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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
    Form 20-F
     (Mark One)o

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF
    THE SECURITIES EXCHANGE ACT OF 1934orþ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2007.oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period from
    
    tooro

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934Date of event requiring this shell company report   Commission file number:
    001-33328
 XINHUA FINANCE MEDIA
    LIMITED
   (Exact name of Registrant as
    specified in its charter)
  N/A
  (Translation of
    Registrants name into English)
  Cayman Islands
  (Jurisdiction of incorporation
    or organization)
  2201, Tower D, Central
    International Trade Center,
    6A Jian Wai Avenue, Chaoyang District,
    Beijing, 100022, Peoples Republic of China
  (Address of principal executive
    offices)
  Fredy Bush
    Chief Executive Officer
    2201, Tower D, Central International Trade Center,
    6A Jian Wai Avenue, Chaoyang District,
    Beijing, 100022, Peoples Republic of China
    Tel: +86-10-8567-6000
    Fax: +86-10-6448-0585
    Email: fredy.bush@xinhuafinance.com
  (Name, Telephone,
    E-mail
    and/or Facsimile number and Address of the Company Contact
    Person)
  Securities registered or to be
    registered pursuant to Section 12(b) of the Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredAmerican depositary shares, each
    representing two Class A common shares, par
    value US$0.001 per share

The NASDAQ Stock Market LLC
    (The NASDAQ Global Market)     Securities registered or to be registered pursuant to
    Section 12(g) of the Act:
    None
    (Title of Class)
  Securities for which there is a reporting obligation pursuant
    to Section 15(d) of the Act:
    None
    (Title of Class)
    90,061,269 Class A common shares and 50,054,618
    Class B common shares, par value US$0.001 per share as of
    December 31, 2007.
 o þ
 o þ
 þ o
 Rule 12b-2
 o o þ
 þ o o
 o o
 Rule 12b-2 o þ
  o o




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##### 





TABLE OF
    CONTENTS
   
 INTRODUCTION


1PART I


2Item 1.

Identity of Directors, Senior Management and
    Advisers


2Item 2.

Offer Statistics and Expected Timetable


2Item 3.

Key Information


2Item 4.

Information on the Company


29Item 4A.

Unresolved Staff Comments


68Item 5.

Operating and Financial Review and Prospects


68Item 6.

Directors, Senior Management and Employees


100Item 7.

Major Shareholders and Related Party
    Transactions


111Item 8.

Financial Information


117Item 9.

The Offer and Listing


118Item 10.

Additional Information


119Item 11.

Quantitative and Qualitative Disclosures About
    Market Risk


124Item 12.

Description of Securities Other Than Equity
    Securities


125PART II


125Item 13.

Defaults, Dividend Arrearages and
    Delinquencies


125Item 14.

Material Modifications to the Rights of Security
    Holders and Use of Proceeds


125Item 15.

Controls and Procedures


125Item 16A.

Audit Committee Financial Expert


126Item 16B.

Code of Ethics


126Item 16C.

Principal Accountant Fees and Services


126Item 16D.

Exemptions from the Listing Standards for Audit
    Committees


126Item 16E.

Purchases of Equity Securities by the Issuer and
    Affiliated Purchasers


127PART III


127Item 17.

Financial Statements


127Item 18.

Financial Statements


127Item 19.

Exhibits


127EX-4.55 LOAN AGREEMENTEX-4.56 WAIVER OF LOANEX-4.57 SERIES B CONVERTIBLE PREFERRED SHARES PURCHASE AGREEMENTEX-4.58 SHAREHOLDERS AGREEMENTEX-4.59 REGISTRATION RIGHTS AGREEMENTEX-4.60 SHARE SUBSCRIPTION AGREEMENTEX-4.61 EQUITY TRANSFER AGREEMENTEX-4.62 PURCHASE AGREEMENTEX-4.63 PURCHASE AGREEMENTEX-4.64 PURCHASE AGREEMENTEX-4.65 PURCHASE AGREEMENTEX-4.66 COOPERATION AGREEMENTEX-4.67 ADVERTISING AGENCY AGREEMENTEX-4.68 COOPERATION AGREEMENTEX-8.1 LIST OF SUBSIDIARIESEX-12.1 CEO CERTIFICATION PURSUANT TO SECTION 302EX-12.2 CFO CERTIFICATION PURSUANT TO SECTION 302EX-13.1 CEO CERTIFICATION PURSUANT TO SECTION 906EX-13.2 CFO CERTIFICATION PURSUANT TO SECTION 906   i




