Focus discards Internet unit to concentrate on DOOH
China’s Focus Media is returning to its digital out-of-home roots and selling off its Internet advertising subsidiary Allyes.
A definitive agreement with technology investment firm Silver Lake will see Focus – which is traded on the U.S. NASDAQ market under the symbol FMCN – receive $124m for its 62 percent stake in Allyes.
Silver Lake will also acquire an undisclosed further chunk of equity in the Internet company from other shareholders, believed to be Allyes staff who bought the remaining 38 percent of the firm from Focus earlier this year.
Set up in 1998, Allyes provides a range of services to online media owners and advertisers in China.
But Internet operations have not performed strongly for Focus. In 2009, they brought in gross revenue of $113m and gross profit of $14.5m – around 20 percent of the firm’s revenue figure but just nine percent of the profit.
After the transaction is completed in the near future, according to Focus’s founder, chairman and CEO Jason Jiang, his firm “will be more focused on our core businesses, striving to continuously enhance and expand our media platforms through our LCD display network, poster-frame network, in-store network and movie-theatre network”.
For Focus, the decision to sell its majority stake suggests that – as Jiang has signalled more than once this year – despite dalliances with both the online and mobile markets, and at one point considering an initial public offering (IPO) for Allyes, it now has confidence that digital out-of-home can sustain the kind of growth that its Wall Street investors require.
www.allyes.com
www.focusmedia.cn
www.silverlake.com
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