AirMedia Q2 revenues at US$56.3 million

Beijing :AirMedia Group Inc. (“AirMedia” or the “Company”) (Nasdaq: AMCN), a leading operator of out-of-home advertising platforms in China targeting mid-to-high-end consumers, today announced its unaudited financial results for the second quarter ended June 30, 2010.

“Our business continued to turn around in the second quarter of 2010 with new record total revenues of US$56.3 million. We experienced another quarter of improved advertising spending in China, indicating that a sustained recovery of advertising is under way in 2010. Our forecast of continued revenue ramp up in the third quarter further boosts our confidence to break even under U.S. GAAP in the third quarter of this year,” commented Herman Guo, chairman and chief executive officer of AirMedia. “Other than the gas station media network, we have completed our media expansion in the short term. Going forward, we will continue to focus on improving our profitability and fully realizing the operating leverage of our business model based on fixed concession fees during contract periods, allowing revenue growth to directly bring about profitability growth,” Mr. Guo added.

Total revenues for the second quarter of 2010 reached US$56.3 million, representing a year-over-year increase of 53.0% from US$36.8 million and a quarter-over-quarter increase of 15.5% from US$48.8 million. The year-over-year increase was primarily due to increases in revenues from digital frames in airports, traditional media in airports, other media, digital TV screens on airplanes and the gas station media network. The quarter-over-quarter increase was primarily due to increases in revenues from digital frames in airports, traditional media in airports, the gas station media network and other media.

Revenues from digital frames in airports for the second quarter of 2010 increased by 64.0% year-over-year and by 20.6% quarter-over-quarter to US$27.0 million. The year-over-year increase was due to an increase in the number of time slots sold, which was partially offset by a decrease in the average advertising revenue per time slot sold (the “ASP”). The quarter-over-quarter increase was due to increases in both the ASP and the number of time slots sold. Please refer to “Summary of Selected Operating Data” below for detailed definitions of the operating data cited in this press release.

The number of time slots sold for the second quarter of 2010 increased by 74.5% year-over-year and by 8.6% quarter-over-quarter to 9,918 time slots. The year-over-year and quarter-over-quarter increases were due to continued sales efforts and growing acceptance of AirMedia’s digital frames. AirMedia’s digital frames were in operation in 33 airports in the second quarter of 2010, up from 28 airports at the end of the second quarter of 2009 and 32 airports at the end of the first quarter of 2010. The number of time slots available for sale for the second quarter of 2010 increased by 24.5% year-over-year and by 8.5% quarter-over-quarter to 32,708 time slots.

The year-over-year and quarter-over-quarter increases were primarily due to an increase in the number of airports in AirMedia’s digital frame network. The utilization rate of digital frames for the second quarter of 2010 increased by 8.7 percentage points year-over-year to 30.3% and remained unchanged from the previous quarter. The year-over-year increase was primarily due to the increase in the number of time slots sold, which was partially offset by the increase in the number of time slots available for sale.

The ASP of digital frames for the second quarter of 2010 decreased by 6.0% year-over-year and increased by 11.1% quarter-over-quarter to US$2,724. The year-over-year decrease was primarily due to higher discounts offered in the second quarter of 2010 than in the same period one year ago. The quarter-over-quarter increase was primarily due to the change in the mix of time slots sold. The number of time slots sold in the top three airports, which have significantly higher ASPs than those sold in other airports, accounted for a higher percentage of total number of time slots sold in the second quarter of 2010 than in the previous quarter.

Revenues from digital TV screens in airports for the second quarter of 2010 decreased by 28.2% year-over-year and increased by 1.2% quarter-over-quarter to US$6.6 million.

The number of time slots sold for the second quarter of 2010 decreased by 8.7% year-over-year and by 28.8% quarter-over-quarter to 5,344 time slots. The year-over-year decrease was primarily due to advertisers’ shift in their budget allocations from our digital TV screens in airports to our other products in airports and on airplanes.

The quarter-over-quarter decrease was primarily attributable to AirMedia’s termination of a promotional campaign, which had been adopted in the first quarter of 2010 and offered high discount from the listing prices. The number of time slots available for sale for the second quarter of 2010 decreased by 9.5% year-over-year and by 0.4% quarter-over-quarter to 22,950 time slots primarily due to the termination of operation of digital TV screens in certain second-tier and third-tier airports. The utilization rate for the second quarter of 2010 increased by 0.2 percentage point year-over-year and decreased by 9.3 percentage points quarter-over-quarter to 23.3%. The year-over-year increase was primarily due to the decrease in the number of time slots available for sale. The quarter-over-quarter decrease was primarily due to the decrease in the number of time slots sold.