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INTRODUCTION    
    we, us, our company,
    our, XFM and Xinhua Finance
    Media refer to Xinhua Finance Media Limited and its
    subsidiaries, including direct subsidiaries and affiliated
    entities, except where the context requires otherwise, such as
    in Item 4.B. Information on the Company 
    Business Overview  Regulation, where these
    terms refer to Xinhua Finance Media Limited and its direct
    subsidiaries, but not its affiliated entities;
    production of or to produce drama series
    refer to co-production with third parties who hold drama
    series production licenses or to cooperate with
    third parties who hold drama series production license to
    produce;
    shares or common shares refers to our
    common shares which include both Class A common shares and
    Class B common shares;
    ADSs refers to our American depositary shares, each
    of which represents two Class A common shares, and
    ADRs refers to the American depositary receipts that
    evidence our ADSs;
    China or PRC refers to the Peoples
    Republic of China, excluding Taiwan, Hong Kong and Macau;
    GAAP refers to general accepted accounting
    principles in the United States;
    all references to RMB or Renminbi are to
    the legal currency of China, all references to $,
    dollars, US$, USD and
    U.S. dollars are to the legal currency of the
    United States and all references to HK$ are to the
    legal currency of Hong Kong;
    all discrepancies in any table between the amounts identified as
    total amounts and the sum of the amounts listed therein are due
    to rounding; and
    the conversion of RMB into U.S. dollars in this annual
    report is based on the noon buying rate in The City of New York
    for cable transfers of RMB as certified for customs purposes by
    the Federal Reserve Bank of New York. Unless otherwise noted,
    all translations from RMB to U.S. dollars and from
    U.S. dollars to RMB in this annual report were made at a
    rate of RMB7.2946 to US$1.00, the noon buying rate in effect as
    of December 31, 2007.  Form 20-F
    FORWARD-LOOKING
    INFORMATION
  Form 20-F
  
    our goals and strategies;
    our future business development, financial condition and results
    of operations; 1




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
    projected revenues, profits, earnings and other estimated
    financial information;
    our plans to expand our Internet presence, and expand into new
    media, such as, broadband wireless and Internet television;
    the growth or acceptance of our integrated platform;
    our plans to identify and create new advertising networks that
    target specific consumer demographics, which could allow us to
    charge a separate fee;
    competition in the PRC media and advertising industries; and
    the expected growth in advertising spending levels.     PART I  Item 1.
    Identity
    of Directors, Senior Management and Advisers    Item 2.
    Offer
    Statistics and Expected Timetable    Item 3.
    Key
    Information  A.
    Selected
    Financial Data       2




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Period from


Period fromYear Ended


Year Ended


January 1,


May 26,December 31,


December 31,


2005 to May 25,


2005(1) to


Year Ended


Year Ended2003


2004


2005


December 31,


December 31,


December 31,(Predecessor)


(Predecessor)


(Predecessor)


2005


2006


2007(In thousands, except per share data)Selected statement of operations dataNet revenues:Content production

$



$



$



$
3,641


$
6,545


$
7,681Advertising sales


157



48



240



387



6,691



39,282Advertising services


23



301



53



580



44,862



86,681Publishing services


9



52



55



787



868



1,195Total net revenues


189



401



348



5,395



58,966



134,839Cost of revenues:Content production














651



2,829



3,707Advertising sales


11



35



42



85



1,912



19,490Advertising services


56



248



66



154



27,654



58,048Publishing services


51



325



347



534



1,386



854Total cost of revenues


118



608



455



1,424



33,781



82,099Operating expenses:Selling and distribution


18



418



322



293



5,277



14,877General and administrative(2)


