Dr. Anita Leung Fung Yee, CEO of QJY, noted, “Following the acquisition of the exclusive advertising rights of the City Channel of Hebei TV Station last week, the Group was delighted to announce a further acquisition of the exclusive advertising rights of the News Channel of Shanxi TV Station amidst intensive competition for such assets. The State Administration of Radio, Film and Television (“SARFT”) has approved the conversion of Shanxi News Channel into an economic and information channel. It is expected that the reformed channel will achieve a total advertising rate card value of RMB 1 billion in 2008. This will drive QJY’s cross-media advertising platform further to reach a total rate card value of RMB 4 billion, enabling the Group to achieve its target half year ahead of schedule.”
According to an independent third-party valuation, the market value of such exclusive advertising rights exceeds the acquisition cost by at least 150%. The exclusive advertising rights of the Shanxi News Channel were acquired for a term of 3 years with options to renew for two further three-year terms. The Group was able to acquire such rights at a relatively low price due to its track record of boosting the advertising performance of the Drama Channel of Hubei TV Station. The first-year operating results of Hubei Drama Channel accounted for the 130% leap in the Group’s advertising revenue, which in part contributed to the Group’s 67% net profit growth in fiscal 2007. The Group’s procurement of quality placements from international and nationwide advertisers has also helped upgrade the images of the TV stations and improved audience viewing experiences. The resulting win-win situation is a strong advantage to facilitate the Group’s future acquisition offers.
With China’s ascent as a new economic force, there is anticipated growth in demand for news and economic intelligence. Hence, it is expected that the revamp of Shanxi News Channel into an economic and information channel will draw popularity. Advertisers are not only keen on placements in movie and entertainment channels which enjoy high audience ratings, but are also looking at economic and information channels which appeal to the middle-aged and young audiences. It is expected that with the Group’s advertising planning, and promotion and packaging input for Shanxi News Channel, there will be a breakthrough in its audience ratings and advertising revenue in 2008.
Dr. Leung expressed satisfaction with the first-year performance of QJY’s TV-focused cross-media advertising platform, which embraces drama, entertainment, city, living, news and economics content, and commands a geographical stretch spanning from the central, to southern, western and northern parts of China. The platform has delivered above-expectation performance.
With net earnings growth of 67% and an EPS growth of 52% in fiscal 2007, the share placement can fuel the Group’s further acquisition of advertising rights of TV channels, in order to sustain its growth momentum well into fiscal 2008.
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.