Shanda Interactive Entertainment has added online video to its growing digital media empire through the acquisition of Ku6.com, the Chinese version of YouTube. This is Shanda’s first acquisition in the online video market, and coincides with its tenth anniversary.

Ku6 will keep its name and become a subsidiary of Hurray! Holdings, the mobile content company Shanda bought out in mid 2009. It engaged legal advice from long-term legal advisor, Han Kun, which also advised the company on its first and second round of venture funding in 2007 and 2008.

“We believe we will have more opportunities to achieve synergies going forward and we are well-positioned to capture opportunities in the fast-growing Internet and media market in China,” said Qu Haibin, the acting chief executive of Hurray!

In June last year, Ku6 became the first privately-held video portal to receive a license for Internet broadcasting audio-visual programs, issued by the State Administration of Radio, Film and Television (SARFT). “The license is governed by very strict regulatory guidelines, making it very difficult for media companies to attain the rights,” said Charles Lee, a founding partner of Han Kun. “While media companies were mostly raising funds in the past, these companies have now resorted to acquiring businesses which already have existing licenses issued by SARFT.” He also said that the firm is currently dealing with an influx of media company M&As.

Davis Polk has also worked with Shanda recently and was engaged to provide advice on the acquisition of Hurray! The firm is now assisting with the Ku6 acquisition. Shanda’s general counsel Thomas Yih told ALB earlier this year that the in-house team foresaw more transactions. “We expect the next couple of years to continue to be very busy as the company continues to expand its platform,” he said.

Prior to the acquisition of Ku6, Shanda also set up a joint venture with Hunan Broadcasting and Television Group to invest US$88m to produce online movies and television series. This follows the spin-off and IPO of its games unit, Shanda Games. Recently, the company also acquired game developer Zona, network game platform Haofang, online game company Gametea, and literature platforms Qidian and Hongxiu, in its bid to dominate China’s online entertainment markets.

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