma a piece of Paramount,” Gamco founder and chief executive Mario Gabelli said in a Financial Times report.
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The tantalising prospect of officially becoming a part of the Hollywood establishment could help accelerate Alibaba’s plans to create an extensive online-to-offline entertainment empire.
Forrester Research analyst Jin Di said acquiring a stake in Paramount would benefit Alibaba’s digital entertainment ecosystem by helping the company “capture a wider audience, obtain more consumer data to analyse and incorporate e-commerce into the global movie industry”.
