For those that dont like to read everything in the 10 K's. Here are a few items from CCME SEC filings back in December 2009 I thought were interesting for those that dont already know these things and with some of the recent things from MW. I went back to the 2009 10K, until 2010 is available. I think it helps demonstrate the market size and demand, competative advantage, and at least where CCME was back in December 2009. Read just as a reminder if nothing else.
Eric
Page 9 of December 31, 2009 10K:
"Inter-city travel increases length of exposure . Inter-city travel in China typically takes a number of hours. Audiences are therefore exposed to the content displayed on CME’s network for a significantly longer period of time than on shorter-distance travel. According to a survey conducted by CTR Market Research in July 2008 on bus services originating in eight major cities, the average duration of a journey on buses within CME’s network took two and a half hours. As CME displays advertisements in ten-minute blocks after every 30 minutes of entertainment content, the audiences can potentially view the same advertisement up to three times per journey. CME believes repeated exposure to the same advertisement significantly increases its effectiveness."
Page 8 of December 31, 2009 10 K
Competitive Strengths
The largest television advertising network on inter-city express buses with an early entrant advantage in China. "CME believes it operates the largest television advertising network on inter-city express buses in China. According to CTR Market Research, as of July 31, 2008, CME’s advertising network accounted for 81% of all inter-city express buses installed with hard disk drive players and 55% of all inter-city express buses installed with any type of television display. In the first seven months of 2008, a monthly average of over 53 million passengers traveled on inter-city express buses within CME’s network, representing 85% and 57%, respectively, of the passenger traffic on inter-city express buses installed with hard disk drive players and with any type of television display, respectively. CME believes its large-scale network capable of reaching a sizeable audience traveling within economically prosperous regions in China presents an attractive proposition to advertisers"
Page 4 of December 31, 2009 10K
CME has entered into long-term framework agreements with 45 bus operator partners for terms ranging from five to eight years. Pursuant to these agreements, CME pays the bus operators concession fees for the right to install its displays and automated control systems inside their buses and display entertainment content and advertisements. CME’s entertainment content is provided by third parties and advertisements provided by its clients. CME obtains a wide range of free entertainment content from Fujian SouthEastern Television Channel and Hunan Satellite Television each month and purchases a limited amount of copyrighted programs from the Audio and Video Publishing House of Fujian Province. As of December 31, 2009, the number of inter-city express buses within CME’s network is 20,161.
On page 7 of December 31, 2009
Express bus travel is a primary means of transportation in China due to various reasons, including the more comprehensive coverage of highway networks compared to other modes of transportation and relatively low private vehicle ownership in China. Many cities in China are highly dependent on highway transportation and many small and medium-sized cities in China rely on highways as the primary means of transportation outside cities and towns. Inter-city buses on highways also offer the advantages of lower cost, higher frequency and point-to-point convenience relative to rail and air travel, an additional factor which explains the prevalence and continued growth of this mode of inter-city transportation. According to the Ministry of Transport, as of July 31, 2008, there were over 43,000 inter-city express buses with a seating capacity of more than 27 passengers in China. The average monthly passenger traffic on inter-city express buses totaled over 158 million in the seven months ended July 31, 2008. In addition to its large size and continued growth, the express bus market is highly fragmented, with a large number of small-scale operators operating services primarily within certain provinces or regions. At present, there are few large operators with nationwide networks
On Page 4 of 2009 10 K
CME has grown significantly since it commenced its advertising services business in November 2003. During the year ended December 31, 2009, more than 450 advertisers had purchased advertising time on CME’s network either through advertising agents or directly from CME. Some of these clients have purchased advertising time from CME for more than three years, including Hitachi, China Telecom, Toyota, Siemens and China Pacific Life Insurance. CME has attracted several well-known international and national brands to its advertising network, including Coca Cola, Pepsi, Wahaha, KFC, Siemens, Hitachi, Haier, China Telecom, China Mobile, Nokia, China Post, Procter & Gamble, Bank of China, China Constructing Bank and China Pacific Life Insurance. While CME is unable to determine the exact dollar amount paid by these individual advertisers who purchase advertising through third party agencies, CME is able to determine, based on the number of ads run for these advertisers, that these advertisers comprise a significant portion the advertising on CME’s network. For the years ended December 31, 2007, 2008 and 2009, CME generated total net revenue of $25.8 million, $63.0 million and $95.9 million, respectively. During the same periods, CME had net income of $7.0 million, $26.4 million and $41.7 million, respectively
