When the transaction was pending, Baidu replaced the head of YY live broadcasting, and vice president He Junjie took over the baton

Wen 丨 Gong Fangyi Li Xiaolei

Edited by Gong Fangyi

"LatePost" exclusively learned that Cao Xiaodong, who was sent by Baidu to be in charge of the YY business unit, no longer serves as the head of the department, and is replaced by He Junjie, the former vice president of Baidu and once responsible for Baidu's strategic investment. He will also report directly to Baidu's new CFO Luo Rong.

At the same time, Zhang Ying, former senior vice president of Huanju Group and current president of YY Live, is ready to leave. She is no longer visible in YY's internal office approval process. Previously, Jin Bing, CFO of Huanju Group, resigned in April this year.

In November last year, Baidu announced the acquisition of Huanju Group's domestic live broadcasting business (YY Live) for US$3.6 billion. However, the deal has so far not been approved by the State Administration for Market Regulation. The State Administration for Market Regulation said in its annual anti-monopoly law enforcement report that they are strengthening the anti-monopoly review of the concentration of business operators in Baidu's acquisition of Huanju Group in accordance with the law.

The pending transaction and various adjustments from the company to the industry during the period have put both parties to the transaction, especially Baidu, in an awkward position.

Baidu said in its 2020 annual report that it had called $1.9 billion of the acquisition to Huanju. The remaining US$1.6 billion is held in designated escrow accounts, subject to regulatory approval of the transaction.

It is not known what the consequences will be if the transaction is finally rejected. Qualcomm's $44 billion acquisition of NXP in 2018 failed to pass China's antitrust review, and Qualcomm abandoned the deal and paid NXP a $2 billion liquidated damages.

There is also the business and organizational structure that has been integrated. At the same time as the head of the business department is adjusted, YY Live will be merged and split into content ecology, live SDK, mobile phone YY, and interactive entertainment from the original three major business departments of entertainment, game and voice. The live broadcast entrance of Baidu products has been replaced by YY live broadcast.

Baidu's acquisition of YY Live is to diversify its business, and although its mobile influence is not as great as in the previous PC era, the number of people who use Baidu's mobile phone every month has exceeded 600 million before the acquisition of YY Live. It had hoped to double YY's live revenue within three years.

According to the materials disclosed by Baidu in the IPO prospectus to Hong Kong, from 2018 to 2020, the total revenue of YY Live broadcasting was 10.08 billion yuan, 10.72 billion yuan and 9.664 billion yuan, respectively. Net profit in 2020 is about 3.14 billion yuan.

But one YY mid-level executive told us that the three-year doubling goal of revenue "looks hard to achieve." He said YY's DAU and net profit are still growing, but this year's total revenue may be lower than Huya, and the advertising click-through rate (CTR) related to revenue is also declining.

Last year, Huya's revenue was about 10.9 billion yuan, compared with 8.54 billion yuan in the first three quarters of this year, an increase of 7% year-on-year. Its merger application with Douyu is now also waiting for approval from the State Administration for Market Regulation.

Finally, Baidu's own operating pressure this year is not small, on the one hand, its main business advertising revenue fell seriously, decreasing by 9.78% year-on-year in the third quarter; the revenue of iQiyi, which it controls, has risen, but its losses are also expanding, and cash flow is tight.