May 2009
Cautionary Note About Forward-Looking Statements
Except for the historical information contained in this presentation (this “Presentation”), the
matters discussed in this Presentation or otherwise incorporated by reference into this
Presentation are “forward-looking statements.” Such forward-looking statements are made
pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995.
These statements can be identified by the use of forward-looking terminology such as “believes,”
“expects,” “may,” “will,” “should” or “anticipates” or comparable terminology, or by discussions
of strategy that involve risks and uncertainties. These forward-looking statements involve risks
and uncertainties, including those identified within the Company's Current Report on Form 8-K
filed with the U.S. Securities and Exchange Commission (the "SEC") on February 11, 2008 as well
as the Company's other filings with the SEC from time to time. Although the Company believes
the expectations reflected in such forward-looking statements are based on reasonable
assumptions, the Company cannot assure shareholders or investors that these expectations will
prove correct, and the actual results that the Company achieves may differ materially from any
forward-looking statements, due to such risks and uncertainties. These forward-looking
statements are based on current expectations, and the Company assumes no obligation to
update this information, except as required by law.
Agenda
I.
Overview
II.
Industry Overview
III.
Strategy Overview
IV.
Organizational Overview
V.
Financial Overview
Agenda
I.
Overview
II.
Industry Overview
III.
Strategy Overview
IV.
Organizational Overview
V.
Financial Overview
Overview
China’s expanding economy and surging domestic consumption is driving brands to increase
and speed up expansion into China
The expansion is driving rapidly increasing advertising spend in China as existing and new
brands compete for consumer attention
The Chinese market poses significant challenges to advertisers
Large consumer base but small as a percentage of the population
Consumer base, though large, is a small percentage of the population (roughly 10%)
Traditional television, outdoor and print media has become very expensive
The effective cost of most mass media advertising price a significant number of brands out of the
market
Advertisers looking for solutions that target the affluent and mass affluent consumer base
Legend Media’s business plan is pinned to the market trends and follows a simple two rule
approach
Secure the rights to advertising media that clearly targets the trends of the emerging affluent and
mass affluent
Any rights secured have to be low cost (undervalued by the market) thus building a high margin
business
1 “China Media Forecasts”, GroupM; Internal Conversion from RMB to US$
Overview
Legend Media has entered into two distinct sectors of the advertising industry that have overlying
connection – they target the mass affluent of China
Radio Advertising: part of the foundation of the Company and is the pivotal piece of the entire growth
strategy
Radio advertising in China is highly fragmented, underutilized and undervalued
Clearly targets car owners, a leading indicator of affluence
Largest radio listening audience in the world with over 394 million radio households
2.7% of China’s national advertising being spent on radio versus a worldwide average of 8.1% and a
US average 11.8%
China’s 2007 radio advertising spend hit US$ 646 million versus US$ 22 billion in the US
Legend Media is positioned to acquire large blocks of low cost radio advertising without the capital
typically associated with buying radio stations
Airline magazine advertising: targeted medium that fits with the Company’s strategy and compliments the
efforts made in radio
Travel is a leading predictor of affluence in China
The magazine provides an entry into to certain advertisers who are not aware of the value of radio
Limited inventory in the market has made it a far easier sale than radio
Current Radio Network
Xian
Beijing
Tianjin
Beijing FM90.5
News and entertainment; reaches
over 17 million
45,940 advertising minutes per year
Tianjin FM 92.5
Pop music; reaches over 10 million
19,710 advertising minutes per year
Xian FM 95.5
Pop Music; reaches over 8 million
19,710, advertising minutes per year.
