KU6 MEDIA STILL FACES PROFITABILITY DILEMMA AFTER CEO RESIGN

AsiaInfo Services
03-16-2011
Ku6 Media Still Faces Profitability Dilemma After CEO Resign

BEIJING, Mar 16, 2011 (SinoCast Daily Business Beat via COMTEX) -- Ku6 Media Co., Ltd. (Nasdaq: KUTV) Founder and CEO Li Shanyou resigned last week. The reason provided by Shanda Interactive Entertainment Ltd. (Nasdaq: SNDA) officially for the resignation is personal choice.

Rampant talks say that the resignation of Li results from his diverged opinions with Shanda Board Chairman Chen Tianqiao over the development strategy of Ku6 Media.

Although both sides have denied the saying, the loss making status quo and dim future of the company reflects the crisis faced by the Chinese online video market under the pressure of profitability.

After Ku6 Media merged with Hurray! Holding Co., Ltd. (Nasdaq: HRAY) under the aegis of Shanda in 2009, Li tried to increase investment in the company and boost its ranking in the Chinese online video market. His aim is to build Ku6 Media into an influential brand that could compete with Youku.com Inc. (NYSE: YOKU) and Shanghai Tudou Network Technology Co., Ltd.

When receiving interviews, Li reiterates the purchase of copyrighted contents, saying that Ku6 Media has different focus with its archrivals. Since the company is still behind Youku.com and Tudou in terms of market share, he hopes that it could leap forward through monopolizing the broadcasting of domestic popular TV operas.

However, Ku6 Media has not caught up with its archrivals as expected by Li. In 2010, the company recorded operating revenues of USD 16.6 million, far less than USD 58.7 million of Youku.com. Ku6 Media has failed to carry out Li's development strategy.

Although Ku6 Media has not fulfilled its target in terms of performance, its employees are still surprised at the resignation of Li. Although reiterating the advantage of Ku6 Media in copyrighted TV operas, Li has not neglected the media orientation of the company.

At the end of May 2010, at a small meeting, Li expressed his intention to build Ku6 Media into the largest online video media company in China, aiming to catch up with portals like SINA Corporation (Nasdaq: SINA) and Sohu.com Inc. (Nasdaq: SOHU).

However, although spending much money in buying the broadcasting right of 2010 FIFA World Cup in South Africa and Guangzhou Asian Games, Ku6 Media's operating revenues were still small in the same periods.

After Ku6 Media announced the resignation of Li, Chen Tianqiao visited the company's headquarters in Beijing this Monday and held a meeting attended by its top management. At the meeting, besides denying disagreement with Li, Chen proposed new development strategy for the company to follow the pace of US peer YouTube.

(USD 1 = CNY 6.57)

Source: www.thebeijingnews.com (March 16, 2011)

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