Yes, Alibaba’s Newspaper Deal Was Political

That news never made it into mainland China’s tightly- controlled media market. But SCMP, free from the strictures of government censors, is different, and that’s why there has been a lot of consternation over Alibaba’s (BABA) late Friday night announcement that it would buy the media company. On Monday, SCMP said the deal is worth $266 million.

This is not the same as Amazon.com (AMZN) founder Jeff Bezos buying the Washington Post, analysts have said. Alibaba is a mainland China-based company whose founder Jack Ma has acknowledged the importance of its relationship with the Chinese government, the same Chinese government that obsesses about improving China’s image in the world. For example, a study session of the Central Politburo in December 2013 focused on “prioritising the enhancement of national cultural soft power.” Enhancing soft power has been a fixation within the government for years and affected the editing of Hollywood films to the opening of Confucius Institutes around the world.

Alibaba’s executive vice chairman Joseph Tsai said in an interview with SCMP’s executive editor on Friday the deal directly related to Alibaba’s hope to change the country’s portrayal in the press, which would help enhance Alibaba’s. He said:

“Today when I see mainstream western news organisations cover China, they cover it through a very particular lens. It is through the lens that China is a communist state and everything kind of follows from that. A lot of journalists working with these western media organisations may not agree with the system of governance in China and that taints their view of coverage.We see things differently, we believe things should be presented as they are.”

Media watchers expressed wariness over the deal, as expected. Even investors criticized it, sending Alibaba’s shares down by 5.4% in New York after the announcement, because Alibaba is paying almost 12 times earnings for the newspaper, way more expensive than current values for other paper companies like News Corp. (NWS) and Gannett, the Wall Street Journal noted. (It is, however, a mere fraction of the 35 times earnings that Japan’s Nikkei paid for The Financial Times earlier this year).

But the real test will be in the coming years, when it will have to make hard choices balancing editorial freedom (and the commercial success that ought to validate it) with political correctness. Although the newspaper’s reputation has diminished over the past decade, SCMP is still a respected source among businesspeople, diplomats, and academics for uncensored news on China.

If coverage changes considerably under Alibaba’s ownership, the focus may turn from how much Alibaba wanted to change the image of China for its business to how much it wanted to change the image for its government.