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TOM Enters China's TV and Print Advertising Agency Business

Hong Kong, November 21, 2002---TOM.COM LIMITED ("TOM" or "the TOM Group", stock code: 8001) today announced that it has signed separate Memoranda of Understanding with Charm Art & Advertising Co. Ltd. ("Charm"), the leading advertising agent of China Central Television ("CCTV"), and Henan Ming Sheng Advertising Co. Ltd ("Ming Sheng"), Mainland China's leading print media advertising agent. Separate joint ventures ("JV") will be set up to penetrate the huge TV and print advertising agency markets in Mainland China.

The Joint Venture with Charm

TOM holds a 60% interest in the JV with Charm holding the remaining 40%. Registered capital will be at least RMB10 million (approx. HK$9.43 million). TOM will invest RMB20 million (approx. HK$18.9 million), of which RMB10 million will be the registered capital and the remaining RMB10 million as shareholder loan.

Charm is one of CCTV's leading advertising agents. Its agency network also covers over 100 regional TV stations nationwide. Charm will inject into the JV its agency rights for CCTV's prime time auctioned commercial slots and non prime time program commercial slots; advertising sales agency business for regional TV stations' commercials; necessary assets and management team for operating the business. Both TOM and Charm estimate that the JV's first year revenue will be over RMB100 million and that this will grow by 15% annually for the first three years.

TOM's Integrated Entertainment Platform

The JV will provide design, production and agency sales services mainly for TV media as well as other local and international media. The JV will undertake at no cost the advertising contracts of CCTV and other TV stations signed with Charm's clients for 2003.

TOM Group Chief Executive Officer and Executive Director, Sing Wang said, "TV advertising agency business is a significant component of TOM's integrated entertainment platform. With Charm's leadership position in TV advertising agency business, the JV will give TOM immediate access to CCTV, China's largest TV station, hundreds of regional TV stations and a broad advertisers' base. The co-operation with Charm will spearhead our drive into China's TV advertising sector, bringing in diversified and recurrent income."

Charm's General Manager, Dang He remarked, "We are glad to partner with TOM. TOM has a clear strategy toward developing its media business in the Mainland and is providing strong backing to the JV. With our joint media expertise and cross selling capability, we believe our cooperation will continue to fuel our business growth and help us gain further market share."

Through Maya and YC Company, TOM is already a TV programme provider. Together with Hong Xiong's proprietary programme library and extensive distribution network as well as Charm's advertising agency operations, TOM's integrated entertainment platform encompassing "content, distribution and advertising" has taken shape. This platform will be the foundation to further develop TOM's entertainment businesses.

China is the world's largest TV market with the biggest audience base. As the leading state-owned broadcaster, CCTV enjoys the largest audience share reaching approximately 400 million viewers every day. TV continues to be China's largest advertising medium. According to estimates, China's TV advertising expenditure will reach RMB20 billion in 2002, representing over 40% of China's entire advertising market. CCTV is by far the dominant player with advertising revenues of RMB5.4 billion in 2001, representing a 32% market share of China's total TV advertising spend.

About Charm

Founded by General Manager, Dang He in 1995 in Beijing, Charm is mainly engaged in TV advertising agency business and providing services such as design, creative, media planning and research services. Charm has established branch offices in Shanghai, Guangzhou, Hefei and Hangzhou. The company is one of the top CCTV advertising agents. It was ranked No.1 among all CCTV agencies with RMB170 million CCTV prime time auction ad sales in 2001. It came in second this year with CCTV ad sales of RMB167 million. Apart from CCTV, Charm's agency network covers over 100 regional TV stations nationwide, including advertising contracts with 10 satellite TV stations worth RMB10 million. Charm is also the exclusive advertising agency for evening drama programs of 115 local TV stations.

The Joint Venture with Ming Sheng

According to the MOU, TOM holds a 51% interest in the JV while Ming Sheng holds the remaining 49% interest. Registered capital of the JV will be at least RMB2 million (approx. HK$1.89 million). TOM will invest RMB1.02 million (approx. HK$0.96 million) while Ming Sheng will invest RMB0.98 million (approx. HK$0.92 million) and inject its advertising agency business and related assets into the JV.

The JV will focus on advertising design & production and advertising agency services for local and international print media. Both partners estimate that the JV's first year revenue will be over RMB10 million and that this will grow by 15% annually for the first three years.

As a leading print media advertising agency in China, Ming Sheng represents over 266 periodicals and magazines and 23 newspapers nationwide. Monthly circulation of these publications totals 100 million copies. The company also publishes its own quarterly magazine called Ming Sheng Media Advertising Rates ( ). Providing industry updates, this publication barters its advertising space for advertising space in other publications. These businesses will be injected into the JV.

A Valuable Complement to TOM's Publishing Business

The co-operation between TOM and Ming Sheng combines the strength of both partners in terms of market position, brand reputation and management expertise. Ming Sheng's extensive experience in print advertising agency services will be a valuable complement to TOM's publishing business. The JV will solidify TOM's cross-selling strategy and strengthen the advertising sales and client base of TOM's publishing businesses. It will also create valuable synergies with TOM's other media businesses such as outdoor.

TOM Group Chief Executive Officer and Executive Director Sing Wang said, "We are glad to partner with Ming Sheng---the leading advertising sales agency in the Mainland's print market. The JV adds print advertising agency business to TOM's existing publishing platform. It will bring overall benefits and boost profitability."

Ming Sheng Chief Executive Officer Niu Zhi Min said, "TOM's seamless development in Greater China's print media business will help broaden our business scope. Ming Sheng already plans to establish a branch operation in Beijing and the cooperation with TOM will bring in new business opportunities."

About Ming Sheng

Based in Zhengzhou, Ming Sheng was founded by Chief Executive Officer Mr. Niu Zhi Min in 1994. The company is also a member of FIPP (The International Federation of the Periodical Press). Other FIPP members from the Mainland include representatives from international publishing groups such as the Chinese version of Fortune, The Reader's Digest from the US, IDG and AC Neilsen.

Ming Sheng is the advertising agency for 266 periodicals and magazines and 23 newspapers. Among these, Ming Sheng is the exclusive or partially exclusive advertising agency for 10 periodicals and magazines (total monthly circulation around 10 million copies). The prominent ones include , ranked fifth on FIPP's general periodical category with a monthly circulation of 3.7 million copies; , a popular story periodical with a monthly circulation of 700,000 copies; and , a police publication with a monthly circulation of 400,000 copies.

Ming Sheng is also the non-exclusive advertising agency for 256 periodicals and magazines, and 23 newspapers that have an estimated monthly circulation of over 90 million copies. The periodicals and magazines cover a variety of genres including economics & finance, information & technology, pharmaceutical, security & law, family & marriage, sports, machinery and agriculture. Some of the most popular ones include and . As for newspapers advertising sales, they include and . Ming Sheng also publishes its own quarterly magazine Ming Sheng Media Advertising Rates ( ). This features the latest industry updates for advertising agencies and advertisers and now establishes a membership base of approximately 130 from local media representatives and advertising agencies.


For press enquiries:
Rachel Chan, The TOM Group
Tel: (852) 2121 7810
Fax: (852) 2127 7576
Email: [email protected]