Reaching 35 Million
and increasing
HNA Airline Group
80 pages of advertising per month
Copy at every seat of every flight
3 year exclusive agreement
Targets the affluent travelers in China
HNA Airline Group
11 airlines serving domestic and international routes
198 aircraft operating over 4,200 flights per week
15,000,000 passengers in 2006, over 17,000,000 in 2007
and over 20,000,000 in 2008
4th largest airline group in China
Airline Magazine
Plus:
International Routes to
Africa
Luanda, Angola
Asia
Astana, Kazakhstan
Osaka, Japan
Seoul, South Korea
Taipei, Taiwan
Bangkok, Thailand
Dubai, UAE
Europe
Brussels, Belgium
Berlin, Germany
Budapest, Hungary
Novosibirsk, Russia
St. Petersburg, Russia
North America
Seattle, WA, United States
Route Map
Premium Client Base
Agenda
I.
Company Overview
II.
Industry Overview
III.
Strategy Overview
IV.
Organizational Overview
V.
Financial Overview
Conducive Environment for Advertising
China’s…
Rapidly growing economy
15% CAGR from 2002 – 2007
14% CAGR from 2007 - 2012
Growing affluence and disposable income
3rd largest economy in the world; 2nd largest economy based on “purchasing power parity”
By 2015, there will be 27 million households in China earning over 100,000 RMB, growing to 41
million in 2025E
In 2006, China had 310,000 US$ millionaires, estimated to grow to 609,000 by 2011, the
world’s most
By 2011 there will be 16 million high net-worth individuals in China with $6.2 trillion in total
assets 1
Is resulting in…
Rapid increase of domestic consumption
Rapid increase in China advertising sales
1 “HSBC joins race to cash in on China's new millionaires “, Reuters March 31, 2008
Domestic Consumption Driving Advertising Boom
$ 1.5 trillion in 2008
21.6% growth in 2008
20% forecasted growth in
2009
No expectation of a
slowdown as the
government pushes for
retail sales expansion
China’s emergence as
fastest growing and
potentially largest retail
market in the world is
driving brands to shift
strategic focus towards
brand building in China
Source: National Bureau of Statistics of China, www.chinaview.cn
China’s Advertising Spend Rapidly Expanding
Expanding affluent and
middle class
2008 retail sales exceeded
$1.5 trillion
China’s economic policies
geared towards further
expansion of consumer
consumption
Brands looking to reach
largest consumer market in
the world
China has become the 2nd
largest advertising market
in the world behind the
United States and still has
not fully developed /
utilized their media assets
Source(s): Barboza, David ( July 20, 2008). “Western Olympic Ads Cheerlead for China”. NYTimes.com; GroupM (2008). “China Media Forecasts”, Internal Conversion from RMB to US$;
Radio Industry Overview
Forecasted fast growing radio advertising market `
Radio advertising is expected to grow 50.6% in 2008 and 33.4% in 2009
Underutilized Chinese radio advertising market
2.7% of China’s advertising is spent on radio vs. a worldwide average of 8.1% and a US average of 11.8%.
Low utilization rates
Most cost effective advertising method in China – radio advertising
China has the largest radio listening audience in the world with over 646 million radio audience.
Radio advertising is most cost effective: only $0.77 per thousand impressions in China vs. $9.53 for
outdoor, $9.86 for television, $25.79 for magazines, $25.84 for newspapers in China.
Low acquiring cost of radio advertising minutes
The forecasted average cost of acquiring radio advertising minutes is $22 per minute and the average
selling price is $193 per sold minute. Break even point is at 23.8% utilization rate.
Fragmented Chinese radio advertising market and low competition
China’s radio advertising market is undervalued and highly fragmented, yet has great growth potential
Legend Media is in the position to take an advantage of the fast growing yet fragmented radio advertising
market
Radio Advertising Still Developing
Recent and forecasted
growth rate outpacing
overall advertising growth
Expansion has come
without a market
consolidator / market
champion
Highly fragmented market
which until recently has
been overlooked as a
method to reach the
consumer base in China
Increasingly mobile
population increases value
of radio as TV hours reduce
China’s radio industry
poised for a renaissance
Source(s): GroupM (2008). “China Media Forecasts”, Internal Conversion from RMB to US$;
China’s Radio Advertising Underutilized
As a % of total advertising, China’s radio industry,
on average, trails the rest of the world
In 2007, the USA’s total advertising spend was 12
times larger than China’s while USA’s radio
advertising was 33 times larger than China’s.