The ASP of digital TV screens in airports for the second quarter of 2010 decreased by 21.3% year-over-year and increased by 42.2% quarter-over-quarter to US$1,226. The year-over-year decrease was primarily due to higher discounts offered in the second quarter of 2010 than in the same period one year ago. The quarter-over-quarter increase was primarily attributable to the termination of the promotional campaign which had been adopted in the first quarter of 2010.

Revenues from digital TV screens on airplanes for the second quarter of 2010 increased by 49.3% year-over-year and decreased by 14.4% quarter-over-quarter to US$5.9 million. The year-over-year increase was due to increases in both the number of time slots sold and the ASP of digital TV screens on airplanes. The quarter-over-quarter decrease was due to decreases in both the number of time slots sold and the ASP of digital TV screens on airplanes.

The number of time slots sold for the second quarter of 2010 increased by 38.5% year-over-year and decreased by 9.4% quarter-over-quarter to 259 time slots. The year-over-year increase was due to continued sales efforts, and the quarter-over-quarter decrease was due to seasonality. Although the first quarter is in general a weak quarter for our advertising business as a whole, it is a peak season for advertising on digital TV screens on airplanes as advertisers place more advertising orders to take advantage of high passenger volume during the Spring Festival holiday period in China. The number of time slots available for sale for the second quarter of 2010 decreased by 15.4% year-over-year and by 2.9% quarter-over-quarter to 396 time slots.

The year-over-year decrease was primarily due to the termination of our operation of digital TV screens on the airplanes of China United Airlines and less advertising time on Air China’s airplanes. The quarter-over-quarter decrease was primarily due to the termination of our operation of digital TV screens on the airplanes of China United Airlines. The utilization rate for the second quarter of 2010 increased by 25.4 percentage points year-over-year and decreased by 4.7 percentage points quarter-over-quarter to 65.4%. The year-over-year increase was due to the increase in the number of time slots sold and the decrease in the number of time slots available for sale. The quarter-over-quarter decrease was primarily due to
the decrease in the number of time slots sold.

The ASP of digital TV screens on airplanes for the second quarter of 2010 increased by 7.8% year-over-year and decreased by 5.4% quarter-over-quarter to US$22,672. The year-over-year increase in the ASP was primarily due to lower discounts offered in the second quarter of 2010 than in the same period one year ago and the increase in the listing prices of digital TV screens on Air China’s airplanes. The quarter-over-quarter decrease in the ASP was primarily due to higher discounts offered in the second quarter of 2010 than in the first quarter of 2010.

Revenues from traditional media in airports for the second quarter of 2010 primarily included revenues from traditional media in Beijing Capital International Airport, Shenzhen International Airport and Wenzhou Yongqiang Airport, as well as revenues from billboards and painted advertisements on gate bridges in certain airports. Revenues from traditional media in airports for the second quarter of 2010 increased by 115.5% year-over-year and by 23.7% quarter-over-quarter to US$12.2 million. The year-over-year increase was primarily due to continued sales efforts and growing acceptance of AirMedia’s traditional media in airports. The quarter-over-quarter increase was primarily due to an increase in the number of locations sold.

The number of locations sold for the second quarter of 2010 increased 45.4% year-over-year and 15.8% quarter-over-quarter to 455 locations primarily due to continued sales efforts. The number of locations available for sale for the second quarter of 2010 decreased by 35.9% year-over-year and increased by 3.7% quarter-over-quarter to 705 locations. The year-over-year decrease was primarily because AirMedia terminated the operation of certain unprofitable traditional media in Beijing Capital International Airport as well as billboards and painted advertisements on gate bridges in certain airports in the first quarter of 2010. The quarter-over-quarter increase was primarily due to the increase in the number of billboards in the Wenzhou airport and light boxes in certain airports. The utilization rate of traditional media for the second quarter of 2010 increased by 36.1 percentage points year-over-year and by 6.7 percentage points quarter-over-quarter to 64.5%. The year-over-year increase was due to the decrease in the number of locations available for sale and the increase in the number of locations sold. The quarter-over-quarter increase was primarily due to the increase in the number of locations sold.

The ASP of traditional media in airports for the second quarter of 2010 increased by 48.1% year-over-year and by 6.8% quarter-over-quarter to US$26,903 primarily due to more locations with higher listing prices sold in the second quarter of 2010.

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