Chinese television advertising company China Mass Media (NYSE: CMM) today announced its unaudited financial results for the second quarter ended June 30, 2011. Total net revenues were RMB 51.7 mln (USD 8.0 mln), a decrease of 9.1% from the second quarter of 2010 and an increase of 1.6% from the first quarter of 2011.
Net income was RMB 11.2 mln (USD 1.7 mln), an increase of 158.6% from RMB 4.3 mln in the second quarter of 2010 and an increase of 35.3% from the first quarter of 2011.
Revenues from advertising agency services were RMB 45.7 mln (USD 7.1 mln) in the second quarter of 2011, a decrease of 10.1 % from RMB 50.8 mln in the second quarter of 2010, and a decrease of 2.2% from RMB 46.7 mln in the first quarter of 2011. As expected, revenues were affected by a decrease in sales during the advertising industry's traditional low season. In particular, revenues from CMM's "Daytime Advertising Package" and "Television Guide Package" decreased. However, certain new clients advertising through CMM's "Periodic China News Package" on CCTV-4 contributed to a noticeable increase in sales compared with the previous quarter. As a result, total revenues from advertising agency services only decreased slightly from the first quarter of 2011. The decrease in revenues compared with the second quarter of last year was mainly due to the decrease in revenues relating to CCTV-4, as the time slots available for sale decreased from 90 seconds to 60 seconds.
Revenues from production and sponsorship services were RMB 9.4 mln (USD 1.5 mln) in the second quarter of 2011, an increase of 6.6% from RMB 8.9 mln in the second quarter of 2010, and an increase of 31.9% from RMB 7.2 mln in the first quarter of 2011.
CMM's application to list on the Hong Kong Stock Exchange was rejected in July 2011 due to CMM's dependence on CCTV.
CEO Wang Shengcheng added that because CMM did not reach an agreement with CCTV-E and CCTV-F over contract pricing from July 1, 2011 to June 30, 2013, it terminated its contracts with both channels effective July 1, 2011. As a result, from the third quarter of 2011, total advertising time obtained by CMM will decrease significantly. Since the advertising time sold for CCTV-E and CCTV-F channels was limited in the past, CMM does not expect overall revenue and total advertising time sold to be significantly adversely affected. Over the past three years, there were no viewership statistics for these channels, making it difficult for CMM to promote sales of advertising time. Revenues related to CCTV-E and CCTV-F were approximately RMB 80,000 (USD 12,000) in the six months ended June 30, 2011, and approximately RMB nil, RMB 5.7 mln and RMB 0.4 mln for each of the years ended December 31, 2008, 2009 and 2010, respectively.
CMM currently expects to generate total net revenues of between RMB 52 mln (USD 8.1 mln) and RMB 57 mln (USD 8.8 mln) for the third quarter of 2011, including RMB 14 mln in revenues from CCTV in relation to special events services provided to CCTV for the 2008 Beijing Olympic Games. The expected range of net revenues represents a potential decrease of up to 5.0% or increase of 4.1% compared with the third quarter of 2010.
8/22/11