On October 10, the State Administration for Market Regulation issued an announcement approving the acquisition of Xinchao Media's equity by Focus Media with restrictive conditions attached. The long-running integration of the elevator media industry has finally reached a critical step. The backdrop against which this deal was completed is also noteworthy. This year, the State Administration for Market Regulation and five other government departments issued the "Opinions on Vigorously Promoting the High-Quality Development of the Advertising Industry in the New Era," which explicitly called for supporting the digitalization, intelligentization, and scenario-based development of outdoor advertising, while encouraging qualified advertising companies to integrate resources across the entire industry chain and cultivate leading enterprises with international competitiveness. For the elevator media industry, which has already entered a mature stage, resource integration and efficiency improvement are becoming new directions for development. As industry concentration further increases, the competitive approach of elevator media may also change: competition that previously revolved heavily around screen locations and resources is beginning to shift more toward operational efficiency, technological capability, and service quality.

Focus Media's Acquisition of Xinchao Approved, Policy Risks Fully Cleared

The most visible aspect of this transaction is the change in market share. According to the relevant market definition, the combined share of Focus Media and Xinchao in the elevator media market after concentration is estimated at approximately 55% to 60%. Many people are therefore curious about why this deal was ultimately able to proceed given such a market share. An important backdrop is that the competitive landscape of the entire advertising market has undergone significant changes. During its review, the State Administration for Market Regulation specifically examined the overall operation of the advertising industry. In 2025, internet advertising publishing revenue accounted for more than 85% of total advertising publishing revenue, making it the primary channel for advertisers. At the same time, other advertising formats such as transportation advertising and traditional outdoor large-screen displays also impose certain competitive constraints on elevator media in terms of pricing and advertising effectiveness. For advertisers, elevator media is just one option within their overall marketing budget. When prices or effectiveness change significantly, budgets themselves can be reallocated among different media. Based on the development trends of the entire advertising market, these external competitive pressures can, to a certain extent, mitigate the competitive effects that this concentration might bring, and this is also an important backdrop that allowed the transaction to move forward. Another backdrop is that the advertising industry itself is entering a new round of integration and upgrading. This year, the State Administration for Market Regulation and five other government departments issued the "Opinions on Vigorously Promoting the High-Quality Development of the Advertising Industry in the New Era," which explicitly called for supporting the digitalization, intelligentization, and scenario-based development of outdoor advertising, while encouraging qualified advertising companies to integrate resources across the entire industry chain and cultivate leading enterprises with international competitiveness. This policy direction is quite clear. For the advertising industry, which has already entered a mature stage, future development increasingly depends on resource integration and efficiency improvement, while enhancing the service capabilities of the entire industry through digitalization and intelligentization. Against this backdrop, the integration of Focus Media and Xinchao becomes easier to understand. The media networks, sales systems, and technology platforms that the two companies previously built separately can, after integration reduces redundant investment, free up more resources to invest in digitalization and intelligent upgrading. After the deal is completed, the more noteworthy question is actually how Focus Media will use its further expanded scale advantage. Based on the commitments Focus Media has voluntarily made, several boundaries have already been clearly defined.

The first is pricing. According to the commitment plan, after concentration, the actual annual transaction prices in each city shall in principle not exceed the corresponding price levels of the 24 months prior to the effective date, while reasonable adjustments can be made based on factors such as inflation. This provides advertisers with relatively stable price expectations. After industry integration, one of the most direct concerns for clients is a significant price increase following changes in the competitive landscape. Now, this has been clearly constrained. At the same time, companies can still reasonably adjust prices based on factors such as inflation, and normal commercial mechanisms are still preserved. This also means that after integration, Focus Media's future performance improvement will rely more on operational efficiency.

The second is customer rights. Focus Media has committed to continuing to fulfill existing customer contracts and to providing services in accordance with the principles of fairness, reasonableness, and non-discrimination. This further clarifies the growth approach after integration. Future synergy space will need to be found more in sales, operations, technology, and media resource utilization rates. For example, higher ad placement rates, more effective customer coverage, and more precise targeting all have the potential to unlock the value of existing screen locations. From an investment perspective, the completion of this transaction also has a very practical significance. This transaction took a long time, and the market had previously been facing uncertainty regarding approval progress and final conditions. With the conditional approval now in place, the core uncertainty at the transaction level has significantly decreased, and for the first time the market can reassess the post-integration cost synergies, ad placement rate improvements, and operational efficiency gains under clearer boundaries.