692



608



456



1,248



12,840



24,349Total operating expenses


710



1,026



778



1,541



18,117



39,226Other operating income






















2,262Income (loss) from operations


(639
)


(1,233
)


(885
)


2,430



7,068



15,776Other income (expense), net


26



(10
)


(3
)


(21
)


(898
)


1,340Provision for income taxes (benefit)


1



5



(4
)


929



1,070



(12,226
)Minority interest














129



1,704



1,303Equity in loss of an investment


















52



Net income (loss)

$
(614
)

$
(1,248
)

$
(884
)

$
1,351


$
3,344



28,039Deemed dividend on redeemable convertible preferred shares


















(2,157
)


Dividends declared to redeemable convertible preferred shares


















(5,335
)


(1,338
)Net income (loss) attributable to holders of common shares


(614
)


(1,248
)


(884
)


1,351



(4,148
)


26,701 3




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Period from


Period fromYear Ended


Year Ended


January 1,


May 26,December 31,


December 31,


2005 to May 25,


2005(1) to


Year Ended


Year Ended2003


2004


2005


December 31,


December 31,


December 31,(Predecessor)


(Predecessor)


(Predecessor)


2005


2006


2007(In thousands, except per share data)Net income (loss) per share:Basic  Class A common share

$



$



$



$



$
(0.08
)

$
0.23Basic  Class B common share

$
(8.53
)

$
(13.13
)

$
(7.85
)

$
0.03


$
(0.08
)

$
0.23Diluted  Class A common share

$



$



$



$



$
(0.08
)

$
0.21Diluted  Class B common share

$
(8.53
)

$
(13.13
)

$
(7.85
)

$
0.03


$
(0.08
)

$
0.21Shares used in computation:Basic  Class A common share


















5,084



66,166Basic  Class B common share


72



95



113



42,613



44,693



50,055Diluted  Class A common share


















5,084



86,315Diluted  Class B common share


72



95



113



42,613



44,693



50,055Dividend per redeemable convertible preferred share


















0.34



0.08     (1)
    
    Date our parent acquired 60% of EconWorld Media Limited, our
    predecessor.(2)
    
    Includes share-based compensation expense of $2.4 million
    and $3.1 million for the years ended December 31, 2006
    and 2007, respectively.  4




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As of

As ofDecember 31,

December 31,

As of

As of

As of2003

2004

December 31,

December 31,

December 31,(Predecessor)

(Predecessor)

2005

2006

2007(In thousands, except per share data)Selected balance sheet dataCash

$
131


$
21


$
2,081


$
36,354


$
44,436Goodwill










4,070



83,670



180,125Intangible assets










628



176,202



233,506Total assets


401



198



10,306



399,450



650,802Total current liabilities


224



1,269



8,579



175,067



79,214Convertible loan














14,017



Convertible preferred shares














16



Class A common shares and
    Non-vested Shares














32



90Class B common shares














7



7Total owners and shareholders (deficiency) equity


177



(1,071
)


1,353



101,250



466,636Number of shares:Convertible preferred shares














15,585



Class A common shares and
    Non-vested Shares














32,011



90,061Class B common shares


72



95



1



50,055



50,055   Exchange
    Rate Information
   5




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Noon Buying RatePeriodPeriod

End

Average(1)

Low

High2003


8.2767



8.2772



8.2800



8.27652004


8.2765



8.2768



8.2774



8.27642005


8.0702



8.1940



8.2765



8.07022006


7.8041



7.9723



8.0702



7.80412007November


7.3850



7.4212



7.4582



7.3800December


7.2946



7.3682



7.4120



7.2946Full year


7.2946



7.5806



7.8127



7.29462008January


7.1818



7.2405



7.2946



7.1818February


7.1115



7.1644



7.1973



7.1100March


7.0120



7.0722



7.1110



7.0105April


6.9870



7.0000



7.0185



6.9840May (through May 16)