Source: ZenithOptimedia. Group[M and PriceWaterhouseCoopers; Internal calculations prepared for certain figures using ZenithOptimedia, GroupM and PriceWaterhouseCoopers data
Radio Underutilized Despite Growing Car Sales
Car radio listening audience
grew 35% in 2007 alongside car
sales
95% of drivers listen to radios
and most of them spend at least
30 minutes listening to radios
every time
Nationwide increase in traffic
leads to longer commutes and
radio listening times for drivers:
90% of drivers choose to listen
to radios while waiting in traffic
60% of drivers reporting paying
attention to the radio
advertising
Radio is well positioned to target
China’s affluent as car sales
continue to grow
Source: National Bureau of Statistics of China, Xinhua Economic News, Google Finance and internal calculations
Radio Underutilized Despite Financial Value
Lower Cost per Thousand than Alternatives
In China, television and outdoor are 12 times more than radio; magazines and newspapers 33 times more
Compared to other markets the CPT value discrepancy is too large
Reaching over 93% of the population, radio satisfies large advertisers’ needs to expand nationally at a very low
cost per impression
A national radio platform will be cost attractive to advertisers and have long term price momentum
Focused on Targeting the Affluent
Owning a car and travelling by air are important for
social status in China
Both overseas and domestic travel are the top
choices for leisure activity of China’s affluent
Source: “Insights”. (Second Quarter 2007 and Third Quarter 2007”). MasterCard Worldwide and HSBC. www.masterintelligence.com;
Airline Magazine Industry Overview
Fast growing airline / airport based advertising as air travel booms
Effective way to reach affluent consumers.
76% of China’s affluent have flown in past 2 years
56.5% fly annually
Low acquiring cost of airline magazine pages
$1,500,000 per year for 80 pages of advertising per month
$1,600 per page per month for a magazine with a reach over 1,200,000 monthly
Airline magazines have not been specifically exploited as cost to acquire pages is still low
Legend Media is in a good position to take an advantage of the airline magazine niche as it can
leverage existing success with 4 th largest airline in China
Legend’s Airline Magazine is Well Positioned
Legend’s airline magazine is positioned to satisfy
large advertisers’ needs to reach the affluent and
middle class at a cost lower than traditional print
media
Legend’s airline magazine has the potential to reach
20,000,000 people per year
Legend is partnered with the only privately held
airline group in China which has significant
expansion plans
Airline passengers are a captive audience
Excellent value proposition for advertisers
Lower cost per thousand than other print medium
Targeted to affluent
Premium Client Base
Agenda
I.
Company Overview
II.
Industry Overview
III.
Strategy Overview
IV.
Organizational Overview
V.
