Why the "Integration strongman" is silent in Jiangnan spring

Beijing time December 22 9:30 P.M., the Nasdaq opened before the opening, Sina announced the acquisition of the core business of the media. In this time node before and after, the media board chairman Changjiang Delta Spring dozens of times to call the phone, for the familiar number, he is only a few words, and do not want to disclose their own sales of the idea of the business.

10-point Telephone conference began, in the 2-hour meeting, Sina CEO Cao Chao played the leading role, Jiangnan Spring just calmly answered two questions: first, the rest of the business is how large scale; second, how he deals with the rest of the business. The answers to these two questions took two or three minutes.

　　Big consolidation or Big split

East China Normal University, the Chinese department of the School Poets Jiangnan Spring, in the media advertising arena to the elevator LCD advertising started, the use of the mass media to carry out large-scale acquisitions, to build China's largest outdoor media platform, and monopolized the elevator inside and outside the market and a number of niche advertising markets. The sale of the core business to Sina, indicating a big split or even the beginning of the big liquidation.

The results show that the audience in the past four years, a total of investment, acquisition of more than 60 companies. This time, the audience will be the most core of the outdoor digital advertising business, including building TV, frame ads and store ads three major combinations, sold to Sina.

Last year, with Mengniu chairman Niu Gensheng and former Grand President Tang June and other People's Party, the 35-Year-old Jiangnan Spring summed up their career development, a core idea is "close." After the listing, the integration of the crowd, monopoly of the building LCD TV ads, and then the integration of the framework, the monopoly of the elevator advertising, and then tried to buy the seal Prudential, occupy the store in the bulk of the LCD advertising share.

The number of mergers and acquisitions after the listing, some small acquisitions will be listed in quarterly earnings. So after quarterly earnings, there are a series of corporate acquisitions.

Through the acquisition, to achieve the market segments of the relative monopoly, digestion of competitive price competition and advertisers bargaining power, and then carry out large-scale advertising business replication, and finally by raising prices and ensure that the gross profit margin to gain relative monopoly income, so that its profitability is improved.

If the Sina and the focus of the transaction also as a Jiangnan spring practice management concept of the big integration, then the protagonist has been replaced by Sina, the audience has become the object of the split. The deal is a deal between China's largest Internet-branded advertiser and the largest foreign media advertiser, according to the Morgan Stanley Research report. According to forecasts, Sina in 2008 will occupy China's network brand advertising market 25% of the share of the media is occupied by the Chinese outdoor advertising market about 17% of the share.

According to the 2007 annual report, Jiangnan Spring Holdings accounted for the media 10.55%, the media will be successful after the transaction will be the acquisition of Sina shares in proportion to the share of the media to the shareholders, Jiangnan Spring will hold nearly 5 million shares, the equivalent of Sina's total shares of 4.8%.

Wang Luebbe, consulting president, said Sina issued new shares after the acquisition, the total number of shares in the overall account for Sina's 45%, if this calculation, Jiangnan spring of the media will become the largest shareholder of Sina, the management or board members are expected to have one or two to enter the Sina board.

But Luebbe hope that, although the minority into Sina major shareholder, Jiangnan Spring may become a big shareholder of Sina, but for the control of Sina is meaningless, because only occupy the majority of the board, the audience and Jiangnan spring can be the dominant role of Sina business, but this is almost impossible. In other words, Sina will still be the CEO Cao Chao led by the original class of the control.

Chao revealed that Sina will set up a new company responsible for the integration of the digital outdoor advertising business operations, the division of Management in the merger will continue to remain in office. But according to the agreement, in addition to a small number of shares, the new shares are not banned restrictions, which means that the shareholders of the shares of Sina will be able to quickly cash out.

　　Future Qing 0 again?

In the conference call, in the face of "what is left in the audience," Changjiang Delta Spring answer, the focus left business turnover is about 100 million to 500 million yuan, net profit of about 100 million to 120 million yuan. The specific business includes Internet advertising business, theater advertising business and traditional outdoor advertising business. Changjiang Delta Spring Frankly, good yes has become the main business of the company left behind.

