BEIJING, Jan. 13, 2015 /PRNewswire/ -- AirMedia Group Inc.
("AirMedia" or the "Company") (Nasdaq: AMCN), a leading operator of
out-of-home advertising platforms in China targeting
mid-to-high-end consumers, today announced that it had reached
agreements with two media companies to divest its TV-attached
digital frames and airport digital TV screens business, two
unprofitable product lines, to enhance its profitability.
TV-attached digital frames and airport digital TV screens had
been negatively contributing to the Company's overall results for
years. The divestiture is expected to have an immediately positive
effect on the Company's results of operation.
"The divestiture is expected to bring the Company back to
profit. Our sales force can concentrate on promoting the remaining
product lines which have higher profitability, such as our
mega-size LED screens and stand-alone digital frames. It is also
helpful for the Company to redeploy capital and management's focus
to support business with higher return. After the divestiture, we
expect our current media business to become profitable and provide
steady cash flow to support our transformation into a leading
in-flight and on-train Wi-Fi operator in China, which we expect to bring remarkable
growth to the Company in the long run," commented Mr. Herman Guo, chairman and chief executive officer
of AirMedia.
Details of the Transactions
AirMedia reached an agreement with Beijing Tianyi Culture
Development Co., Ltd., a third party unrelated to AirMedia, on
January 13, 2015, pursuant to which
AirMedia will sell 81% equity interest of
Beijing AirMedia Jinsheng Advertising Co., Ltd.
("Jinsheng Advertising"), which is the operating entity of
AirMedia's TV-attached digital frames business. AirMedia had
transferred all relevant assets, liabilities and managerial duties
to Jinsheng Advertising and will transfer all the concession rights
contracts related to TV-attached digital frames to Jinsheng
Advertising after obtaining the consents from the airports.
Jinsheng Advertising will operate TV-attached digital frames under
entrustment before the completion of the transfer of related
concession rights contracts.
On December 12, 2014, Beijing East
Jiacheng Culture Media Co., Ltd. ("East Jiacheng"), a third party
unrelated to AirMedia, and AirMedia established a joint venture,
Beijing AirMedia Jiacheng Advertising Co., Ltd. ("Jiacheng
Advertising"), in which East Jiacheng has 70% equity interest with
subscribed capital contribution of RMB21.0
million (US$3.4 million).
Pursuant to the joint venture arrangement, AirMedia will transfer
all relevant assets, liabilities and managerial duties with regard
to the airport digital TV screens business to Jiacheng Advertising
and will also transfer all the concession rights contracts related
to airport digital TV screens after obtaining the consents from the
airports. Jiacheng Advertising will operate airport digital TV
screens under entrustment before the completion of the transfer of
related concession rights contracts.
Expected Financial Impact
TV-attached digital frames generated US$20.6 million revenues in fiscal year 2013 and
US$11.4 million revenues in the first
nine months of 2014, accounting for 7.5% and 6.1% of the Company's
total revenues respectively in the corresponding periods. Airport
digital TV screens generated US$14.0
million revenues in fiscal year 2013 and US$9.0 million revenues in the first nine months
of 2014, accounting for 5.1% and 4.8% of the Company's total
revenues respectively in the corresponding periods. The Company
expects to cause some of its clients to reallocate part of their
advertising budgets from TV-attached digital frames and airport
digital TV screens to AirMedia's remaining product lines to offset
part of the decrease in its revenues. As a result, the decrease in
AirMedia's total revenues in 2015 due to the divestiture of the
aforementioned two unprofitable product lines is expected to be
less than the simple sum of the percentages of the two product
lines. Based on its current estimate, the Company expects the
decrease in total revenues in 2015 due to the divestiture of the
aforementioned two unprofitable product lines to be less than 10%
of its total revenues in 2014.
The Company had loss from operations of US$18.2 million in fiscal year 2013 and
US$24.1 million revenues in the first
nine months of 2014, including loss from operations of US$9.3 million and US$8.1
million from TV-attached digital frames in the corresponding
periods, and loss from operations of US$1.2
million and US$1.5 million
from airport digital TV screens in the corresponding periods.
As a result of the aforementioned transaction in connection with
its TV-attached digital frames business, the Company will use cost
method to report results from TV-attached digital frames in
airports in the first quarter of 2015.