Financial Overview
Legend Media’s Strategy Summary
Develop Scale of Inventory
Opportunity exists for a “land grab”
Radio stations are motivated to sell
advertising minutes at low rates
Radio stations are government
owned and yet to be efficiently
commercialized
Utilization rates are low at under
20% nationally
Take advantage of undervalued
media and aggressively acquire
advertising rights
Acquire existing companies looking
for exit
508,000 minutes can be acquired
today if capital is available
Provide Content Support
Help stations develop content
Provide syndicated content
for free
Provide outside consultants
to provide strategic advice
Initial focus on morning and evening
drive times
Develop the #1 content for
these periods
Revenue / minute 2x to 3x
other times
Use content as a branding method
for advertisers
Increase interaction between
audience and station
Use acquired content talent to
provide support to all channels
Increase Listenership
Run listenership campaigns through
on and off-air contests which help
improve the content
Use special events to promote the
media in the long run, and enhance
the reputation to the clients
Promote as a way to pass the
time commuting
Target mass transit users
Create incentives for Taxi’s to tune
in
Use special events tied in with on-
air
Use barter to increase level of
sponsored events
Use outdoor media to promote trial
Legend Media’s Strategy Summary
Refine and Improve Sales Efforts
Activate 4A agencies
With scale the offering value
increases enough to get 4A
support
Use existing relationships to
create strategic alliances
Add senior radio sales talent to
existing sales teams
Recruit in talent from
developed markets
Recruit senior talent from
existing media companies
Use Andre Nair and Clear Channel
sales executives to provide
overarching strategies
Champion radio and sell on the
value of radio
Find Outlets for Unsold Inventory
Barter radio advertising for
Outdoor media to promote
the channels
Products that can be
converted to cash (even at a
discount)
JV with established shopping TV
channel to launch radio based
product sales
Launch internet sites related to the
content being played and promote
the sites with unsold inventory
Provides internet ad space
Creates database for direct
marketing applications
Web Based Industry Solution
Create web based application to
provide advertisers and agencies a
comprehensive view of all available
inventory
“Make it easy” to buy radio
advertising at the local, regional and
national level
Allow access to all radio channels
Charge access fees and high
commissions
Expands inventory without fixed
costs
Effective control of market by
controlling sales channel
Reduces competition by providing
channels an efficient distribution
model
Legend Media’s Strategy Summary
Local
Focus on city /
provincial based brands
Heavy focus on driving
new sales versus brand
building
Promote radio as a way
to drive customers in
the “door”
Focus on selling off
peak and remnant
space at very attractive
prices
Use price as a sales tool
where needed
National
Focus on large
international brands
Promote value
proposition of radio as
a national platform
with tremendous value
Sell premium time at a
premium price
Focus on helping brand
building and driving
incremental sales
Push business into
agencies while agencies
pull the business in
Direct
Agency Based
Activate relationships
with large international
and local agencies
Ensure agencies add
radio to mix of media
offered to clients
Educate media buyers
on the value
proposition of radio in
China
In near-term, offer
higher commissions
than competitive
media
Marketing
Support sales team and
agency efforts
Active B2B campaign
targeting local and
headquarters decision
makers of
multinational brands
Provide information on
the value of radio in
the Chinese market and
how it can help brands
Indirect
Agenda
I.
Company Overview
II.
Industry Overview
III.
Strategy Overview
IV.
Organizational Overview
V.
Financial Overview
Legend Media’s Foundation
Experienced,
execution oriented
management team
Clear and
executable strategy
Strong board and
outside advisors
Competitive Strength Overview
Strong management team
Diverse operating experience while having deep experience in China’s advertising market
Execution oriented, capable of converting a great strategy into action
Sino American team
Sales strategy development guided by relevant advisors
Clear understanding of market and keys to developing a successful sales model
Andre Nair, with 27 years of 4A experience, provides relationship resources and sales
strategy guidance
Experienced Radio Sale Executives (from Clear Channel) from the USA have been involved
with the development of the sales strategy from the beginning
Ready to access talent
Additional sales leadership identified and ready to join as Company scales
Sales leadership talent from China, Taiwan, Singapore and the United States identified
and ready to join as Company scales
In-depth knowledge of current state of radio advertising market
Competitive Strength Overview
Strong relationship with regulatory agencies
Consistent communication between Company leadership and members of the regulatory
agencies
Deep relationships with heads of radio stations
Management has access to key decision makers at national, provincial and city level radio
