Dr. Anita Leung Fung Yee, CEO of QJY said, "QJY is one of the very few foreign companies which are able to acquire exclusive advertising rights to a channel of a mainland TV station. Benefiting from the open policy and the CEPA, QJY is one of the foreign media services companies which have taken the lead in directly operating advertising businesses of a mainland TV channel."
Dr. Leung explained that the airing time of the Film/TV Drama Channel of Hubei TV Station is 18 hours a day, which are totally devoted to broadcasting films and TV dramas. Total advertising airtime amounts to 156 minutes per day and the annual advertising value calculated at the standard rate is up to RMB 700 million. As the owner of exclusive advertising rights, QJY has absolute discretion on the pricing, discount and strategies of the Channel's advertising operations. QJY is also entitled to all sponsorship and advertising incomes, tangible or intangible, of the Channel.
QJY's acquisition of the exclusive advertising rights to the Channel also includes the exclusive rights of promotion and public relations activities. It has the right to plan and organize PR activities relating to the films and TV dramas broadcast on the Channel such as the singing competition of theme songs of those programmes. The revenue generated from sponsorship and mobile phone voting also goes to QJY.
On 28th January, 2007, the Channel will launch a brand new TV package including "Show Good Theatre" which will give out free gifts to audience every day, and "Family Cinema" which will invite local and overseas movie/TV stars to Wuhan to meet with fans every month and to participate in charity activities. Moreover, lucky draws in the "Classic Theatre" will offer to the lucky one a free trip to Hollywood and Cannes to participate in film shooting and international film festivals. The new package, supported by new quality films and TV dramas, has received good responses from advertisers. It is expected that by Lunar New Year which is usually the advertising peak season, the turnover from projected advertising contracts will fully cover the acquisition cost of the advertising rights. Moreover, with the title rights for the dramas broadcast during 19:00-20:00 expected to be sold by then, the operating results of the first three months from this operation will be credited to the account of the first half of 2007.
Dr. Leung explained further that the contracting business with a "programme title" or "programme slot" of a TV station is most appealing to investors. The acquisition of exclusive rights of advertising to the Film/TV Drama Channel of Hubei TV Station allows QJY to enjoy advertising and sponsorship revenues of the Channel, without investing substantially in the TV station's infrastructure, facilities and operation. The Group is only required to pay the advertising contracting fee and the cost of enhancing the content quality of programmes. The TV station is responsible for programme broadcasting and censorship, and achieving the viewing rate agreed between the both sides. On the other hand, the Group is responsible for advertising operation and programme procurement. Both sides will work together on enhancement of content quality and programme promotion and package.
QJY is given this invaluable opportunity to be the sole advertising agent for the Channel because the company has earned the trust of industry partners:
1. In the past 11 years, QJY's collaboration with mainland TV stations, including that with Hubei TV, has achieved mutual support and benefits. 2. QJY has already reached collaboration agreements with 8 major mainland TV stations on drama production and distribution. The long-term investment plan can push the number of TV dramas produced or distributed by QJY to 1,000 episodes a year, validating its ability to consistently and regularly produce quality drama series which are intensely competed for broadcast by TV stations. Apart from investments in drama production, QJY proactively acquires quality TV dramas for first-round and second-round broadcast in order to strengthen its film library. Hubei TV has been granted the privilege to buy QJY's dramas at a favorable discount. 3. QJY is well-known for its expertise in promotion, packaging and PR in the industry. It is capable of raising the brand awareness and viewing rate of the Channel, which leads to enhanced competitiveness.
Dr. Leung concluded, "The buzzword "Content is king" receives recognition in the industry. QJY's success in acquiring the exclusive advertising rights to the Channel is not simply based on the price we offered, but as well on the additional value we give to the TV station, which is derived from the sustained performance and goodwill QJY has achieved in the last 11 years, and its consistent acquisition of quality TV drama."
Dr. Leung said that it is the first time QJY has acquired exclusive rights of an advertising agency for a mainland TV channel, indicating that the Group has reached a higher and more important platform. QJY is confident of the Channel's ongoing viewing rate and coverage by virtue of the close cooperation between Hubei TV and QJY. Then, as the owner of exclusive advertising rights, QJY has absolute discretion on adjusting pricing and discount, it will lead to a higher advertising turnover.
Dr. Leung emphasized, "It is obvious that the only direct access to the mainland's RMB 300 billion TV advertising market is by acquiring advertising rights to mainland TV channels. In 2007, QJY will focus on acquiring advertising rights to a variety of TV channels including satellite channels that have a nationwide coverage."
Dr. Leung asserted that the latest acquisition would not cause funding pressure on the Group, so it has no intention to raise funds. The Group has sufficient funds to pay the acquisition fee that can be settled by installments. It is believed that the Group's cash flow will benefit from the acquisition instead.
About Qin Jia Yuan
Qin Jia Yuan Media Services Company Limited (HKEx: 2366) is a China-focused one-stop shop for TV media services, providing integrated programme, distribution, advertising and marketing and public relations services to production houses, advertising agencies and advertisers. The Group was listed on the main board of the Stock Exchange of Hong Kong on June 30, 2004 following a successful initial public offering. Its strategic shareholders include Aegis Group plc, a public company listed on the London Stock Exchange and one of the world's five largest media groups.