Alibaba announced the deal in principle on Friday last week, without financial details.
Given the high profile nature of the deal, Alibaba has been careful to make reassurances about expanding the paper, growing its digital businesses and safeguarding independence.
SCMP Group revealed on Monday (Dec. 14) that it had accepted Alibaba’s offer of HK$2.06 billion (US$266 million) payable in cash, for its entire cluster of media assets.
The statement showed that the media businesses had 2014 revenues of HK$1.20 billion (US$155 million) and recorded after tax profits of HK$133 million (US17.2 million). That implies an earnings multiple of 15.5.
Besides the broadsheet, other SCMP titles include the Sunday Morning Post, its digital platforms SCMP.com and related mobile apps, and the two Chinese websites Nanzao.com and Nanzaozhinan.com. The acquisition also includes a portfolio of magazine titles including HK Magazine and the Hong Kong editions of Esquire, Elle, Cosmopolitan, The Peak and Harper’s Bazaar.
“The [SCMP Group] Board believes that the future of traditional publishing is an uncertain one and believes that the value of the media business lies in the rich digital media content and the reputation and prestige of its publication titles. It is likely that a new media operator such as the purchaser will be able to unlock greater value from the content and brand than a traditional media business such as that operated by the group,” SCMP Group said in a filing.
Without its media businesses, the SCMP Group will be reduced to a property investment holding company. It plans to pay a special dividend to shareholders once the Alibaba transaction is completed.
Alibaba described the takeover as “the perfect opportunity to marry our technology with the deep heritage of the SCMP to create a vision of news for the digital age.”
“We see a compelling business case for the acquisition because we believe that Alibaba is best positioned to take the SCMP to the next level. The foundation for this work must be the quality of the content. And what underpins this will be editorial excellence: a clear pre-requisite to maintaining readers’ trust and, ultimately, achieving commercial success. Be assured, we get that,” said Alibaba deputy chairman, Joseph Tsai in an open letter to SCMP readers.
“Our vision is to grow the readership globally. We believe we can do this because the SCMP, from its base in Hong Kong, is uniquely positioned to report on China with objectivity, depth and insight, a proposition that is in high demand by readers around the English-speaking world – from New York to London to its home in Hong Kong – who care to better understand the world’s second largest economy.”
Tsai said that Alibaba plans to make all digital content available for free, eliminating the newspaper’s “pay wall” after a period of time.