6.9880



6.9895



7.0000



6.9815     (1)
    
    Annual averages are calculated from month-end rates. Monthly
    averages are calculated using the average of the daily rates
    during the relevant period.  B.
    Capitalization
    and Indebtedness    C.
    Reasons
    for the Offer and Use of Proceeds    D.
    Risk
    Factors  Risks
    related to our business
    Our
    limited operating history and successive acquisitions make
    evaluating our business and prospects difficult.
    
    successfully integrate the recently acquired companies;
    navigate the regulatory landscape and respond to changes in the
    regulatory environment;
    offer new and innovative products and services to attract and
    retain viewers, listeners and readers;
    attract additional advertisers and increase advertising fees;
    increase awareness of our branded media platforms;
    respond to competitive market conditions; 6




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
    manage risks associated with intellectual property rights;
    maintain effective control of our costs and expenses;
    raise sufficient capital to sustain and expand our
    business; and
    attract, retain and motivate qualified personnel.      We
    rely on key contracts and business relationships, and if our
    business partners or contracting counterparties fail to perform,
    or terminate, any of their contractual arrangements with us for
    any reason or cease operations, our business could be disrupted,
    our reputation may be harmed and we may have to resort to
    litigation to enforce our rights, which may be time-consuming
    and expensive.
    
    agreements to provide consulting and advisory services to, offer
    content to, and be the exclusive external advertising agent for,
    Shanghai Camera Media Investment Co., Ltd., or Shanghai Camera,
    which has the exclusive rights to sell advertising for and
    provides most of the content of Inner Mongolia Satellite
    Television;
    agreements with Economic Observer Press Office that allow us to
    have the exclusive rights to sell advertising for the
    Economic Observerand to provide management and
    information consulting services;
    agreement with the exclusive advertising agent for China Radio
    International that allow us to have the exclusive rights to sell
    advertising for and the right to provide content to its EasyFM
    stations in Beijing and Shanghai. We intend to provide only
    non-news content pursuant to this agreement;
    agreement with Money Journal Press Office that allows us to have
    the exclusive rights to sell advertising for, and to provide
    management and information consulting services to, Money
    Journal;
    agreements with Guangdong Peoples Radio Station that allow
    us to have the exclusive rights to sell advertising for and the
    rights to provide content to channels FM107.7, FM103.6 and
    FM90.0;
    agreement with Zhoumo Wenhui Press Office that allows us to have
    the exclusive rights to sell advertising for, and to provide
    management and information consulting services to, Funds
    Observerand Chinese Venture; and
    agreement with Shidai Renwu Press Office that allows us to have
    the exclusive right to sell advertising for the Investor
    Journal.    
    agreement with Dow Jones that allows Money Journalto
    publish Dow Jones content;
    agreements with China Mobile and China Unicom that allow us to
    provide mobile value-added services;
    agreement with Beijing Television Stations advertising
    agents that allow us to act as the advertising agent for certain
    programs; and
    agreements to be the external advertising agent for the real
    estate portals of various websites.   7




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We are
    not a party to some of the key contracts on which we rely.
    Instead, we have contracts with companies which in turn have
    these key contracts with third parties. If the third parties
    fail to perform or terminate any of these key contracts for any
    reason or cease operations, our business could be disrupted, our
    reputation may be harmed and we will not be able to enforce our
    rights in court.
    
    we have contracts with Shanghai Camera, which has the exclusive
    rights to sell advertising for and provides most of the content
    of Inner Mongolia Satellite Television under a contract it has
    with Inner Mongolia Television Station;
    we have a contract with Beijing Guoguang Guangrong Advertising
    Co., Ltd., or Guoguang Guangrong, the exclusive advertising
    agent for China Radio Internationals domestic stations,
    giving us the exclusive rights to sell advertising for and the
    rights to provide content to the EasyFM radio stations in
    Beijing and Shanghai; and
    we have contracts with Beijing Television Stations
    advertising agents that allow us to act as advertising agent for
    certain television programs.   8




