At the expiration of the first three-year term, the Group is entitled to renew the term twice, for two successive terms of three years. The ownership period is nine years in total, ending at December 31, 2016. At the end of 9 years, the Group has the right of first refusal to extend the contract for another three years under the same conditions. The total agency fee will be increased by 12% and 13.8% respectively for the second and third three-year terms. The Xiamen TV deal is Qin Jia Yuan’s third acquisition of its kind, after similar deals concluded with the Drama Channel of Hubei TV Station and Entertainment Channel of Chongqing TV Station.
Dr. Anita Leung Fung Yee, CEO of Qin Jia Yuan, said, “Our latest acquisition has three implications: First, the Group has further realized its business strategy of establishing a unique Chinese Qin Jia Yuan TV Advertising Platform, which is expected to have an advertising value of RMB3.3 billion. The platform currently has an advertising value of RMB2 billion through the ownership of exclusive advertising agency rights of three influential local TV channels. Second, the agreement was reached with Xiamen TV after a thorough and lengthy study by the latter. The three acquisitions indicate the recognition of local TV media of the Qin Jia Yuan model of cooperation. It is believed that the Qin Jia Yuan Platform will continue to expand with the joining of more TV channels. Third, since Qin Jia Yuan acquired and began to operate the exclusive advertising agency rights of the Drama Channel of Hubei TV in January 2007, solid results have been achieved in terms of improvements in the channel’s advertising income, programme procurement quality, promotional events and TV ratings. We hope that by the year end, we can report to you the concrete results of this ‘win-win’ cooperation.”
Xiamen is a developed city comparable to a provincial capital, with a unique geographical location facing Kinmen of Taiwan. She is also a business hub for Fujian’s merchants. The state has given Xiamen preferential treatment that affords advantages to her in economic growth and external relationship building. Xiamen has been named one of the world’s most desirable places. Due to her high consumption power, the demand for advertising placements is undoubtedly huge, pointing to an optimistic future. Every year, there are numerous international events held in Xiamen. The International Trade Promotion Conference held every September 8 in Xiamen is one such major world business events. Qin Jia Yuan will have the opportunity to organize or promote spectacular events through Xiamen TV’s rights.
Dr. Leung added that Qin Jia Yuan and Xiamen TV had reached a ground-breaking cooperative agreement wherein Xiamen Broadcasting & TV Group agreed to grant Qin Jia Yuan priority for a period of six months to negotiate for exclusive advertising agency rights of a proposed satellite channel on Chinese language education. This opportunity will give Qin Jia Yuan a headstart in tapping satellite TV advertising rights.
Xiamen TV’s ratings are among the top 20 in Xiamen, preceding 4 channels of China Central TV (CCTV). Qin Jia Yuan is confident of the ongoing performance of Xiamen TV, building on the channel’s solid foundation, and Qin Jia Yuan’s proven business strategy and expertise. Following the expansion of the Qin Jia Yuan Platform, the Group is able to enjoy economies of scale with more TV channels sharing the overall operating costs. Qin Jia Yuan is also entitled to adjust the channels’ advertising rate cards and discounts, thereby achieving the benefits of high profit at low cost, and creating an all-win situation for TV stations, advertising clients, audience and Qin Jia Yuan.
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.