Alibaba Group Holding Lt. (NYSE:BABA) is mulling an injection of assets into its unprofitable arm. The company intends to do so by putting assets in its entertainment arm.
Alibaba Pictures Group Ltd released a statement that its parent company has proposed merging its online movie ticketing business and its crowd funded movie production platform into the Alibaba Pictures unit.
Alibaba Pictures’ shares which were halted on March 24 rose 36.7% on the news, finishing at 3.91 HKD.
Alibaba Pictures’ statement did not specify any business into which the assets were being injected. However, it is speculated that the businesses in which the assets will be injected are Alibaba Taobao Movie ticketing website and Yule Bao a crowd funded movie studio.
The move is seen by Alibaba as a way to integrate its strengthening e-commerce and its millions of customers on that front with filmmaking and production. The new model, if it goes ahead, will change the traditional filmmaking production.
If the integration goes through then, it could increase the value of the Alibaba Group’s investment in movie production firm that has been having problems. Alibaba Pictures was founded when Alibaba Group bought a 60% share in the Chinese movie studio ChinaVision Media Group.
In December, according to an independent analysis, Alibaba Pictures wrongly stated the financial impact of convertible bonds. The misstatement was blamed on previous management.
Alibaba Pictures reported a full-year earnings with revenue down almost two-thirds. The business incurred a loss of $67.2 million.
The move could be a good one for the movie industry as it would integrate both the movie finance with ticket sales according to Bryan Wang, an analyst for Forrester Research. However, he also said that the move will not add significant value to Alibaba’s other businesses.
Alibaba in a statement said that integrating the movie financing and ticketing businesses will help the company’s vision of making digital media entertainment available to customers anywhere anytime.
Alibaba Group Holding Lt. (NYSE:BABA) has been trying to gain and retain users to their platforms. The company also has a stake in online video firm like YoukuTudou.
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