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Rumor: Ku6 Spins Off Interactive Entertainment Division

Sina Tech, 9/14/11

Shanda Interactive's (Nasdaq: SNDA) online video subsidiary, Ku6 (Nasdaq: KUTV), has reportedly spun off its interactive entertainment division to be operated by audio-production subsidiary Radio-Arts under the "Bale" brand. Ku6 VP Yao Jianjiang will serve as CEO of the new company, according to an industry source. Radio-Arts has received approximately RMB 60 mln in investment from sibling companies Sunshine Media, Shanda's video licensing and distribution subsidiary, and Shineshow, a film and TV production JV of Shanda and Hunan Broadcasting System predecessor Golden Eagle Broadcasting System.

Bale.cn launched early this year as an entertainment platform showcasing Ku6's self-produced entertainment and new media video content. Following adjustments to Ku6 strategy and senior management over the past six months, Shanda will develop Bale as a new brand independent of Ku6.

A Shanda employee said that Shanda had opted to merge Radio-Arts, a subsidiary acquired through Hurray, with Ku6 to produce audiovisual content, but that the service's performance was lackluster, recently leading Shanda to lay off all Radio-Arts employees. While the company is now an empty shell, Shanda believes that the Radio-Arts brand has value, so will reverse course, splitting Radio-Arts off from Ku6 and developing it along with Bale. Bale staff have already moved out of Ku6's offices, and now work in the same building as Sunshine Media.

Sunshine Media has reportedly invested a total of RMB 40 mln cash in Bale in exchange for a 40% share of the company. Shineshow invested RMB 20 mln for a 20% stake.

Previous rumors had said that Sunshine Media would acquire Radio-Arts, but a Shanda employee said that following the new restructuring, Sunshine Media would be the company's controlling shareholder, with Sunshine distributing Radio-Arts' self-produced content. Shineshow, which focuses on producing and filming film and television content, will be another source of content.

When contacted, Ku6, Sunshine Media, Shineshow, and Yao Jianjiang all declined to comment on the rumor.

Editor's Note: For more information on this topic, please see "Ku6 Launches Video Channel Aimed at Young Women," MD 2/23/11 issue.

Keywords: Bale corporate restructuring content production Shanda Yao Jianjiang Internet investment online video Ku6 SNDA Hurray Shineshow Sunshine Media Radio-Arts KUTV HR Hunan Broadcasting System

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