Shareholders approve Youku-Tudou merger

The greenlight for the merger will allow both companies to drive down costs in areas such as copyright, bandwidth, and server purchases, but "synergies" will need to be quickly achieved to boost bottomlines.
Written by Kevin Kwang, Contributor

The merger between China's top two video streaming service providers--Youku and Tudou--has been given the greenlight by shareholders, which promises to bring down operational costs once the new entity achieves the right "synergies".

According to a China Daily report on Tuesday, the decision to form Youku Tudou was finalized after shareholder meetings held on Monday. This came after similar approval was given by the United States Securities and Exchange Commission (SEC), it noted.

In terms of how the new entity will run, Victor Koo, Youku Tudou's chairman and CEO, said in the report the two Web sites will go in different directions by having different brand positioning, self-produced video content, and styles. Other departments such as public relations and IT will be combined though, he added.

Liu Dele, Youku's president, noted in the report the merger will drive down costs in areas such as copyright, bandwidth, and server purchases. At the same time, it will increase competitiveness once the companies' resources are shared.

"The faster we achieve synergies, the quicker we can break even," Liu told China Daily.

Youku had reported a net loss of 62.8 million yuan (US$9.9 million) while Tudou posted losses of 154.7 million yuan (US$24.4 million), due to rising costs for Internet bandwidth and content, the report noted.

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