With its stock price hovering at about USD0.83 at the close of trading on November 14 — a drop of almost 75% since the beginning of 2008 — Chinese wireless value-added services company Linktone (LTON) apparently believes it does not need additional revenue and has severed its exclusive advertising agreement with Tianjin Satellite Television.
A year ago, Linktone entered into a definitive agreement with Tianjin Satellite Television through one of Linktone's wholly-owned media subsidiaries, Shanghai Lang Yi Advertising, for Linktone to serve as the exclusive, long-term partner for all non-4A Category I advertising on the channel. TJSTV is a popular satellite TV channel in China which reaches more than 50 million households, and over 170 million urban viewers in all 31 provinces throughout China. The total Category I advertising revenue for TJSTV was estimated to be nearly CNY100 million in 2007.
Linktone said in November 2007 that it would dedicate a team of roughly 30 experienced media professionals to work closely with TJSTV to provide better, customized services to advertisers beginning in 2008.
Linktone has not stated why they cancelled this deal, saying in its statement only that it "will cease to serve as TJSTV's advertising agent effective immediately". Linktone is determining the extent of any impairment charge that will be recorded on its financial statements as a result of this decision.
At the same time, Linktone announced the results of its 2008 annual general meeting of shareholders held last week. The company reported Thomas Hubbs and Muliawan Guptha will serve as Class I directors in the company until the 2011 annual general meeting of shareholders or until their successors are elected and duly qualified.