Tencent in talks to buy stake in video streaming rival iQIYI (report)

Tencent Holdings, majority-parent company of Tencent Music Entertainment, is currently in talks to acquire a stake in the largest video streaming service in China, iQIYI.

Nasdaq-listed iQIYI is known as China’s equivalent to Netflix. The company has a market cap of $14 billion.

Tencent has reportedly approached Chinese search giant Baidu, which owns a 56% share of iQIYI, to acquire an ‘as-yet undetermined’ stake in the latter company.

That’s according to a report published by Reuters today (June 16), citing people familiar with the matter.

Reuters’ report adds that  the “plans are at an early stage and subject to change”, and that potential deal between iQIYI and Tencent would see the latter company move closer “to becoming China’s dominant online entertainment provider”.

A part-acquisition of iQIYI wouldn’t be Tencent’s only headline-grabbing buy of late: earlier this month, Tencent, partly via Tencent Music Entertainment, acquired a 1.6% stake in Warner Music Group.

At the end of March, Tencent Video reported to have 112 million paying subscribers, while iQIYI claimed to have 119 million.

One of Reuter’s sources are cited as saying: “A tie-up would improve their bargaining power when producing and purchasing content, and lower marketing costs that would otherwise be spent on grabbing users from each other.”

iQIYI’s shares rose by as much as 38% following the publication of the report.Music Business Worldwide

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