On October 10, the State Administration for Market Regulation issued an announcement, approving Focus Media’s acquisition of Xinchao Media’s equity with additional restrictive conditions after review in accordance with the law. This approval marks important progress in the integration of the elevator media industry, which has attracted much market attention.
This year, the "Opinions on Vigorously Promoting the High-Quality Development of the Advertising Industry in the New Era" issued by six departments including the State Administration for Market Regulation clearly proposed to support the digital, intelligent, and scenario-based development of outdoor advertising, and encourage qualified advertising companies to integrate resources across the entire industry chain and cultivate leading companies with international competitiveness. This provides a clear industrial policy background for the regulatory direction of this transaction.
The review decision not only supports the implementation of the transaction, but also releases a clear signal of the direction of industrial upgrading. Focus Media stated that the company will promote this transaction in compliance with laws and regulations, focusing on aspects such as price stability and fair services. While releasing the efficiency of industry integration, it will continue to protect the legitimate rights and interests of advertisers, spot resource holders and other market operators.
Conditional approval, equal emphasis on development and regulation
Judging from the review results, the case was finally approved with restrictive conditions attached. The announcement shows that after an in-depth inspection of the overall operating conditions of the advertising industry, the State Administration for Market Regulation believes that Internet advertising has become the dominant advertising channel in the advertising industry (the revenue from advertising will account for more than 85% of total advertising revenue in 2025); advertising categories such as transportation advertising and traditional outdoor large-screen advertising will form certain competitive constraints on elevator media advertising in terms of pricing and effectiveness.
At the same time, the State Administration for Market Regulation has held multiple rounds of discussions with Focus and other parties on how to reduce the possible impact of this concentration of operators. Conditional approval is a review method that takes into account both regulation and development. Typical cases of concentration review released by the State Administration for Market Regulation this year show that regulatory authorities have promoted the implementation of concentration in multiple industries by attaching restrictive conditions, and legally supported enterprises to revitalize idle assets through mergers and acquisitions, improve operating efficiency, and promote win-win development of operating entities. The review path of this Focus Trend case is in line with this consistent orientation.
Diversified development of the industry, matching responsibility and development
The announcement shows that Focus Media’s market share in China’s elevator media advertising market is 50%-55%, and Xinchao Media’s market share is 5%-10%. The aggregate market share of the post-concentration entities is 55%-60%. However, market share is not the only basis for competition analysis of operator concentration. This review also comprehensively considered factors such as the rapid development of Internet advertising, competitive constraints formed by other advertising forms, and the future development trend of the advertising industry.
The greater the scale and market influence of an enterprise, the more responsibilities it needs to bear commensurate with its market position. The restrictive conditions attached to this exchange involve price stability, fair services and other aspects. While releasing the efficiency of industry integration, it will continue to protect the legitimate rights and interests of advertisers, spot resource holders and other market operators.
From scale competition to value competition, industrial integration will ultimately improve efficiency
The restrictive conditions attached to this transaction reflect the balance of industrial integration efficiency and the direction of high-quality industrial development.
In terms of advertisers' rights and interests, Focus solemnly promises that, without legitimate reasons, the actual annual transaction prices in each city after the concentration will not exceed the actual transaction prices in the corresponding cities of Focus Media and Xinchao Media in the 24 months before the effective date. At the same time, Focus will continue to honor existing customer contracts and all their commercial terms. Focus always gives priority to the rights and interests of its customers and ensures that different types of customers receive corresponding media services based on the principles of fairness, reasonableness and non-discrimination.
On the basis of fully ensuring market accessibility and customer choice, this integration will help alleviate the industry's long-standing inefficient investment problems such as repeated site laying, repeated development, and repeated operations, and promote the focus of industry competition from low prices to competition in technological innovation, delivery efficiency, customer service, and marketing effectiveness.
In the context of the scale of China's advertising industry exceeding 2 trillion yuan and moving from large to strong, the integration of focus and new trends conforms to policy guidance and industry development trends. After the completion of this transaction, Focus and Xinchao are expected to further collaborate in terms of media resources, operating systems and technical capabilities. By optimizing resource allocation and improving operational efficiency, Focus and Xinchao will invest more resources in areas such as digital operations, intelligent placement, data capabilities and advertising effect measurement.
Analysts believe that regulation is not to restrict development, but to make development healthier; integration is not to reduce competition, but to promote competition from quantity to quality. When scale competition and industrial upgrading go hand in hand, it means that the elevator media industry will become more standardized and mature. This is also the core signal released by this integration to the industry.
