J.P.Morgan Investment Banking Pitch Book
VALUATION ANALYSIS
Business overview
Focus Media is a business that primarily sells advertising space or time on the most extensive network of fixed
digital displays and poster displays in China
■ Focus Media's display assets are well distributed in elevators and public areas of commercial, office and residential
buildings throughout most of China's major cities, creating for advertisers both an effective national market reach
as well as a deep local market presence
■ Focus Media's management believes that sometime in the next 5 years, its customer value proposition (mind share
of Chinese consumers) and effectiveness of its service may decline as a result of three main trends
■ Advertising budgets continuing to migrate from traditional media towards digital, Internet and mobile media
providers;
Wireless Internet performance improving dramatically in speed, affordability and coverage due to massive
investment in communications infrastructure; and
Personal display devices (smartphones and tablets) gaining rapid adoption and dependence among Chinese
consumers
Focus Media's management further believes that if the company is to maintain its growth and profitability in the
near to medium term future, it will be necessary to compete with internet and wireless based providers of
advertising services, requiring Focus Media to significantly increase its capital expenditure and R&D budgets,
potentially impairing its future financial performance
PROJECT FOXTROT
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