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Ku6 Media to Introduce External Investment
Jan 30, 2013 (SinoCast Daily Business Beat via COMTEX) --
Chinese online video website Ku6 Media Co., Ltd. (NASDAQ: KUTV) plans to introduce external investors.
Shi Yu, CEO of it, said in an interview recently that it did not want to depend much on Shanda Interactive Entertainment Ltd. and would open the financing door for external investors, too.
A senior executive with Shanda Interactive, parent of Ku6 Media, declined to make a comment on whether it would invest more in the Nasdaq-listed subsidiary.
Shi was named CEO of Ku6 Media in August 2011 and the nomination was regarded as a new start of the firm. It was a fact that it had got listed through a back-door listing. However, it was still laid behind by archrivals including Youku.com Inc. (NYSE: YOKU). Notably, its capital-driven copyright mode had delivered a strong impact on other innovative businesses of Shanda Interactive. In addition, Shanda Games Ltd. (NASDAQ: GAME), the online game unit of Shanda Interactive, suffered a slowdown. Under such an environment, Chen Tianqiao, chairman of Shanda Interactive, said that Ku6 Media should shift into a mode based on communities and user generated contents (UGCs) from the capital-driven one.
Shi chose to slash cost of Ku6 Media first and the move was proved to work well. And according to financial results it released for the third quarter of 2012, the operating loss hit USD 3.45 million, down 72.4 percent from a year ago. However, the operating revenue dropped in the meantime. And in the quarter, it saw operating revenue hit USD 3.06 million, representing a yearly fall of 27.7 percent. Besides, a drop in market share caused its share price to fluctuate at about USD 1.
Shi said that one of its major tasks in 2012 was to reduce cost. However, it had met a bottleneck in the field. Under such an environment, it would attach importance to an external strategy therefore seize more operating revenue through widened advertising channels and increased users.
Chen said in 2011 that Shanda Interactive would inject USD 100 million into Ku6 Media, but judging from a quarterly loss of USD 2 million to USD 3 million of the latter, the injection should have been almost used out. Shi stressed that external investment was welcome and this year, it would launch a road show in the US.
In line with industry observers, a major reason for Ku6 Media to reduce dependence on Shanda Interactive is that Shanda Interactive has changed its strategy since it delisted from the US stock market in early 2012.
(USD 1 = CNY 6.22)
Source: www.yicai.com (January 30, 2013)
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