Since the end of last year, LeTV has been experiencing quite a rollercoaster ride, much like a TV drama filled with twists and turns. Starting with capital chain issues and supplier payment disputes, followed by the setbacks related to its North American automobile factory, the company has recently faced further turmoil involving personnel changes, frozen funding, and institutional divestments. These challenges have led to widespread rumors about LeTV's potential downfall, and the company's grand ecological vision seems to be crumbling along with its sub-economy.
Recently, reports have surfaced suggesting that PPTV might be considering acquiring LeTV's TV business. In my view, selling to PPTV would essentially be a form of asset trading. For such a transaction to occur, several conditions must be met: one party must be willing or compelled to sell, the other must be willing to buy and have the financial capability to do so, and both parties should benefit mutually from the deal.
From LeTV's perspective, the possibility of selling seems plausible. LeTV, once a pioneer in the realm of Internet TVs, dominated the market but has since faltered. According to data from the "Global TV Brand Shipment Monthly Data Report" by AVC, shipments for Internet TV brands have plummeted, with May's figures reaching only one-sixth of the same period last year.
At the end of last year, LeTV encountered significant financial difficulties. Various recent developments highlight LeTV's declining fortunes. Foxconn affiliate Shenzhen Guanding has withdrawn from LeTV's new shareholder series, meaning Foxconn will cease processing for LeTV. This has severely impacted LeTV's production capabilities. Additionally, the acquisition of Vizio failed, relations with TCL remain strained, and LeTV has struggled to maintain its sports copyright payments, including those for the AFC Champions League and other major sporting events.
On the manufacturing side, LeTV's initial three factories have been consolidated into one, with stringent demands placed on this remaining factory. Only when LeTV pays its debts can it receive products from the factory. Statistics show that LeTV has incurred over RMB 1.7 billion in losses since its inception, with 2016 alone seeing a loss of RMB 6.35 billion. The more LeTV sells, the deeper it sinks financially.
Moreover, LeTV has lost the trust of its users. Data from the "Global TV Brand Shipment Monthly Data Report" reveals that LeTV's position as a leader in the market is waning. Users are hesitant to purchase LeTV TVs due to concerns over after-sales service and content updates. This lack of trust suggests that LeTV's TV business could collapse at any moment. Given the current financial strain and loss of user confidence, LeTV's situation appears dire.
Sun Hongbin's arrival at LeTV marked a shift toward separating the listed and non-listed systems. Non-listed entities like LeTV Sports and Easy Access follow the principle of "selling what can be sold, cooperating where possible." Recent news indicates that LeTV has lost its status as a major shareholder and was transferred to Suiyun Capital Holdings. This marks the beginning of Sun Hongbin's restructuring efforts, and it's unsurprising that these changes have extended to LeTV.
Turning to the rumored buyer, PPTV, can they afford such an acquisition? PPTV began as a video streaming site and has expanded its content offerings to include sports, entertainment, and gaming. It holds exclusive media rights to popular sports events like La Liga, Premier League, and the Chinese Super League, covering 90% of major sports events. PPTV also boasts a robust library of film and TV resources.
After venturing into hardware, PPTV's TV business gained momentum, supported by Suning, which provided a strong market foundation. Third-party monitoring data shows that despite a 31.5% year-on-year decline in Internet TV retail sales this year, PPTV TVs maintained a slight growth due to Suning's extensive offline presence.
For Suning, expanding into appliance manufacturing aligns with its long-term strategy. Whether through PPTV's TV ventures, Whirlpool's air conditioning initiatives, or Fideo's kitchen appliances, Suning aims to build a comprehensive retail ecosystem. With LeTV's current struggles, Suning sees an opportunity to stabilize the market while maintaining a strategic investment stance.
PPTV's ambitions extend beyond mere acquisition. Its open strategy aims to leverage over 10 billion yuan worth of IP content, integrating smart TV resources to rapidly expand its market reach. This mirrors Google's Android system, which attracted numerous manufacturers. PPTV seeks to establish itself as a dominant platform in the smart TV industry.
In terms of compatibility, PPTV and LeTV share similar models, both pursuing a "hardware + content + service + e-commerce" approach. Such a merger would allow PPTV to strengthen its position while providing LeTV users with enhanced services.
Ultimately, a successful acquisition would benefit all parties. LeTV would gain much-needed funds, PPTV would expand its user base, and users would enjoy improved content and services. While the acquisition remains speculative, the potential for such a deal is evident. We'll have to wait and see how this unfolds.
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