(Yicai Global) Dec. 10 -- Alibaba Group Holding will assume majority control of its loss-making film unit through a HKD1.3 billion (USD160 million) share subscription.
The e-commerce giant will buy all one billion new shares of Alibaba Pictures Group, lifting its stake to 50.9 percent from 49 percent, Hangzhou-based Alibaba said in a statement. Alibaba Pictures will invest the funds in content, expanding its client base, and developing sales and marketing activities.
The deal will bolster cooperation between the subsidiary and other Alibaba culture and entertainment entities, including its Youku video website, ticketing platform Damai and e-reader portal Alibaba Literature and others, according to Alibaba Pictures Chairman Fan Luyuan.
Shares of Alibaba Pictures [HKG:1060] ended 4.9 percent higher today at HKD1.29 (17 US cents), after earlier gaining as much as 7.3 percent. The benchmark Hang Seng Index fell 1.2 percent.
Net loss at Alibaba Pictures, which integrates and innovates internet and film applications, narrowed 64 percent to CNY154 million (USD22.3 million) in the six months through September on a 29 percent gain in operating income to CNY1.5 billion.
The decision to take control of Alibaba Pictures shows that Alibaba is upbeat about its culture business. The group remains confident and determined about its entertainment line, Fan, who took over from Yang Weidong, said in an open letter. Yang, Youku's former president, was caught up in a police corruption last week, Yicai Global reported.
Editor: Ben Armour