Tencent subsidiary China Literature, China's dominant online publishing and e-book company, has bought Tencent Animation and Comics (TAC) for 600 million yuan (US$83.6 million). Tencent, among China's largest media conglomerates, is a majority shareholder of China Literature, holding 56% of shares, making this, essentially, a merger of subsidiaries.
Tencent Animation and Comics has been losing money for several years, including $26 million in 2021 and $15 million in 2022. It has been given a book value of $62 million, according to China Economic Review, making the purchase price generous.
China Literature and TAC have had a synergistic relationship in the past. Hou Xiaonan, CEO of China Literature, said, "China Literature and Tencent Animation and Comics share a rich history of collaboration which has yielded remarkable accomplishments. It is worth noting that approximately 50% of Tencent Animation and Comics' top 30 best-selling titles originate from China Literature's IPs." Among the most popular titles produced from stories that originated on China Literature are The Fox Spirit Matchmaker, The Outcast, and Spare Me, Great Lord!
It has been a long-standing business practice at China Literature to work with writers to further exploit their IP. An example is Tencent Pictures' Joy of Life, a story that originated on China Literature and is often referred to as China's Game of Thrones; Disney holds the rights to the story in the U.S., and it has already appeared in 27 regions and been translated into seven languages.
At the Frankfurt Book Fair, Xiaonan was interviewed by Ruediger Wischenbart, and noted at the time that the company was looking to be more aggressive and look for opportunities to grow its comics and animation business, alluding to the success of Korea company Naver's Webtoon and similar companies. "As with Joy of Life, when a story becomes popular as a movie or animation series, it brings consumers to the [China Literature] platform, because people who watch the series may have never read the original stories," Xiaonan said.