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We may
    not be able to achieve the benefits we expect from recent and
    future acquisitions, and recent and future acquisitions may have
    an adverse effect on our ability to manage our
    business.
        We are
    subject to a class action complaint alleging that we failed to
    disclose certain information in our initial public offering
    registration statement. If the class action is successful, it
    may have an adverse effect on our financial condition and
    operating results.
   9




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Our
    business could be materially and adversely affected if our
    target audience and readers do not continue to accept our
    programs and content or if we do not continue to produce and
    purchase programs that generate high ratings.
      
    identifying popular programming and content;
    competing with and adapting to new technological innovations,
    including Internet television, portable entertainment systems,
    and others;
    attracting viewers, listeners and readers amidst the
    proliferation of television, radio, magazines and newspapers in
    China; and
    controlling programming and content sourcing costs.    Our
    future success depends on attracting advertisers who will
    advertise across our various platforms. If we fail to attract a
    sufficient number of advertisers, our operating results and
    revenues may not meet expectations.
    Some
    segments of our business have sustained net losses in the past
    and may continue to sustain net losses in the future or may not
    grow as expected.
  Fortune China
 10




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We
    derive a substantial proportion of our revenues from
    advertising, and the advertising market is particularly
    volatile.
    
    a downturn of economic conditions in China or around the globe;
    a decision to shift advertising expenditure to other media and
    platforms;
    a deterioration of the ratings of our programs;
    a change of government policy with regard to the type of
    programs that can be broadcast; or
    a decline in advertising spending in general.      The
    market for most of our operating groups is concentrated in a few
    major cities in China, and if advertising spending decreases in
    any of these cities, our operating results and revenues could be
    adversely affected.
      Our
    business could suffer if we do not successfully manage current
    growth and potential future growth.
      
    develop new and enhance existing product and services, obtain
    new customers, and retain existing customers;
    maintain adequate control of our expenses;
    attract and retain qualified personnel; and
    respond to competitive market conditions. 11




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Our
    operating results may fluctuate, which makes our results
    difficult to predict and could cause our results to fall short
    of expectations.
        Our
    quarterly operating results may fluctuate significantly from
    period to period due to seasonality in our
    business.
      If we
    do not maintain and develop our brands and those of our
    strategic partners, we will not be able to attract audience and
    readers to the media platforms we use.
  Fortune
    China Money Journal Economic
    Observer
   12




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If we
    do not compete successfully against new and existing
    competitors, we may lose our market share, and our operating
    results may be adversely affected.
        We
    rely on services from third parties that are also our
    competitors to carry out certain of our businesses. If any of
    these firms refuses to continue its cooperative relationship
    with us, or makes the terms of doing so more onerous, our
    ability to attract customers or provide services will be
    affected.
      Our
    business depends substantially on the continuing efforts of our
    key executives. Our business may be severely disrupted if we
    lose their services.
       13




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Our
    senior management and employees have worked together for a short
    period of time, which may make it difficult for you to evaluate
    their effectiveness and ability to address
    challenges.
      If we
    are unable to attract, train and retain key individuals, highly
    skilled employees and important talent, our business may be
    adversely affected.
  Fortune China
    We may
    be subject to litigation for information provided in our
    products and services, which may be time-consuming and costly to
    defend.
      We may
    not be able to prevent others from using our intellectual
    property, which may harm our business and expose us to
    litigation.
       14




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Failure
    to achieve and maintain effective internal controls could have a
    material and adverse effect on the trading price of our
    ADSs.
  Form 20-F
        We may
    need additional capital to finance future acquisitions and we
    may not be able to obtain it.
   15




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We may
    be required to record a significant charge to earnings if our
    goodwill or acquired intangible assets are determined to be
    impaired.
    Our
    strategy of expanding our Internet and new media presence may
    not be well received or may be more expensive than we
    expected.
      
    sufficient demand for these services from our existing and
    potential audience and readers, and sufficient advertising
    revenues from customers, to offset the substantial investment we
    will make in order to provide them;
    our ability to compete effectively with other providers of these
    services;
    our ability to adapt and develop our products and services in
    order to conform to market conditions and customer
    needs; and
    our ability to form, acquire or cooperate with Internet content
    and service providers and obtain the appropriate licenses to
    conduct this business.   16




