Dr Anita Leung Fung Yee, CEO of QJY, said, "2007 is a year of breakthrough for the Group in terms of operating results. During the period, as a foreign direct investment (FID) company providing media services in Mainland China, QJY has formed unique strategic partnerships with nine major mainland TV stations or broadcasting units in Beijing, Shanghai, Fujian, Guangdong, Jiangsu, Hubei, Dalian, Harbin and Chongqing, as well as with SDL Entertainment Limited, a wholly-owned subsidiary of STAR Group Limited. This network of strategic partnerships would lead to a breakthrough in the performance of the domestic and overseas distribution of the TV dramas produced or acquired by the Group."
As for the advertising operation, one of the Group's three core businesses, the acquisition of exclusive advertising rights (with a term of three years and renewable for another three years) to the Hubei TV Station Film/TV Drama Channel has enabled the Group to expand its capability from the syndication programme model to that of an exclusive and comprehensive advertising business of a TV channel. In other words, the Group's earnings source has been expanded from the 2-minute advertising air-time per episode for syndication programmes to 3 hours and 19 minutes of advertising air-time each day. Revenues from market planning services brought by such advertising rights have been recognized as income since February 2007.
Dr Leung added that based on the performance of the first half of 2007, the target volume of TV drama production and acquisition can be achieved on schedule in the second half, enabling the Group to move towards its goal of increasing its market share of prime-time TV dramas in China to 15% within four years.
It is expected that the Group's increased purchase of movies and TV dramas can help strengthen its film and script library, placing the Group in a leading position in the industry's race for exclusive advertising rights to mainland TV channels. This also demonstrates the Group's competence in achieving high viewing rates and in the advertising business.
During the period, the Group has received a letter of approval from relevant authorities for the establishment of Qin Jia Yuan (China) Advertising Company Limited in the Mainland. It is expected that the official advertising operating license will be issued during the second half. The issuance of the license will enable the Group to operate advertising agency business directly in China, and to exercise its former agreement with Tianjin Qin Jia Yuan Advertising Company Limited to acquire the rights of a number of long-term advertising contracts which will provide a stable stream of revenue. Furthermore, the issuance of the advertising operating license is a big step towards the Group's establishment a comprehensive TV channel advertising platform in the Mainland, which enhances its capacities in taking on more advertising clients.
Dr Leung also referred to the terms of the service contract she signed with the Group on 1 December 2003, pursuant to which the Group has priority to purchase her scripts at a unit price of HK$1/episode for TV drama production. Such rights will be exercised during the second half of 2007 for the adoption of a novel written by Dr Leung to the production of a movie and TV drama series entitled "Wonder Woman". The exclusive sponsorship rights to the movies and the TV drama series "Wonder Woman" have already been sold at a record price. Income from the copyrights to the original work and the script rights to the movie version of "Wonder Woman", in the amount of approximately HK$10 million, will be recognized during the second half of 2007.
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.