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China's Baidu to Pay $370 Million for Internet Video Business

2013-05-09 09:02:12        Chinese Films

Baidu, China's biggest search engine company, announced on Tuesday that it would pay $370 million for the online video business of PPStream.

Baidu, which is listed on the Nasdaq, said it planned to fold the PPS Internet video business into its iQiyi unit, an advertising-supported online television and movie portal, to form what it said would be China's largest online video platform by number of mobile users and video viewing time.

The announcement of the Baidu deal came a week after Alibaba, one of China's biggest Internet firms, agreed to pay $586 million for an 18 percent stake in Weibo, a leading Twitter-like microblogging service in China that is owned by the Nasdaq-listed Sina Corporation.

PPStream, a Shanghai firm that operates the popular PPS.tv domain, is a leading online broadcaster of television shows and movies in China. It distributes content via desktop PCs and mobile apps.

Baidu's own online video business, iQiyi, was originally launched as Qiyi in 2010 with backing from the private equity group Providence Equity Partners, based in Providence, R.I. Baidu bought Providence Equity's stake for an undisclosed sum in November.

Acquiring the video business from PPS will increase Baidu's position in China's fractious market for online entertainment and help iQiyi compete better against Youku Tudou, the country's leading Internet television company. Youku Tudou is listed in New York and was formed in August after the completion of the merger between Youku Inc. and Tudou Holdings.

"The merger of iQiyi and PPS's online video business is a major step toward consolidation in the industry," Gong Yu, the chief executive of Baidu's video unit, said in a statement. Combining the two under Baidu's ownership will provide better content to users and offer more options to advertisers, Mr. Gong said.

Baidu said that after the deal, Mr. Gong would remain as chief executive of iQiyi. He will be joined by Zhang Hongyu, the founder and chairman of PPS, and the PPS president, Xu Weifeng, both of whom will serve as co-presidents in the merged online video unit.

Baidu said the transaction was expected to close in the second quarter of 2013.

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