Research On Merger Motivation And M & A Performance Of Network Video In China

Driven by the trend of the times, the Internet is developing continuosly.At the same time, the network video ushered in the development of period of the golden age. Video website is one of the fastest growth enterprise during the Internet industry in recent years. Although the market scale of network video industry is expanding steadily, the development isn’t going smoothly.For example, the industry entry threshold has been increased again and again. The venture capital seceded during the global financial crisis.What the most prominent is that the government regulations about content-protection was issued six years ago, the regulations make the construction of copyrighted content in the industry generally strengthened. On the one hand,high copyright royalties brings about high operating costs.On the other hand,the benefit is reducing constantly because the advertising revenues is shrinking. In the cut-throat video industry, in order to solve the dilemma, grab market share through injecting significant capital has become the best choice.As a result, the entire industry is in the operation deficit predicament, both money problems and profit problems have become a very big trouble.In order to achieve economies of scale and alleviate the pressure of competition, M&A events occur frequently between network video enterprises. In March 2012, the " winner" and " second " of the market share in China’s video industy are Youku site and Tudou site respectively, which announced a merger. The way of merger is 100% stock exchange merger.A year later, in May, not only Baidu acquired PPS video business, but also made its subordinate-iQIYI merger with PPS. Later, Suning Appliance made an alliance with Hony Capital, purchased of PPTV 74% stock.Since then, M&A tide of China’s online video industry has been opend in an all-round way.Whether network video enterprise can get rid of the plight of long-term losses by merger integration has always been a hot topic in the academia. At the same time, what is the reason that China’s online video companies mergers and acquisitions?How about M&A performance of China’s online video?Based on the above several issues, the author analyzes the motive of numbers of mergers and acquisitions in the industry from two aspects:one is the development of the whole network video industry;second is the whole industry’s competition situation. On this basis, the author selected the two leading enterprise in the industry of network video-Youku and Tudou as the M&A case, analyzed M&A motives through linking work at selected spots with that in entire areas. Focusing on the impact of the M&A performance between Youku and Tudou, I analyzed from the perspective of short-term and long-term, and used two analytical methods:one is the event-study analysis;the second is the principal component analysis (pca). The results show that in the short term, for stock holders, the M&A created a positive value for shareholders;From a long-term perspective, the acquisition has been made the performance of Youku rise steadily. But due to several factors such as high operating costs, mergers and acquisitions cannot fundamentally reverse the situation of long-term and overall loss on network video enterprise, the existing profit pattern of network video enterprise still needs to be changed. Finally, through the analysis of this article, achieve the research conclusion and acquire the enlightenment for the future development of network video enterprise, hope to provide some theoretical guidance and practical advices to network video enterprises who are or will be involved in mergers and acquisitions.