stations in China by which favorable pricing and terms can be secured
Strong ties to competing radio advertising companies
Management maintains relationships with senior managers of the competing radio
advertising companies
The relationships have provided a pathway to acquiring two competing companies at
what is expected to be favorable rates and terms
Administrative, Finance and Accounting
Transparent
Automated and scalable
US GAAP reporting
Uniquely Qualified to Succeed in China’s Media Market
The right relationships
Ju BaoChun’s has deep relationships with the necessary parties
Regulatory relationships that will facilitate negotiations for CCR and other prime radio assets
Radio station relationships that will ensure internal support needed to a) gain control of the
advertising rights and b) provide needed content consulting
Competing radio advertising companies that will work to facilitate with the acquisition portion of
the strategy
Andre Nair is connected to every major media buyer and brand in Asia
27 years of ad agency experience with a focus on media buying can be fully applied
The heads of GroupM China and Universal McCann China are former employees of Mr. Nair
Competing radio advertising companies do not have the high level personal relationships with the
media buyers and brands
The right people
Ju BaoChun has spent most of his adult life selling advertising, securing media rights at a low cost and
building successful advertising sales organizations
Jin Xin has a proven history of building and managing multi location, multi channel sales organizations
Jeffrey Dash understands emerging markets and what it takes to build a solid and scalable infrastructure
Uniquely Qualified to Succeed in China’s Media Market
The right strategy
Build a media base focused on reaching China’s affluent
Focus on national radio channels to quickly build a national listenership at relative low cost
No need to do it one city at a time when national radio reaches 93 % of the population
Acquire competitors
In talks with competition about acquiring their media assets
Competitors will require some restructuring to help maximize their results;
The management of competitors come from the content / creative end of the industry; the businesses will
need to be refocused on sales, marketing and technology
Continue to develop a robust sales platform focused meeting advertisers needs to reach the
affluent of China
Company Accomplishments to Date
Beginning
February 2008 Company formed and reverse merged onto OTCBB (LEGE)
March 2008 secured first round of $5 million
May 2008 entered radio advertising business with first acquisition
Recruited world class board of directors and advisors
Added seasoned advertising and business professionals to the board
Recruited current and former Clear Channel sales executives to act as advisors
Acquisition of radio stations
Secured advertising rights for Tianjin FM 92.5
Secured advertising rights for Beijing FM 90.5
Secured advertising rights for Xian FM 95.5
Acquired airline advertising business and experienced radio advertising manager
Exclusive agent for HNA Airline Group’s airline magazine
Added established professional management with extensive radio experience
Expanded sales force and gained experience
Added experienced sales force to sales infrastructure
Company Accomplishments to Date
Establishment of sales force
Expanded sales force in Beijing, Tianjin and Xian
Added senior executive with a proven track record of building multi location and multi channel sales
organizations
Built infrastructure of internal controls and financial system
Implemented accounting module of market leading ERP system
Added standard internal controls
Operating units report to corporate where all transactions are reviewed and all account records kept
Entire finance and account structure scalable as Company expands
Positioned company for next round of acquisitions
Solid senior management that mixes deep local understanding with western best practices
An established set of relationships, advisors and prospective employees capable of executing on the
strategy
Established and scalable accounting and finance infrastructure
A clear roadmap for acquisitions and expansion that ensures a market leading position
Agenda
I.
Company Overview
II.
Industry Overview
III.
Strategy Overview
IV.
Organizational Overview
V.
Financial Overview
Note to financial numbers
Numbers through 2009 are based on our current plan with existing resources
2010 is based on our existing business plus the assumption we secure a
second round of financing and
We close the two targeted acquisitions; one is close to a term sheet while the
second is early stage discussions
We secure the rights to an additional x radio channels
The Company has a fiscal year ending June 30; all annual numbers are
presented on a fiscal year basis unless otherwise noted
Pro Forma Profit and Loss (fiscal year ended June 30)
FY 08
FY09 F
FY10 F
in USD 000
Revenue
4,726
$
11,005
$
40,623
$
Cost of Revenue
2,789
5,470
13,469
Gross Profit
1,937
5,535
27,154
margin %
41%
50%
67%
S, G & A
Selling Expense
871
2,762
8,960
Overhead, Operating Units
329
1,635
3,419
Overhead, Corporate
1,492
1,569
1,500
S, G & A
2,692
5,966
13,879
EBITDA
(755)
$
(431)
$
13,275
$
