A user accesses YouTube on their mobile phone. (Photo: thegioididong.com) Hanoi (VNS/VNA) - Media group Yeah1 will sell its entire stake in theUS-based ScaleLab LLC following an incident with YouTube.
The move was to “protect the investment capitaland maximise the interests of investors,” Yeah1 said in its statement sent tothe Ho Chi Minh Stock Exchange (HoSE) late last week.
Yeah1 is listing nearly 31.28 million shares onHoSE with the code YEG. The company shares hit the daily declining limit of 7 percentin all five trading sessions of last week to plummet a total of 30.4 percent,ending the week at 170,600 VND (7.32 USD) per share.
After last week, Yeah1 has lost nearly 2.33trillion VND (100 million USD) in its market value.
The fall of Yeah1 shares started on March 4after YouTube said it would terminate its Content Hosting Agreement (CHSA) withsubsidiaries and associates of Yeah1 at the end of this month, includingScaleLab LLC and Thailand-based SpringMe Ptd Ltd.
In a statement sent to Yeah1, YouTube saidSpringMe, in which Yeah1 has nearly 17 percent stake, had violated YouTubepolicies in selecting and managing channels and videos.
Therefore, the statement said, YouTube had toterminate its entire agreement with Yeah1’s subsidiaries and associates thatare running YouTube Adsense-based business activities.
CHSA is considered the licence for those mediacompanies to make earnings from third-party businesses that run ads on thechannels.
According to some securities firms, if Yeah1 isunable to reach an agreement with YouTube to resolve the issue, ScaleLab andSpringMe will no longer be allowed to manage third-party advertisements.
Therefore, Yeah1 will have to deduct thethird-party income from its financial statement, particularly ScaleLab as mostof the US-based firm’s revenue comes from managing third-party advertisements.
In addition, Yeah1 may have to suffer a 12million USD loss for making investment in ScaleLab, which will require theVietnamese firm to make a provision out of its revenue this year for theinvestment.
Thus, the decision to split with ScaleLab mayindicate Yeah1’s failure to reach the best agreement with YouTube to resolvethe problem.
After the incident and the sharp decline ofYeah1 shares, its management board registered to buy 700,000 shares on themarket to boost the company share price.
In 2018, Yeah1 recorded a total revenue of 1.66trillion VND, up 97 percent year on year. Its post-tax profit gained nearly 120percent year on year to 180 billion VND.
The YouTube digital business and digitalpublication divisions recorded a large yearly earnings growth of 93 percent.The two divisions contributed 55.6 percent and 88.6 percent of revenue andpost-tax profit for Yeah1 in 2018.
Yeah1 bought ScaleLab for 12 million USD inearly January 2019. In addition, Yeah1 will pay former owners of ScaleLab extra8 million USD depending on the firm’s performance in the future.
In 2017, ScaleLab earned 27.3 million USD inrevenue and its 2018 figure is expected to rise 15-20 percent year on year. Itsrevenue from 2019 is forecast to increase 20-25 percent per annum.-VNS/VNA
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