In fact, last month the Changjiang Delta Spring had just disclosed that it would push for a separate IPO, and that the question of how to deal with it right now, he said, would have to be reconsidered if it was to go public.

The Morgan Stanley research report shows that after the deal is completed, it will account for more than 85% of the revenue of the new media and more than 90% of the net profit. Yes, the gross profit margin between 20% and 30%, lower than the focus media other business. Because of the good business and Sina business There is a potential conflict, Sina did not buy good yes. Sina's total revenue contribution to the good is over 20%.

The audience insiders revealed that the good Yes has also been in the Jiangnan spring of the list of assets can be sold, the audience has a good deal with Google's DoubleClick contacts, but also with a number of traditional multinational advertising companies contact.

Josen Haversten, an analyst at the US investment bank Oppenheimer, said that in the next six months to a year, the media is expected to transfer all the remaining offline advertising business.

Chao also revealed the mystery of the meeting, Sina this reason did not buy a good yes, is because of fear of the acquisition of other companies after the boycott, thereby damaging the value of good, so after the final decision to consider the division of the Internet advertising business to one side. Right now except for the advertising agent Sina, but also deputy MSN, TOM, thousand dragon net and other websites. This means that Jiangnan spring would like to put a good shot together, but Sina is not suitable for the buy.

Yu, president of Analysys International, said that if the rest of the listed company's main assets can be sold, other assets also have no reservation necessary, the future of the media will be winding up the market.

　　Why let Go

For Changjiang Delta Spring Why to sell experience more than 60 integration, painstaking operation for many years of business, Luebbe Wang Analysis said, this may be mainly because Changjiang Delta Spring has been to their own independent media kingdom dream lost confidence.

This year, the media can be described as "bad times", March encountered a "message door incident", the wireless service dissolved; Wenchuan earthquake to the media business also caused a lot of pressure. Focus Media second-quarter results began to decline. September was hit by the financial crisis, economic contraction, leading to a decline in revenue expectations.

Tan Zhi, the chief executive, had said that quarterly advertising growth was slow in normal conditions, but this year the weak period began early in September due to a dramatic economic climate change. The contract between the media and customers began to delay, many customers worried about next year's sales and advertising budget, the contract will be postponed to the first quarter of next year or this December.

This makes Jiangnan spring a year ago to buy Sina's "ambition" to change to the reality of "flexibility", because the market value of the minority has been lower than Sina, P/E is far worse than the benefit of the Olympic advertising Titi Sina.

People close to the top of the crowd said, in fact, let Jiangnan Spring "disheartened", aware of the establishment of Cross-platform media empire Dream and Reality Gap, the biggest blow still in March the SMS business event.

Previously, reporter contact with a number of people, they are full of optimism, their goal is--the audience soon over CCTV, become China's largest advertising platform, but no one thought, the brand, business and market value, will be in the internal and external factors of the decline so fast.

CCTV in the "3 15" party to the distribution of wireless SMS spam message exposure, triggered a series of crises, this is since the establishment of the most serious losses. The focus of the wireless listing program is not only set aside, but also to pay hundreds of millions of of dollars in restructuring expenses.

Changjiang Delta Spring to this public reflection that the incident revealed that the audience deviated from the track, in order to take the real benefits of the shortcut, the brand of the division has a negative impact, but also worthy of management high degree of reflection. A virus must be scraped to heal.

2006, Jiangnan Spring launched a mobile advertising strategy, the media's mobile phone advertising business to 30 million U.S. dollars to buy the largest mobile phone advertisers Kaiwei point of Start, in the wireless on the "unexpected" frustration, showing the Jiangnan spring continue to display space in the smaller, The advertising segmentation industry, which can be used for rapid mining of mergers and acquisitions, has reached a bottleneck.

Only the use of simple business model mandatory display and send ads, in Jiangnan Spring that the focus of the media in the future of the key areas-wireless communications and the Internet, can not achieve long-term success, wireless communications and Internet market volume is also far greater than the points are good at outdoor advertising. Jiangnan spring even want to use mergers and acquisitions quickly open up the situation, also can not display.

The plan for the future, Changjiang Delta Spring still remain silent.