‘Big Bang Theory’ Ban Sinks Sohu’s Stock: China Overnight
Sohu.com Inc. (SOHU) sank to a one-year low in New York after China ordered the Internet company to remove the U.S. television show “The Big Bang Theory” from its website amid a crackdown on content considered offensive.
Shares of Sohu tumbled 6.7 percent to $54.10 yesterday, extending a four-day plunge to 14 percent. The Bloomberg index of the most-traded Chinese stocks in the U.S. slipped 1 percent to 97.17. Youku Tudou Inc. (YOKU) slumped to the lowest level since August after a search for TV show “The Good Wife” on its website generated a message saying it couldn’t be found. Baidu Inc., China’s largest Internet search engine, slid 7.4 percent.
Sohu was ordered by regulators to remove the U.S. TV show from its website, Chief Executive Officer Charles Zhang said on a conference call yesterday, after the company reported sales that trailed estimates. Chinese video sites have been aggressively buying copyrights to licensed content to win advertisers and paying members as the country’s 618 million Web users search for entertainment. Shares of online companies sank last week as China closed 110 websites and planned to revoke two of Sina Corp.’s licenses as part of a crackdown on pornography.
“If you look at Sohu’s video platform, they’ve traditionally been known as one of the more popular sites for that Western content, the U.S. content,” Cheng Cheng, an analyst at Pacific Crest Securities LLC in Portland, Oregon, said in a phone interview yesterday. “That may be impacting” the stocks.
Sohu, whose rights only include online broadcasts, wasn’t given an explanation for the take-down directive and the show may return after a review of the decision, Zhang said. Jean Shao, a spokeswoman for Youku, declined to comment on China’s regulation of online videos.
China censors the Internet heavily, blocking websites including Facebook and deleting postings on microblogging services like Sina’s Weibo (WB) Corp. that it deems a threat to social stability. The government said this month that the official campaign against pornography will continue until November.
Twenty articles and four videos posted on Sina.com contained lewd and pornographic content, Xinhua News Agency said on April 24, citing a statement from the National Office Against Pornographic and Illegal Publications. The Web portal’s Internet publication and audio and video dissemination licenses will be revoked and the company may also face “a large number of fines,” the official news service reported.
Shares of Sohu also fell after the Beijing-based company reported first-quarter sales of $365.3 million, missing the average of eight analysts estimates tracked by Bloomberg of $366.9 million.
Youku slid 5.5 percent to $22.82. The stock fell even after Alibaba Group Holding Ltd. and its founder Jack Ma’s Yunfeng Capital agreed to buy a $1.22 billion stake in the video website. The deal will give Alibaba access to Youku’s customers as the country’s biggest e-commerce operator prepares for a U.S. initial public offering that could be larger than the $16 billion raised by Facebook Inc. in 2012.
Baidu sank to $150.93, snapping a two-day rally. Weibo Corp. plunged 8.8 percent to $17.51, approaching the $17 price of its April 16 IPO.
China Telecom Corp. gained 4.1 percent, the most since October, to $47.29. First-quarter net income rose 17.9 percent from the same period a year earlier to 5.55 billion yuan ($887.7 million).
The iShares China Large-Cap ETF, the largest Chinese exchange-traded fund in the U.S., declined 0.3 percent to $34.61. The Hang Seng China Enterprises Index (HSCEI) of mainland stocks traded in Hong Kong fell 0.3 percent to 9,770.10. The Shanghai Composite Index (SHCOMP) decreased 1.6 percent to 2,003.49.
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