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China’s LeTV to Fire 10% of Sports Staff as Financial Woes Resurface

Variety logo Variety 12/7/2016 Patrick Frater
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LeEco, the Chinese entertainment and technology group, is to lay off about 10% of the staff in its LeSports sports division, according to reports.

The group (also known as LeShi) voluntarily sought suspension of its shares on the Shenzhen stock market Wednesday, pending an important announcement. It is not clear if the announcement is connected to the sports division. LeEco shares had fallen 8% on Tuesday.

LeSports provides streaming video and also organizes events and is believed to employ roughly 1,000 people. Earlier this year it grabbed a five-year deal giving it global rights to soccer coverage from the China Super League.

China’s Global Times said that the group will scale down the sports division, but will not change the unit’s business strategy.

A company spokesman told Reuters that staff at the sports division will be reduced and the unit reorganized. A LeEco spokesman has not responded to Variety’s messages.

At the end of October, the LeEco parent company revealed severe financial problems that it admitted had resulted from a dash for growth through acquisitions and an over-expansion into new business areas. The group stretches from film production and distribution, through smart phone manufacturing and into electric cars.

The cash crunch prompted co-founder Jia Yueting to cut his own salary to $0.15 (RMB1) per month. He said it was a symbol of his commitment to righting the group’s finances. Less than a month later, the company reported that it had raised some $600 million of capital from private sources.

The sports division had raised significant amounts of capital separately from the rest of the group. In April LeSports announced that B Series funding of RMB8 billion, making it one of the few startup companies per year to raise more than $1 billion in a single funding round. It said that the investment round attributed a valuation of $3.13 billion (RMB21.8 billion) to LeSports.

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