Ali Pictures: words, camera, action

Never mind Alibaba. Jack Ma is Midas. On Wednesday, shares of Ali Pictures - a 60 per cent owned subsidiary of Mr Ma's Alibaba - rose a quarter on news that it might receive two assets from its parent. No detail was given on payment or on the assets' accounts. Yet the market deemed the numberless deal worth $2bn, pushing Ali Pictures' enterprise value to nearly $10bn.

Ali Pictures was ChinaVision before the Alibaba investment last March. It is now is effectively a start up, relisted last December after a suspension for accounting problems under the old management. The new company has glitzy connections.

Since last October it has inked agreements with TV and film partners in Guangdong, Shenzhen and Zhejiang. In January it said that its first film project would involve director Wong Kar-Wai and actor Tony Leung. And last December, the actress Zhao Wei bought nearly a 10th of the company for $400m.

The first of the possible injections, Yule Bao, was established in March 2014. It raises "retail" funds for entertainment content: investors buy an "insurance product" yielding 7 per cent and the proceeds fund productions. (Although it looks similar it is not a crowdfunding model due to regulations). The ticket size is $16-$160. Last year's first $12m funding call sold out in 5 days. The second asset is Alibaba's online cinema ticket business, also set up a year ago.

Combined with Ali Pictures' content, the new assets could help to create an integrated funding-to-distribution model. China's pay-TV market is worth $19bn, just a fifth of the US's, according to IHS Technology. Chinese people spend half as much time watching TV as Americans. So the potential is there.

But Ali Pictures has so far produced nothing; the current state of the balance sheet is unknown; what or how it will pay for the new assets is unknown; and the extent to which the generous Mr Ma will continue to fund the company is a mystery. Even Midas needed to touch something solid to produce gold.

Email the Lex team at [email protected]

© The Financial Times Limited 2015. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation