Chinese search engine giant Baidu would acquire JOYY Inc’s video-based entertainment live streaming business in China for about $3.6 billion in cash.
The deal is expected to close in the first half of 2021 and would includes YY mobile app, YY.com website and PC YY, among others.
China’s Baidu reported third-quarter revenue above market expectations on Monday, as its video streaming service iQIYI added more paying subscribers and its search engine platform benefited from a recovery in ad spending by businesses.
The company said total revenue rose 1 percent to 28.23 billion yuan ($4.29 billion) in the third-quarter ended Sept.30.
The company said through the deal it aims to diversify its revenue source, the bulk of which comes from ad sales on its core search engine platform.
Baidu’s mobile ecosystem enables the fast growth of its non-advertising revenue by increasing log-in users and expanding offerings like membership, live streaming and online games, chief executive officer Robin Li said in a statement.
The company benefited from higher paid subscribers on Baidu’s video streaming service iQIYI IQ.O and a recovery in ad spending by businesses on its core search engine platform in the quarter.
As China’s economy gradually emerges out of the COVID-19 slump, ad spending by businesses have also picked up from their lows during the peak of the pandemic. In September, China’s industrial output rose faster than expected and retail sales gained.
The company said it expects current-quarter revenue to be between 28.6 billion yuan and 31.3 billion yuan compared with estimates of 28.98 billion yuan.
Subscribers for iQIYI touched 104.8 million in September and membership revenue rose 7% from a year earlier.
Baidu’s Netflix-like service is in the middle of a probe by the U.S. Securities and Exchange Commission related to accusations of inflating user numbers, revenue and the prices it pays for content by short-seller firm Wolfpack Research.