Hong Kong tycoon Richard Li to sell HKEJ publisher to PCCW for US$9 million
Hong Kong tycoon Richard Li Tzar-kai is reshuffling his assets again, this time by selling his personal interest in the publisher of Hong Kong Economic Journal to telecommunications group PCCW for HK$70 million (US$9 million).
PCCW, in which Li controls a 31.8 per cent stake, will buy the HKEJ publisher Clermont Media from an offshore trust company in which he is the settlor, according to a stock exchange filing on Tuesday. Li expects to capitalise an undisclosed amount of his loans to the publisher in the transaction, ending his direct interest since he took control of the publisher in 2006. The original cost of the acquisition was stated as US$38.5 million , according to the PCCW filing.
The South China Morning Post, owned by Alibaba Group Holding, competes directly with the Hong Kong Economic Journal. The sale will end almost two decades of Richard Li's direct interest in the publisher of the Hong Kong Economic Journal. Photo: Edmond So
The price tag was based on a multiple of 0.69 times revenue, using the average ratio of 0.64 times from three unnamed Hong Kong-listed industry peers, the filing showed.
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The city's independent news sector, from journalists to media outlets, including HKFP, has also faced simultaneous tax audits since November 2023. In a statement, HKFP said it was cooperating with the probe, whilst withholding donor names, having always paid tax in full and on time. According to the Hong Kong Journalists Association (HKJA), which broke the news in May, the situation reflects a worsening press freedom environment. According to the Inland Revenue Ordinance, the government can conduct tax audits on any company, said Kenneth Leung, an accountant, tax adviser and former legislator. 'Even if the tax was already assessed back then, the IRD can probe assessments over the past seven years, or the past 10 years if any fraud is suspected,' Leung said in Cantonese. The IRD may also conduct tax audits if the authority is tipped off about suspected tax avoidance or understatement by any companies, he added. 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'Among all the different government departments, the IRD is the one I fear the most because, with its scope and investigative capability, it can be really disconcerting.' Over the past one and a half years, her business has had to spend extra budget and manpower to deal with requests from the IRD. Other independent bookstores and publishers told HKFP that they had similar experiences with the IRD's tax audits: Investigations began with the companies' financial reports, and later focused on the directors' personal accounts. Jimmy, a director of an independent book publisher that has been operating for over eight years, said that the IRD's probe started in late 2024. The tax authority first inspected the company's financial reports dating back seven years, then asked him about around five dozen transactions in his personal bank accounts from as far as six years ago. 'I really can't remember the transactions from six years ago. Therefore, I had to reply to the IRD that I could not remember,' Jimmy told HKFP. His tax audit is still ongoing. Meanwhile, Hazel, a director of an independent bookstore that also publishes its own titles, said her company's tax audit was completed after it was fined 'a small amount of money.' 'Obviously, we didn't feel comfortable during this process,' she recalled. 'We feel that our sector has been targeted. We were worried about what we could do if our bank accounts were frozen by the authorities.' She added: 'Books and the publishing sector make so little profit. Shouldn't the government introduce tax incentives to support this cultural industry?' 'Greetings' Apart from tax audits, some independent bookshops and publishers face frequent inspections from various government departments, which those in the sector call 'greetings.' Since Hunter Bookstore's opening three years ago, the Food and Environmental Hygiene Department (FEHD) has made 35 visits to the bookstore or to other venues where it organised activities, according to the bookshop's records. For most of the visits, the FEHD said they were following up on reports alleging that Hunter was hosting events without the Temporary Places of Public Entertainment Licence. 'They keep giving us warnings, but no prosecution has been made so far,' Wong said. Hunter also received 'greetings' from the Hong Kong Police Force; the Fire Services Department; the Companies Registry; the Books Registration Office, under the Leisure and Cultural Services Department; the Buildings Department; and the Labour Department over the past three years. Jimmy said his publishing company's office also received 'greetings' from various government departments, including the Fire Services Department, the Environmental Protection Department, and the Companies Registry. Louis told HKFP that his bookstore was visited by staff from 10 different government departments within 15 days, from December 2023 to January 2024 – during what he called 'a peak period of 'greetings.'' 'They are still inspecting us when we host any activities. Most of the visits came from the FEHD and the Fire Services Department,' he said in Cantonese. Wong of Hunter Bookstore told HKFP that inspections by various government departments took an emotional toll and caused psychological stress. And, as the operator of a small business, she does not have a thorough understanding of all the laws and regulations, she said. 'It seems that we're incapable of fully obeying the laws because we do not understand all the details of laws and regulations,' the bookshop owner said. As Hunter Bookstore is still awaiting further responses from the IRD about its tax audit, Wong continues to run the bookshop. From late May to mid-July, it held an exhibition titled 'Confronting Fear.' Among the exhibits Wong selected were documents the bookshop received from various government departments related to different types of inspections, and a calendar marking all the 'greetings' from authorities.
