Focus Media Restructuring to Pull Down Q3 Revenues
Sina Tech, 10/19/09
Jason Jiang, CEO of Chinese digital media and Internet advertising operator Focus Media (Nasdaq: FMCN), has said that the company's restructuring of its low-profit secondary business operations, which will involve five or six of the company's subsidiaries, is expected to be complete in the fourth quarter. As the businesses involved in the restructuring will no longer be listed in the company's fiscal reports, Focus Media's Q3 2009 results are expected to show a downturn.
The restructuring will primarily affect non-primary business operations, especially the company's online advertising and traditional out-of-home billboard advertisement businesses. Focus Media's advertisement businesses currently cover six major areas: LCD ad displays in commercial buildings, video ads on terminals in shopping locations, ad frames in residential elevators, internet advertising, in-theater advertising and traditional outdoor ads.
Focus Media had previously acquired a number of online advertising companies by paying in installments, and has already paid the first installments on the acquisitions. "No further cash will be paid that has not already been paid on these acquisitions," said Jiang. "The value of the first installments will become equity, such that Focus Media will remain a small shareholder in these companies." Jiang said that the company will retain a controlling stake in its core internet subsidiaries such as Allyes AdNetwork and iResearch. According to estimates by a source close to Focus, the company will save USD 50-100 mln in expenses through the above measures.
Jiang said that company's future strategy will be to focus on three major core businesses: commercial buildings, frames and shopping location terminals. Focus Media will not make acquisitions in these areas, but rather develop them organically. The company also plans to increase coverage for these three advertising media in third- and fourth-tier cities.
Jiang further denied recent rumors of the company's acquisition of a 51% stake in China Mobile's (NYSE: CHL; 0941.HK) 12580 informational service. Jiang said that Focus has no plans to re-enter the wireless advertising business.
Keywords: corporate restructuring mobile advertising Jason Jiang Focus Media strategy television online advertising Q3 2009 FMCN out-of-home display
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