Target Media's new funding -- good news for Focus Media? (FMCN)

Target Media, Focus Media's (proposed ticker: FMCN) main Chinese competitor reportedly received a second round of funding worth $20 million from The Carlyle Group. The timing could not be better as Focus Media is expected to go public on Nasdaq this week.

Target Media is the second-largest liquid crystal display advertising firm in China. It has terminals in 20,000 buildings in 45 Chinese cities. It is also expanding into other areas such as golf clubs, supermarkets, convenient stores, hotels, restaurants and bars.

Target Media is headquartered in Shanghai, employs 600 workers, enjoyed revenue of $18.1 million in 2004 (assumes RMB 8.2765 : US $1), and derives 60%-70% of revenue from office buildings.

Target Media's business model is different from that of Focus Media in that it fully owns all of its operations. Focus Media forms joint ventures and uses franchising to develop new markets such as Hong Kong, Taiwan and Singapore.

Comment: Carlyle is likely concerned about Focus Media becoming an even stronger competitor following its IPO -- with expected proceeds to the company from the offering of approximately $93 million. The timing and funding of a direct competitor also appears to give more credibility to IPO-bound Focus Media. For analysis of Focus Media's upcoming IPO see here.

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