China’s Focus Media is cautiously dipping its toe back in the online and mobile waters. But this time it appears that it will use the two channels to support its digital out-of-home operations, rather than seeing them as revenue generators in their own right.
Focus last year sold its Internet advertising business Allyes to technology investment firm Silver Lake, and earlier abandoned its Focus Media Wireless operation after accusations of sending mobile spam. Exiting those two businesses left Focus back where it started, as an out-of-home specialist with an extensive network of both digital and non-digital media across China.
Said Chairman and CEO Jason Jiang: “We plan to launch Focus Media’s next generation of screens in seven cities in the second half of this year. We believe these next-generation screens will equip Focus Media with capabilities to provide interactive, measurable, location-based search [LBS] services to advertisers.
“We also plan to embark upon a small minority investment in a company that will work hand-in-hand with Focus Media to provide online and mobile services support to enhance Focus Media’s LBS capability.”
Focus will pay $1.5m for a 15 percent stake in Enjoy China Technology Development Company, while a separate firm owned by Jiang is also expected to hold an additional 34 percent of Enjoy – which, taken with Focus’s share, will effectively give him control of that company.
The new plans come after a healthy first quarter for NASDAQ-traded Focus. Net revenue grew by 54 percent year-on-year to reach $146.6m, with by far the bulk of that – $136.1m – coming from the LCD, in-store (pictured) and poster-frame networks. The balance came from the company’s portfolio of conventional outdoor billboards.
Net income was $20.5m, up from a net loss of $1m in the same period a year ago.
During the quarter, Focus spent $5.9m on capital assets, most of that money going to roll out some 5000 further LCD screens. An additional $3.6m was spent on small acquisitions of new subsidiaries, principally in the poster-frame business.
Jiang said Focus was confident of meeting its 2011 targets, but cautioned: “There remains a bit of uncertainty over the [Chinese] macro-economic environment as a result of the continued economic tightening measures.”
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