China Mass Media Q1 revenues at US$7.8 million

Beijing : China Mass Media Corp. (“China Mass Media” or the “Company”) (NYSE: CMM), a leading television advertising company in China, has announced its unaudited financial results for the first quarter ended March 31, 2011.

Total net revenues were RMB50.9 million (US$7.8 million), a decrease of 9.1% from the first quarter of 2010 and a decrease of 32.8% from the fourth quarter of 2010.Operating income was RMB13.1 million (US$2.0 million), a decrease of 5.7% from the first quarter of 2010 and a decrease of 53.7% from the fourth quarter of 2010.

Net income was RMB8.3 million (US$1.3 million), a decrease of 17.9% from the first quarter of 2010 and a decrease of 56.3% from the fourth quarter of 2010.
Net cash inflows from operating activities were RMB34.8 million (US$5.3 million), a decrease of 13.7% from net cash inflows from operating activities of RMB40.3 million in the first quarter of 2010 and an increase of 34.2% from the fourth quarter of 2010.

Shengcheng Wang, Chairman and Chief Executive Officer of China Mass Media, commented, “The first quarter of 2011 was a challenging time as we entered the seasonally weak period of the year. In our advertising agency service business, in order to secure long-term commitments from our clients in the face of intense price competition in the advertising market, we initiated a presale promotional campaign last November to attract longer-term contracts by offering sizable discounts. These contracts, which are with both advertising agencies and direct advertisers and range in term from three to six months, will serve as a solid foundation of our revenues in 2011. Due to these promotional activities, there was a significant decrease in the sales price of certain products in the first quarter 2011 compared with the first and fourth quarters of 2010. As a result, revenues from advertising agency services declined despite the increase in our utilization rate. The sequential decline was also primarily because the fourth quarter is traditionally the peak season in our business.”

Revenues from advertising agency services were RMB46.7 million (US$7.1 million) in the first quarter of 2011, a decrease of 15.8% from RMB55.5 million in the first quarter of 2010, and a decrease of 32.8% from RMB69.4 million in the fourth quarter of 2010. Given the intense price competition in the advertising market, in order to secure a full-year budget from clients and remain competitive in the market, the Company offered sizable discounts to certain clients. Due to these promotional activities, there was a significant decrease in the Company’s average sales price in the first quarter 2011 compared with the first and fourth quarters of 2010. As a result, revenues from advertising agency services declined despite the increase in our the Company’s utilization rate. The sequential decline was also primarily because the fourth quarter is the traditional peak season for the Company’s business.

Revenues from production and sponsorship services were RMB7.2 million (US$1.1 million) in the first quarter of 2011, an increase of 127.9% from RMB3.1 million in the first quarter of 2010, and a decrease of 37.5% from RMB11.4 million in the fourth quarter of 2010. The Company’s efforts to both improve production capabilities and proactively source new clients helped support momentum in the Company’s production and sponsorship services business, as compared with the first quarter of 2010.

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