Yidao changes ownership, LeTV's credibility crisis deepens

On the afternoon of June 28, Jia Yueting, the founder of LeEco, said at LeTV's 2016 shareholders' meeting that funding was more difficult than last year. He also said that "listed companies will go through a short adjustment period, and non-listed companies need a big reversal." As soon as he finished speaking, the first to experience the "reversal" was Yidao.

On the evening of June 28, Yidao issued an announcement stating that the company had recently changed its controlling shareholder and a new controlling shareholder had entered. LeTV is no longer the controlling shareholder of Yidao, and the original management team continues to be responsible for the management, operations and other matters of Yidao.

Internet analyst Liu Huafang said that the credibility crisis and equity changes caused by the black hole of funds and split operations of LeEco are continuing to ferment. For LeEco, the reason behind no longer holding Yidao is the funding problem. Even if the current funding problem is solved, the subsequent development funds cannot support the development of Yidao. According to the information disclosed by the shareholders' meeting, LeEco has not yet obtained the subsequent funding support from financial institutions, and most of them are still waiting and watching.

LeEco's credibility crisis destroyed Yidao's value

In October 2015, LeEco purchased 70% of Yidao's shares for $700 million and became the controlling shareholder. However, after LeEco took over, there were conflicts in corporate strategy and philosophy with the original founding team. In April this year, Zhou Hang, the founder and former CEO of Yidao, issued a public statement calling on LeEco to properly handle the Yidao problem, saying that the most direct cause of Yidao's problems was LeEco's misappropriation of 1.3 billion yuan of Yidao's funds, which triggered a war of words between the two sides. In the end, Zhou Hang and the other three founders of Yidao resigned collectively.

Yidao said in its announcement that it plans to hold a media communication meeting on July 4 to make public explanations on specific matters. Regarding the rumor that the new controlling shareholder will be Shouqi or Ping An of China, Yidao responded to the reporter of the "Daily Economic News" that it would not comment on the above rumors and all matters would be subject to the announcement.

To some extent, the change of controlling shareholder can be regarded as a "new progress" after the founding team of Yidao had previously challenged LeEco. Independent Internet commentator Hong Bo said in an interview with the Daily Economic News that although LeEco is no longer the controlling shareholder of Yidao, the "devastating blow" caused by LeEco's holding of Yidao for about two years will continue for some time.

Regarding the impact from LeEco, Hong Bo further pointed out, "The driver was bitten by a snake once, and he will not easily trust this company again. Although the former major shareholder did not pay back the money, I (the driver) did not know. I only knew that Yidao owed me money and did not pay it back. After getting the money, I ran away as far as I could. From an outsider's perspective, Yidao's value has actually been destroyed."

Crazy expansion sows the seeds of credibility crisis

The story of LeEco's "ecological reversal" has always been the driving force behind LeEco's high valuation. The industry and capital markets have been influenced by this and are looking at LeEco's prospects not just from LeEco.com, but from its sub-ecosystems including smartphones (LeEco Mobile), smart TVs (LeEco Zhixin), electric cars, and LeEco Sports.

However, as time goes by, Jia Yueting, who has slowly left the center of LeTV, is watching the myth he created fall. One month after Sunac China injected funds into LeTV, in May this year, LeTV founder Jia Yueting chose to resign as general manager of LeTV.com, but in June, LeTV suffered a concentrated debt crisis.

"When the capital market environment was better, we received more financial support and all business lines developed very well. After the environment deteriorated, our three major business segments are currently under too much financial pressure." Jia Yueting said at the above-mentioned shareholders' meeting that the funding problem of the non-listed system is far more serious than we imagined. In the past few months, we have seen that the funding problem is more serious than last year. We originally thought that 9 billion yuan could solve all problems, but in the end we made certain mistakes and it was still not enough to solve the funding problem.

The LeTV Super TV segment, which is regarded by the industry as LeTV's most high-quality business, has also been affected by the pursuit of profitability, which has affected its development pace. At the shareholders' meeting, Liang Jun, general manager of LeTV.com, said that LeTV's offline channels have brought a lot of achievements to the company, but there are also some problems. Since the first half of this year, LeTV TV has seen negative growth.

Previously, LeEco had painted a big enough pie for franchisees in the channel retail system. In early April 2017, a reporter from the Daily Economic News visited Huaqiangbei in Shenzhen and learned that only one of LeEco's five stores in Huaqiangbei remained.

Lack of money is not a terrible thing, what is terrible is losing hope. The irrational expansion in the past few years has planted the seeds of LeTV's credibility crisis. Now that LeTV has lost the support of financial institutions, it is gradually drifting away from its supply chain, channel and other partners.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.