China Media1 Corp.
OTC Bulletin Board : CMDA

China Media1 Corp.

August 23, 2006 08:30 ET

China Media1 Swaps Guangzhou for Chengdu, Haikou and Xian

IRVINE, CALIFORNIA--(CCNMatthews - Aug. 23, 2006) - China Media1 Corp. (OTCBB:CMDA) wishes to make the following announcement.

Since the acquisition of the Guangzhou Baiyun International Airport ("GZ Airport") contracts, there is an ongoing dispute between Guangzhou Chuangrun Advertising Co. Ltd. ("Chuangrun") (our exclusive operating agent in China) and ActionView Far East Limited ("ActionView") (scrolling sign box supplier). We have been recently made aware that ActionView has received a letter from GZ Airport that raised questions about the validity of the two advertising contracts we acquired from Chuangrun. After lengthy discussions with Mr. Adrian Cai, controlling person of both China Media1 and Chuangrun; in order to protect the interest of China Media1 shareholders, Mr. Cai has at his own cost, arranged to swap the two GZ Airport contracts with Titan Media for airport advertising contracts in Chengdu, Haikou and Xian. It was earlier this year that we acquired our Shenzhen Airport contract from Titan and it has started to generate revenue in the third quarter. This decision was made after careful consideration of the situation. Chengdu is the 6th largest airport in China and the contract covers 32 signs of different sizes. Haikou the 8th largest and covers 10 large and 17 small signs. Xian the 9th largest and covers 11 large and 19 small signs. The combined net revenue of the 89 signs is projected to exceed that of the combined 150 signs in Guangzhou because we can avoid the high rental charge of the in-door signs (US$ 3,750 or RMB 30,000 per sign per month) and the revenue sharing arrangement with ActionView in Guangzhou. There will be neither monetary nor share considerations in the swap and all the related costs will be borne by Mr. Cai. Please see the table below for a comparison of the net revenue projections:

All figures converted from Renminbi at 8 RMB to US$ 1



Price Rent
per Total per Total Net
Airports Signs Posters Poster Revenue Month Rent Revenue
-----------------------------------------------------------------------
(US$) (US$) (US$) (US$) (US$)

GZ Inside 100 3 5,333 19,200,000 3,750 4,500,000 14,700,000
GZ Outside 50 10 1,800 10,800,000 1,250 750,000 10,050,000
--- ---------- ----------
Total 150 30,000,000 24,750,000
--- ----------
ActionView (Revenue Share) (6,187,500)
----------
Net revenue (Projected) 18,562,500
----------
----------



Price Rent
per Total per Total Net
Airports Signs Posters Poster Revenue Month Rent Revenue
-----------------------------------------------------------------------
(US$) (US$) (US$) (US$) (US$)

Chengdu
- large 19 5 4,000 4,560,000 875 199,500 4,360,500
Chengdu
- small 13 10 3,000 4,680,000 625 97,500 4,582,500
Haikou
- large 10 5 2,000 1,200,000 500 60,000 1,140,000
Haikou
- small 17 10 1,500 3,060,000 250 51,000 3,009,000
Xian
- large 11 5 3,000 1,980,000 625 82,500 1,897,500
Xian
- small 19 10 2,000 4,560,000 375 85,500 4,474,500
-- ---------- ----------
Total 89 20,040,000 19,464,000
-- ---------- ----------
Depreciation (Amortization of the estimated
sign costs over 5 years) (250,000)
----------
Net revenue (Projected) 19,214,000
----------
----------


As far as we can determine, there were two root problems with the GZ Airport contracts. First, they were signed about 2 years ago and the airport had since changed from a government agency into a private corporation together with a complete overhaul of management personnel. We have met with airport representatives several times and the receptions were either hot or cold depending on the person. Second, the ActionView design also posted a problem. Since signing of the GZ Airport contract and contract with ActionView, Chuangrun started to work with ActionView to develop a scrolling light box with LED display for the outside bus waiting area of the Airport based on ActionView's own design and technology in their light boxes. It has been over a year and the design and technology are still not totally satisfactory. Since the installation of the Shenzhen Airport Departure Level signs earlier this year, we have been experiencing a variety of problems that were not expected before. Although the signs were not purchased from ActionView, they were manufactured by the same factory using the same design and technology. This led to a much more thorough and careful examination of the product by Chuangrun's engineers, especially the glass, electrical, electrical interference, lighting system and overall stability problems. Effort was put in but problems persisted with the Shenzhen signs. These two problems combined to cause a lengthy delay as well as a lot of anxiety amongst all interested parties; shareholders and management included. Since the Shenzhen Airport installations, Chuangrun has learned a lot from the experience and has started to source alternate suppliers. The new signs to be installed at Shenzhen Airport Arrival Level are manufactured by a Guangzhou area specialty scrolling sign maker. They have also contacted a major sign maker in Shanghai that has installed 70% of scrolling signs in the Shanghai area. Both suppliers offer sophisticated state-of-the-art electronic/mechanical systems and are both specialized professional sign makers, and are eager to supply us at very reasonable prices. We will use these new suppliers for the three new airports and we do not expect the kind of problems with Shenzhen Airport to happen again.

About China Media1 Corp.:

China Media1 Corp. has obtained rights to premiere Chinese advertising media assets in China. Its affiliate, Guangzhou Chuangrun Advertising Co. Ltd., operates the advertising space and advertising contracts with top-tier brand names and multi-national corporations as well as large advertising agencies. China Media1 has focused on providing its clients superior advertising locations based on viewership, exclusivity, and uniqueness through the use of its illuminated scrolling poster signs. China Media1's advertising locations include the Airports in Shenzhen, Chengdu, Haikou and Xian, and the Guangzhou MTR (12 Subway Stations). China Media1's website is www.chinamedia1corp.com

Forward Looking Statements:

Any forward-looking statement in this press release is made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertain-ties including, but not limited to, economic and political factors, technological developments, regulatory matters and increased competition. The Company disclaims any obligation to update any such factors or to publicly announce results of any revisions to the forward-looking statements contained herein to reflect future events or developments.

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