Hong Kong Tycoon Buys AOL Time Warner’s Chinese TV Unit

04 July 2003

The ailing mainland China TV station owned by AOL Time Warner has been acquired by Hong Kong's richest businessman, Li Ka-shing.

In an all-share deal Ka-shing cashed-in, gaining 64% of Chinese Entertainment Television Broadcasting at a price well below analysts’ expectations. Underscoring a general belief that AOL TW got the butt end of the deal, shares in Ka-shing’s media empire Tom.com leapt 4.26%.

The acquisition is valued at around US$55 million (HK$428.90m; €47.80m; £32.90m), “a pretty cheap price,” according to Denis Lam, media analyst at Hong Kong’s Kim Eng Securities. Opines Lam: “CETV is still loss-making so when Tom.com consolidates its numbers, it will delay its own timetable to break even. But the bigger revenue base will be of great advantage in the future.”

Not least because CETV enjoys coveted broadcast ‘landing rights’ into the southern Chinese province of Guangdong, inserting a hefty wedge in the door of the fast growing mainland media market.

AOL TW retains a 36% stake in the business with an option to buy back in 2010 the shares sold to Tom.com at their (then) market value. Alternatively, at a price equivalent to Tom.com's original investment plus 50% internal rate of return – whichever is the higher.

The US media group has a long-term commitment to CETV, insists its man in Hong Kong, Steve Marcopoto, president and managing director of Turner Broadcasting System Asia Pacific.

Data sourced from: Financial Times; additional content by WARC staff