LeTV shares suspended after reports it cooked the books


SHARES of Shenzhen-listed LeTV.com were suspended from trading today after reports said the company fudged several key financial statistics.

The Shenzhen Stock Exchange said in a statement that the company will make a clarification in response to the media reports.

Capital Week said in a 12,000-word report released on Friday that a series of LeTV's key figures, including its advertising income and the number of licensed movies and TV series, failed to match market research results.

The report quoted financial figures from some of LeTV's largest advertisers and questioned how it could make money in the face of fierce market competition while most of the major players in the market are reporting losses.

LeTV later said in an e-mail statement that Beijing-based Capital Week's report didn't hold ground and its research methods didn't take into account its licensed content that is only available to its paid subscribers.

LeTV added it retains the right to pursue legal action against Capital Week.

LeTV is the only video website listed on the domestic stock market. In 2011, its revenue more than doubled to 599 million yuan (US$94.9 million) and profit jumped 87 percent to 131 million yuan. Redistribution of licensed content contributed about 59 percent of its income and online advertising revenue made up around 19 percent.

LeTV was listed on Shenzhen's Growth Enterprise Market in August 2010, before Youku and Tudou, two of the leading players in the domestic market, went public in the US.

After raising 680 million yuan from its initial public offering, LeTV spent most of its capital buying licensed TV series and movies and then redistributed it to other online video streaming sites.

It accounts for 5.8 percent of China's 1.69 billion yuan online video market in the fourth quarter last year, according to Beijing-based research firm Analysys International.


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