Beginning with its initial public offering July 13, shares of Shanghai-based Focus Media, which sells out-of-home TV advertising time in corporate lobbies, elevators, retail spaces and even karaoke parlors across China, will be traded on Nasdaq. Focus now directly operates 16,025 flat-panel displays in 22 cities and has more than 1,800 displays operated by regional distributors. Its screens were located in 70% of commercial buildings in China, and it counts among its major advertisers NEC, Nokia, Samsung, Volkswagen and Toyota.
The company's prospectus, filed with the SEC, is a dramatic lesson on the rapid expansion of the Chinese market. Focus reported total revenue of $29.2 million in 2004 and net income of $372,752 for 2004, compared to $3.8 million and $25,483 for 2003.
Although Focus isn't laying claim to any global ambitions, some industry observers expect to see Far East companies expand in the U.S. Last month, for instance Chinese financial-services and media giant Xinhua Finance acquired investor and public relations firm Taylor Rafferty.
To be sure, major players like WPP Group have been hyper-focused on China. Rival Omnicom Group CEO John Wren said last year in a call with analysts, "The only regional thrust that is of keen interest to me is Asia, China." A recent forecast by ZenithOptimedia predicted that by 2011 China will overtake Germany and the U.K. to become the third-largest ad market, trailing only the U.S. and Japan.
Focus' management intends to use the $93 million or so it expects to net in the IPO, which is being underwritten by investment banks Credit Suisse First Boston and Goldman Sachs, to fuel an expansion. It's now setting its sights on hypermarkets, supermarkets, convenience stores, beauty parlors, country clubs and other commercial environments in China.
A spokeswoman for the company declined to comment for this story, citing the pre-IPO quiet period.