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Risks
    related to the regulation of our business and to our
    structure
  If the
    PRC government finds that the agreements that establish the
    structure for operating our China businesses do not comply with
    PRC governmental restrictions on foreign investment in the
    media, market research, and telecommunications industries, or if
    these regulations or the interpretation of existing regulations
    change in the future, we could be subject to severe penalties or
    be forced to relinquish our interests in those
    operations.
      
    revoking the business and operating licenses of our PRC
    subsidiaries or affiliates;
    confiscating relevant income and imposing fines and other
    penalties;
    discontinuing or restricting our PRC subsidiaries or
    affiliates operations;
    requiring us or our PRC subsidiaries or affiliates to
    restructure the relevant ownership structure or operations;
    restricting or prohibiting our use of the proceeds of our
    initial public offering to finance our businesses and operations
    in China; or
    imposing conditions or requirements with which we or our PRC
    subsidiaries or affiliates may not be able to comply.       17




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We
    rely on contractual arrangements with our PRC operating
    affiliates and their subsidiaries and shareholders for our China
    operations, which may not be as effective in providing
    operational control as direct ownership.
      The
    shareholders of our PRC affiliated entities may breach our
    agreements with them or may have potential conflicts of interest
    with us, and we may not be able to enter further agreements to
    extract economic benefits from these entities, which may
    materially and adversely affect our business and financial
    condition.
   18




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Contractual
    arrangements we have entered into with our subsidiaries and
    affiliated entities or acquisitions of offshore entities that
    conduct PRC operations through affiliates in China may be
    subject to scrutiny by the PRC tax authorities, and we may have
    to pay additional taxes or be found ineligible for a tax
    exemption.
    Certain
    of our PRC operating companies or strategic partners have
    previously engaged or may currently engage in activities without
    appropriate licenses or approvals or outside the authorized
    scope of their business licenses or permitted activities. This
    could subject those companies to fines and other penalties,
    which could have a material adverse effect on our
    business.
   19




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Any
    limitation on the ability of our subsidiaries and affiliated
    entities to make dividend or distribution payments to us could
    have a material adverse effect on our ability to conduct our
    business.
    The
    dividends we receive from our wholly-owned operating
    subsidiaries and our global income may be subject to PRC tax
    under the new PRC tax law, which would have a material adverse
    effect on our results of operations.
     20




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The
    PRC government may prevent us or our strategic partners from
    producing or distributing, and we or they may be subject to
    liability for, content that it believes is
    inappropriate.
          The
    PRC law on advertising content is such that we may be subject to
    liability for advertisements produced by us or advertisements
    displayed on our or our strategic partners media
    platforms.
     21




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If the
    PRC government finds that the financial data and media services
    we provide do not comply with PRC laws and regulations relating
    to the provision of securities investment advisory services, we
    may suffer severe disruption to our business operations and lose
    a substantial portion of our revenue.
    We are
    controlled by our parent company, whose interests may differ
    from other shareholders.
     22




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Landing
    rights for satellite television in China are increasingly
    granted through auction, which may increase our cost of
    broadcasting rights or result in our strategic partners
    inability to obtain landing rights.
    Risks
    related to doing business in China
  The
    PRCs economic, political and social conditions, as well as
    governmental policies, could affect the financial markets in
    China and our liquidity and access to capital and our ability to
    operate our business.
    Uncertainties
    with respect to the PRC legal system could adversely affect
    us.
      We
    face risks related to health epidemics and other outbreaks, or
    acts of terrorism, which could result in reduced demand for
    advertising or disrupt our operations.
   23




