LeEco Shares Settle After Sale by Major Stakeholder, Loss of Soccer Rights

(Beijing) — Shares of embattled online video operator LeEco stabilized on Monday, halting a two-day rout that saw them lose nearly 10% of their value on the dumping of stock by one of its largest stakeholders and new woes at its sister sports division.

At the same time, LeEco also issued a statement clarifying its commitment to the India market on Monday after media reports surfaced saying the company was making major cuts in the country in possible preparation for a withdrawal.

The publicly traded LeEco is just one component of a much-larger company with many parts, most of them still privately held and involved in enterprises as diverse as sports broadcasting, smartphone manufacturing and new-energy car production. But the publicly traded firm has become a bellwether for a company now facing a cash crunch due to its breakneck expansion into a wide range of geographies and new product areas over the last two years.

LeEco shares closed slight higher at 32 yuan ($4.64) on Monday after tumbling over the previous two days. The stock is down nearly 30% since November, when reports first emerged that it was have trouble repaying some of its suppliers.

The latest selloff came as China Bridge Capital, one of LeEco’s biggest shareholders and a strategic partner, sold nearly 20 million of the company’s shares on Friday for about 634 million yuan, according to data from Wind. Those sales followed China Bridge Capital’s sale of another 8.2 million LeEco shares in January, raising 320 million yuan.

China Bridge Capital released a statement over the weekend stating why funds sometimes reduce their positions in companies, but without directly addressing the LeEco-share sale. China Bridge added it is still confident about LeEco’s future development, and noted the pair still cooperates in many areas.

Meantime, retailing giant Suning Commerce Group Co. Ltd. said it had won exclusive new-media rights to broadcast 2017 regular season games from China Super League, the nation’s premier soccer league. That appeared to show that LeEco’s sports arm, LeSports, had lost the rights to broadcast those games, which was part of a five-year deal that it signed a year ago.

A source close to the deal told Caixin that Suning, which will broadcast the games over its PPTV online video service, paid about the same as the 1.35 billion yuan that was part of LeSports’ winning bid for that part of its five-year deal.

LeSports’ loss of the China Super League rights came just a week after it was stripped of similar rights to broadcast Asian Football Confederation (AFC) Champions League games in China. LeSports had previously signed a four-year, $100 million deal in 2015, winning exclusive rights to transmit all AFC Champions League games in China between 2017 and 2020.

Both deals were part of a spending spree that won LeSports a slew of broadcast rights, both exclusive and nonexclusive, to competitions including the Chinese Super League, the National Basketball Association, Major League Baseball, and the English Premier League (EPL).

As those negative developments circulated, LeEco stepped in to counter other media reports saying the company had laid off 85% of its local staff in India and might be preparing to abandon the market.

“India is one of the most important strategic markets for LeEco and hence there’s no exit plan,” LeEco said in a statement on Monday. “Now LeEco India has shifted its strategy from fast market expansion to focusing on healthy and sustainable growth, which is a natural adjustment in terms of cadence, tactics and operations.”

LeEco said the media reports, which cited unnamed sources, had failed to include “this important context and hence delivered misleading messages to the market and our users.”

“The current workforce in India is well-aligned to the expected scale of operations and is in line with industry benchmarks,” LeEco said. “Moreover, LeEco India has a robust R&D team working for India as well as for LeEco globally, as R&D function has always been a high priority for the company’s long-term business goals.”

Contact reporter Yang Ge (geyang@caixin.com)