The owner of Paramount Pictures, MTV, and Nickelodeon, Viacom, operates in China for at least a decade. According to people familiar with the matters, the Media giant Viacom is in negotiation to sell a majority stake of its operations in China after facing difficulties in doing business in the world' second-largest economy.
The source said that the New York Based company had discussed the potential stake sale with more than one Chinese company. The source also said that the negotiations involve the possibility of selling majority shares on the company's channel brands including MTV and Nickelodeon. Last year, Viacom also made a similar deal with Reliance Industries Ltd. It is a joint venture in which the Viacom sold its majority stake to Reliance.
The deal, despite the possibility of losing control, with a Chinese-based company might help Viacom gain profit while reducing potential business risks in the country brought by the continuing trade and political tensions between China and the United States.
Viacom's move follows the same trend as other large U.S. corporations which include McDonald's Corp. and Hewlett-Packard Co. that considered stake selling or exiting their operations in the country.
China's is the most promising market in the early 2000s for almost all leading international companies. Financial institutions and consulting firms gained a lot in coaching American businesses on how to be welcomed in the country. Since the trade war begun, many consultants advised companies on how to exit or restructure their businesses without risking much. Firms like the Morgan Stanley, JP Morgan Chase & CO. and other some other boutique firms in Asia are now advising companies to rethink their strategies in China.
Brent Carlson of consulting firm AlixPartners, a company that brings U.S. firms in China for almost two decades, said that the companies find that they need to restructure as the promise of turbocharged Chinese growth dissipates. The potential for growth in China's market is too big for other firms to ignore. However, the market is also gravely competitive and full of risky regulations. Aside from the competition in the market, U.S.-based company's growth in the country is also threatened by the trade conflict between China and the United States. According to Carlson, AlixPartners has now transformed into a business that advises companies on how to prune its operations while taking into consideration the current trend in China's market.
According to Lian Lian, Co-head of mergers and acquisitions for North Asia at JPMorgan, company's strategies in China are affected by the rise of domestic players, China's slowing economic growth, and the spread of e-commerce in the country.