As a result of the aforementioned transaction in connection with
its airport digital TV screens business, the Company will use
equity method to report results from airport digital TV screens in
the first quarter of 2015.
About AirMedia Group Inc.
AirMedia Group Inc. (Nasdaq: AMCN) is a leading operator of
out-of-home advertising platforms in China targeting mid-to-high-end consumers.
AirMedia operates the largest digital media network in China dedicated to air travel advertising.
AirMedia operates digital frames in 26 major airports and digital
TV screens in 26 major airports, including most of the 30 largest
airports in China as of the date
of this press release. In addition, AirMedia sells advertisements
on the routes operated by seven airlines, including the four
largest airlines in China. In
selected major airports, AirMedia also operates traditional media
platforms, such as billboards and light boxes, and other digital
media, such as mega-size LED screens.
In addition, AirMedia has obtained exclusive contractual
concession rights until the end of 2020 to develop and operate
outdoor advertising platforms at Sinopec's service stations located
throughout China.
For more information about AirMedia, please visit
http://www.airmedia.net.cn.
Safe Harbor Statement
This announcement contains forward-looking statements. These
statements are made under the "safe harbor" provisions of the U.S.
Private Securities Litigation Reform Act of 1995. These
forward-looking statements can be identified by terminology such as
"will," "expect," "anticipate," "future," "intend," "plan,"
"believe," "estimate," "confident" and similar statements. Among
other things, the Business Outlook section and the quotations from
management in this announcement, as well as AirMedia Group Inc.'s
strategic and operational plans, contain forward-looking
statements. AirMedia may also make written or oral forward-looking
statements in its reports to the U.S. Securities and Exchange
Commission, in its annual report to shareholders, in press releases
and other written materials and in oral statements made by its
officers, directors or employees to third parties. Statements that
are not historical facts, including statements about AirMedia's
beliefs and expectations, are forward-looking statements.
Forward-looking statements involve inherent risks and
uncertainties. A number of important factors could cause actual
results to differ materially from those contained in any
forward-looking statement. Potential risks and uncertainties
include, but are not limited to: if advertisers or the viewing
public do not accept, or lose interest in, AirMedia's air travel
advertising network, AirMedia may be unable to generate sufficient
cash flow from its operating activities and its prospects and
results of operations could be negatively affected; AirMedia
derives most of its revenues from the provision of air travel
advertising services, and any slowdown in the air travel
advertising industry in China may
materially and adversely affect its revenues and results of
operations; AirMedia's strategy of expanding its advertising
network by building new air travel media platforms and expanding
into traditional media in airports may not succeed, and its failure
to do so could materially reduce the attractiveness of its network
and harm its business, reputation and results of operations; if
AirMedia does not succeed in its expansion into gas station,
in-flight internet services and in-air multimedia platform or other
outdoors media advertising, its future results of operations and
growth prospects may be materially and adversely affected; if
AirMedia's customers reduce their advertising spending or are
unable to pay AirMedia in full, in part or at all for a period of
time due to an economic downturn in China and/or elsewhere or for any other
reason, AirMedia's revenues and results of operations may be
materially and adversely affected; AirMedia faces risks related to
health epidemics, which could materially and adversely affect air
travel and result in reduced demand for its advertising services or
disrupt its operations; if AirMedia is unable to retain
existing concession rights contracts or obtain new concession
rights contracts on commercially advantageous terms that allow it
to operate its advertising platforms, AirMedia may be unable to
maintain or expand its network coverage and its business and
prospects may be harmed; a significant portion of AirMedia's
revenues has been derived from the six largest airports and four
largest airlines in China, and if
any of these airports or airlines experiences a material business
disruption, AirMedia's ability to generate revenues and its results
of operations would be materially and adversely affected;
AirMedia's limited operating history makes it difficult to evaluate
its future prospects and results of operations; and other risks
outlined in AirMedia's filings with the U.S. Securities and
Exchange Commission. AirMedia does not undertake any obligation to
update any forward-looking statement, except as required under
applicable law.
Investor Contact:
Raymond Huang
Senior Director of Investor Relations
AirMedia Group Inc.
Tel: +86-10-8460-8678
Email: ir@airmedia.net.cn
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SOURCE AirMedia Group Inc.