The Elevator Media Industry Is Expected to Move Beyond Inefficient Competition

As the industry leader, the several commitments Focus Media has voluntarily made this time are significant not only in terms of restraining itself. Especially when leading companies begin to proactively adjust pricing mechanisms, cooperation methods, and competitive boundaries, these changes are likely to further influence the competitive rules of the entire industry. Whoever controls more buildings and covers more cities is more likely to establish a scale advantage. This model had its value during the rapid expansion phase of the industry, but as the market gradually matures, problems have begun to emerge. Focus Media and Xinchao face the same cities, the same buildings, and the same advertisers, yet they need to separately build property networks, sales teams, operational systems, and technology platforms. In order to compete for premium screen locations, both sides also need to continuously invest more costs. A large amount of resources is ultimately consumed in repeated competition over the same batch of properties, clients, and advertising budgets. From an industry perspective, the marginal efficiency of this kind of competition has become increasingly low. The integration of Focus Media and Xinchao precisely releases the resources that were previously consumed in redundant competition. After integration, some of the redundant construction in sales, operations, technology platforms, and property networks between the two companies can be reduced, and the corresponding resources can be redirected toward capabilities such as intelligent ad placement, data analysis, advertising creativity, effectiveness monitoring, and attribution analysis. This, in turn, forms another layer of resonance with Focus Media's voluntary commitments. After the commitments, future growth will rely more on the operational efficiency of existing media resources. One very direct indicator is the ad placement rate. Assuming the company's average media ad placement rate is approximately 50%, according to relevant estimates, for every 10 percentage point increase in the average ad placement rate, single-screen revenue has approximately 20% elasticity. This data shows that even without a significant price increase, as long as more of the previously vacant advertising slots can be sold, there is still substantial room for revenue improvement. Moreover, the cost structure of elevator media determines that the value of improving the ad placement rate often goes beyond just revenue growth. A large portion of property rents, equipment depreciation, and basic maintenance costs have already been incurred after screen locations are deployed. For screens that already exist, selling one more ad slot does not require adding another set of equipment or paying another property rent. Therefore, after the ad placement rate increases, incremental revenue can often be converted more directly into operating leverage. Whether the ad placement rate can continue to rise ultimately depends on whether these advertising slots have sufficiently high value for advertisers. This is precisely where Focus Media has a greater advantage. For advertisers, buying elevator media is not simply buying a screen; it is about covering target consumers as much as possible within a limited budget. Whoever can more accurately determine which buildings and which demographic groups are more worth targeting can make the same budget generate higher communication effectiveness. Focus Media covers more cities and buildings and has accumulated a large number of national brand clients. Combined with the data platform and intelligent ad placement system built over the past few years, it can screen and combine a larger pool of screen locations based on different brands' target audiences, matching advertising budgets more precisely to corresponding buildings. Once communication efficiency improves, advertisers are more willing to maintain continuous spending, and previously unsold advertising inventory is also easier to absorb, which will ultimately be reflected in the ad placement rate. In this process, Focus Media's advantages in data and technology will also be further amplified. As these issues increasingly rely on data and technology for solutions, elevator media will no longer be just a traditional offline media business. It will increasingly resemble a digitalized urban consumer communication infrastructure. From this perspective, the integration of Focus Media and Xinchao actually provides a new path for industry development: breaking away from inefficient internal competition and investing more resources into improving the efficiency of the entire media system. More importantly, this efficiency improvement does not benefit only the platform side; it has the potential to create a "win-win" between advertisers and the platform. For advertisers and brands, price expectations are more stable, and they can obtain communication services with more unified coverage, more precise targeting, and more measurable results, ultimately improving the efficiency of every marketing budget. For the platform itself, after reducing redundant investment, it can direct more resources into technology, data, and services, achieving healthier and more sustainable growth through efficiency improvements. Ultimately, the dividends brought by industry integration will not only be reflected in one company's cost reduction and profit improvement, but can be redistributed along the industry chain: the efficiency dividends generated by integration will ultimately be shared with advertisers, property partners, and the entire industry chain through more stable prices, more efficient services, and continuous technological investment. Improving efficiency and competing on technology and service—this is the true beginning of the elevator media industry moving beyond inefficient competition.