China MediaExpress Holdings, Inc. (fka CCME)

[GorillaGorilla]

Public Transport TV Market Expanding in China

LCD TVs (Liquid Crystal Display Television) installed on buses in large and medium cities of China have become a money printing machine, feeding an advertising market worth billions of dollars. The three largest rivals, Towona, Vision China Media and Bus Online, are now competing head-to-head for a bigger slice of this lucrative market.

Cash is king

Public transport mobile TV, or so-called transit TV, is becoming one of the most promising new media channels in China, due to its captive, public and enclosed nature. Similar to other out-of-home TV formats, the advertising value of transit TVs is primarily based on the number of installed TV screens (LCD terminals), which require huge upfront and ongoing investments. Therefore, investment capital would be the decisive factor for companies to develop in this industry, and the big three transit TV players in China have firmly followed this principle.

In February 2008, Towona announced that it had received US$50 million funding from Baring Asset Management. But Towona's major competitor, Vision China Media, had been one step ahead of the game, by listing on the NASDAQ with a US$108 million IPO in December 2007.

So floating the company and raising more capital have now become an urgent task for Towona, in order to cope with the competition. Industry experts estimated that the market value of Towona could potentially be worth US$850 million, higher than Vision China. On the other hand, the smaller rival Bus Online had also received US$30 million investments in December 2007 from CCB International, the investment banking division of China Construction Bank. Bus Online had also partnered with CCTV, China's state-owned television station, to produce a new-generation entertainment platform.

Fighting for terminal resources

Vice CEO of Towona, Mr Cui Bin, and CEO of Vision China, Mr Li Limin, had both expressed the view that the first thing they would do on receiving investment funding, was to entrench and expand their transit TV networks. "Terminals are monopoly-nature resources. Once they are locked-in by one company, it will be difficult for other companies to get in," said Cui from Towona. Normally Towona would sign an 8-year long term agreements with local broadcasting and TV companies with mobile TV licenses. Currently there are about 30 Chinese cities each with more than 1,000 buses equipped with TV screens. Towona claimed that it has presence in 25 out of these 30 cities, and it has dominant positions in 14 cities such as Hangzhou, Taiyuan and Qingdao.

http://chinabizintel.com/industry-updates/public-transport-tv-market-expanding-in-china.html