Alibaba Pictures is buying the operator of offline entertainment business Damai for US$167 million as China’s live entertainment industry recovers post-pandemic.
To pay for the purchase, Alibaba Pictures will issue about 2.5 billion shares to a unit of Alibaba Group at 52 Hong Kong cents (US$0.07) per share. After the share issue, Alibaba Group will own about 54.26% of Alibaba Pictures.
China’s entertainment industry is enjoying a renaissance after Beijing lifted restrictions related to the pandemic. The Chinese box office hit an all-time high during the summer season, and international stars are once again performing live across the country.
The Hong Kong-listed movie producer plans to expand Damai across the live entertainment value chain, magnifying its advantages of scale, raising barriers to entry, and building brand awareness for its offline entertainment business.
“We believe this transaction heralds a new chapter for the new Alibaba Pictures,” said Jie Li, President of Alibaba Pictures. The deal diversifies Alibaba Pictures’ revenue into live entertainment and expands its IP monetization channels. The acquisition also strengthens its competitive position by consolidating customer resources and industry expertise.
Alibaba Pictures’ shares climbed 5.5% in Hong Kong trading on Wednesday after news of the deal.
As consumers ventured out from their homes as pandemic-era travel restrictions lifted, China’s box office leaped 125.7% between June 1 and Aug. 31 from a year earlier, according to Beacon Professional, Alibaba Pictures’ promotion and distribution business. A string of blockbusters from gritty crime drama “No More Bets” to Barbie helped draw the popcorn crown out.
Earlier in the year, Alibaba held its Maker Festival, a live event for consumers to discover the latest innovations in retail products, its largest ever in terms of attendance and the number of participating cities. Joining in the fervor, Damai, in collaboration with Xiami Music Entertainment, held the 2023 Aranya Xiami Music Festival in Hebei province. Performers included British rock band Suede.
This steady revival is helping Damai’s operator, called Pony Media Holdings, recover from three years of losses. It has recently witnessed a “material recovery”, said Alibaba Pictures in a Hong Kong stock exchange filing. For the three months ended June 30, Pony Media recorded a gross merchandise volume (GMV) of over RMB4 billion (US$170 million), up from about RMB3 billion in the whole financial year ended March 31.
Founded in 2004, Damai organizes live performances, including concerts, musical festivals, livehouse performances, plays, sports events and exhibitions in mainland China. Its operator Pony Media Holdings served over 1.8 million events and had over 100 million registered customers cumulatively. It is active in production, promotion and ticketing and generated revenue of about RMB228 million for the financial year ended March 31, 2023.
Alibaba Pictures already had an exclusive service agreement in place with Damai.
Pony Media will be the flagship offline entertainment platform in the Alibaba Digital Media and Entertainment Group, a company created when Alibaba reorganized earlier this year.
The acquisition, advised on by J.P. Morgan, is subject to conditions including approval from shareholders in a special general meeting. The transaction is expected to close later this year.