Hong Kong : Qin Jia Yuan Media Services Company Limited has announce the signing of an exclusive advertising underwriting agreement for outdoor LED boards between Qin Jia Yuan (China) Advertising Company Limited (“QJY Advertising”), a wholly-owned subsidiary of QJY licensed to carry out advertising activities in China, and Beijing Xinhua Zhaoxun Culture Media Company Ltd . The outdoor LED boards are broadcasting news from Xinhua News Agency, the most authoritative news agency in the Mainland China.
David Liu, the Chairman of the Strategic Committee of QJY, said, “The Outdoor Advertising Right will enable QJY to enter into a phase. At the time of its incorporation in 1995, QJY was a planner and supplier of TV programs. It developed into a vertically integrated domestic TV services platform in China after its listing. In the year 2010, QJY will become China’s first foreign-owned multi-media service company with media advertisements as the core business. The signing of the agreement for the Outdoor Advertising Right represents the first step of QJY in moving towards this breakthrough.”
David Liu stated the main reasons for QJY’s intention in developing itself into a multi-media service company, including: (i) to cope with State’s policy of encouraging the development of the media sector and the co-operation in advertising activities between domestic and foreign industry players; (ii) to generate good investment returns and cash flow easily; (iii) to make use of existing human resources; (iv) to explore business opportunities from the established clientele; and (v) to leverage on the synergy generated by the Group’s multi-media activities.
To date, there are approximately 530,000 outdoor LED boards in China, of which less than 0.1% are allowed to broadcast news only. Outdoor LED boards of Xinhua Zhaoxun are mainly for broadcasting top news of the day in China as distributed by Xinhua News Agency. People in outdoor areas will be able to update themselves with the latest daily news. The audience rating of these LED boards is inevitably high, thus commended a high value for advertisements.
Xinhua Zhaoxun has 6 outdoor LED screens in Beijing, Shanghai, Chengdu and Guangzhou. In addition to those 34 provincial capitals around the country, there are hundreds of cities with comparable urban development in China. That means there will be plenty of room for Xinhua Zhaoxun to establish a nationwide network of outdoor news LED boards. QJY Advertising has a first right of refusal to underwrite the advertising of the additional LED boards.
Dr. Leung Anita Fung Yee Maria, the Chief Executive Officer of QJY, said excitingly, “QJY has been recruiting high calibre staff since 2008, which has served to bring QJY to an even higher position in the industry and enhance the confidence of QJY in co-operation with media companies in China. In order to fully capitalise the synergy generated by QJY’s multi-media businesses, QJY will put more effort in identifying additional interests and resources in the sectors of outdoor media advertisements and TV shopping in the future, which will be expanded side by side with QJY’s another stream of developed business, namely TV program production, advertisement and entertainment events promotion.”
Since the setting up of outdoor LED boards falls into the category of infrastructure and contents for LED boards are to be provided by Xinhua News Agency to Xinhua Zhaoxun, QJY will incur no costs in these aspects. Advertisement agency fees and expenses of the sales and marketing team are the only costs for QJY. Besides, outdoor advertisements will bring stable revenue with relatively short cash collection cycle, and the most important of all is that the advertisement agency can determine the rate of advertising fee at its sole discretion. Given the uniqueness of outdoor news contents, there is hardly any competitor in the market and the increase in advertising fees is not subject to any established market or industrial regulation. It is expected that the revenue from Outdoor Advertising Right will contribute turnover of more than RMB100 million next year.