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##### Table of Contents



The
    approval of the China Securities Regulatory Commission, or the
    CSRC, may have been required in connection with our initial
    public offering under a recently adopted PRC regulation; any
    requirement to obtain CSRC approval and our failure to obtain
    this approval, if required, may create uncertainties and could
    and have a material adverse effect on our business, operating
    results, reputation, prospects and trading price of our ADSs;
    the regulation also establishes more complex procedures for
    acquisitions conducted by foreign investors which could make it
    more difficult to pursue growth through
    acquisitions.
         24




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##### Table of Contents



Economic Observer
  Recent
    PRC regulations relating to offshore investment activities by
    PRC residents may increase our administrative burden and
    restrict our overseas and cross-border investment activity. If
    our shareholders who are PRC residents fail to make any required
    applications and filings under such regulations, we may be
    unable to distribute profits and may become subject to liability
    under PRC laws.
        Restrictions
    on currency exchange may limit our ability to utilize our
    revenues effectively.
   25




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Fluctuation
    in the value of RMB may have a material adverse effect on your
    investment.
      We
    have limited insurance coverage in China.
    Risks
    related to the ADSs
  The
    market price for our ADSs may be volatile.
    
    announcements of technological or competitive developments;
    regulatory developments in our target markets affecting us, our
    customers or our competitors;
    announcements of studies and reports relating to the
    circulation, ratings, audience or readership size or
    composition, quality or effectiveness of our and our strategic
    partners products and services or those of our competitors; 26




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##### Table of Contents




    actual or anticipated fluctuations in our quarterly operating
    results;
    changes in financial estimates by securities research analysts;
    changes in the economic performance or market valuations of
    other media and advertising companies;
    addition or departure of our executive officers and key
    personnel;
    fluctuations in the exchange rates between the U.S. dollar
    and RMB;
    release or expiration of
    lock-up or
    other transfer restrictions on our outstanding ADSs; and
    sales or perceived sales of additional ADSs.    Substantial
    future sales or perceived sales of our ADSs in the public market
    could cause the price of our ADSs to decline.
  180-day lock-up
  You
    may not have the same voting rights as the holders of our common
    shares and may not receive voting materials in time to be able
    to exercise your right to vote.
    Your
    right to participate in any future rights offerings may be
    limited, which may cause dilution to your holdings and you may
    not receive cash dividends if it is impractical to make them
    available to you.
   27




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We are
    a Cayman Islands company and, because judicial precedent
    regarding the rights of shareholders is more limited under
    Cayman Islands law than that under U.S. law, you may have
    less protection for your shareholder rights than you would under
    U.S. law.
      Our
    dual-class common share structure with different voting rights
    could discourage others from pursuing any change of control
    transactions that holders of our class A common shares and
    ADSs may view as beneficial.
      Our
    memorandum and articles of association contain anti-takeover
    provisions that could adversely affect the rights of holders of
    our common shares and ADSs.
   28




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
    Our board of directors has the authority to establish from time
    to time one or more series of preferred shares without action by
    our shareholders and to determine, with respect to any series of
    preferred shares, the terms and rights of that series, including
    the designation of the series; the number of shares of the
    series; the dividend rights, dividend rates, conversion rights,
    voting rights; and the rights and terms of redemption and
    liquidation preferences.
    Our board of directors may issue series of preferred shares
    without action by our shareholders to the extent of available
    authorized but unissued preferred shares. Accordingly, the
    issuance of preferred shares may adversely affect the rights of
    the holders of the common shares. Issuance of preference shares
    may dilute the voting power of holders of common shares.
    Subject to applicable regulatory requirements, our board of
    directors may issue additional common shares without action by
    our shareholders to the extent of available authorized but
    unissued shares.  You
    may have difficulty enforcing judgments obtained against
    us.
    We
    incur increased costs as a result of being a public
    company.
    Item 4.
    Information
    on the Company  A.
    History
    and Development of the Company   29




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
    Broadcast.  Our broadcast group was
    formed through the following transactions:  
    Upper Step.  We signed a series of agreements
    pursuant to which we acquired 19.0% of the equity of Upper Step
    Holdings Limited, or Upper Step, on February 28, 2006. On
    September 22, 2006, we acquired an additional 37.0% of the
    equity of Upper Step and on November 1, 2006, we acquired
    the remaining 44.0% of the equity of Upper Step.
    Beijing Perspective.  Through our affiliated
    entity, we acquired 51.0% of the equity of Beijing Perspective
    Orient Movie and Television Intermediary Co., Ltd., or Beijing
    Perspective, on July 28, 2006. On November 13, 2007,
    we acquired the remaining 49.0% of the equity of Beijing
    Perspective.
    Accord Group.  We acquired 19.0% of the equity
    of Accord Group Investments Limited, or Accord Group, on
    January 23, 2006. On September 22, 2006, we acquired
    61.0% of the equity of Accord Group and on November 1,
    2006, we acquired the remaining 20.0% of the equity of Accord
    Group.
    Beijing Mobile Interactive (M-in).  We acquired
    100% of the ordinary shares of East Alliance Limited on
    June 4, 2007. East Alliance Limited is an investment
    holding company for its wholly-owned subsidiaries and variable
    interest entities, or VIEs, collectively M-in.
    Singshine Communication.  We acquired 100% of
    Guangzhou Singshine Communication Co., Ltd., or Singshine
    Communication, on June 11, 2007.
    Small World.  We acquired 70% of the equity of
    Small World Television Ltd., or Small World, and control of a
    majority of its board of directors, on August 23, 2007.  
    Print.  Our print group was formed
    through the following transactions:  
    EconWorld Media.  Our parent subscribed for
    60.0% of the equity of EconWorld Media Limited, or EconWorld
    Media, on May 26, 2005 and transferred that interest to us
    on January 12, 2006. On June 8, 2006, we subscribed to
    one additional share of EconWorld Media. We acquired another
    12.0% of the equity of EconWorld Media on June 21, 2006,
    and the remaining 28% on December 28, 2006.
    Economic Observer Advertising.  Through our
    affiliated entity, we acquired 50.0% of the equity of Beijing
    Jingguan Xincheng Advertising Co., Ltd., or Economic Observer
    Advertising, on June 8, 2006 and the remaining 50.0% of the
    equity of Economic Observer Advertising on September 15,
    2006.  
    Production.  Our production group was
    formed through the following transactions:  
    Beijing Century Media.  Our parent, through a
    subsidiary, lent funds to two PRC citizens, who used the funds
    to buy a combined 100% equity interest in Beijing Century Media
    Culture Co., Ltd., or Beijing Century Media, on
    September 9, 2005. On the same day, the subsidiary of our
    parent entered into a set of agreements with these two PRC
    citizens to give our parent effective control over Beijing
    Century Media. Our parent transferred its control of Beijing
    Century Media to us through one of our affiliated entities on
    March 16, 2006.
    Xinhua Media Entertainment.  We established
    Xinhua Media Entertainment Limited, or Xinhua Media
    Entertainment, in April of 2008, and hold 75% of its equity
    interest.  
    Advertising.  Our advertising group was
    formed through the following transactions:  
    Xinhua Finance Advertising.  Our parent
    acquired 100% of the equity in Ming Shing International Limited,
    or Ming Shing, on January 12, 2006 and subsequently
    transferred Ming Shing to us on March 16, 2006. Ming Shing
    subsequently changed its name to Xinhua Finance Advertising
    Limited, or Xinhua Finance Advertising, on June 19, 2006.
    Singshine Marketing.  We acquired 100% of the
    ordinary shares of Singshine (Holdings) Hongkong Ltd., or
    Singshine Marketing, on June 11, 2007. 30




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
    Convey.  We acquired 100% of the ordinary
    shares of Good Speed Holdings Limited and its subsidiaries,
    collectively Convey, on July 2, 2007.
    JCBN China.  Through our affiliated entity, we
    acquired 100% the equity interests in Shanghai Paxi Advertising
    Co. Ltd. and its subsidiaries, collectively JCBN China, on
    November 27, 2007.
    JCBN Hong Kong.  We acquired 100% of the
    ordinary shares of Profitown Development Ltd. and its
    subsidiaries, collectively JCBN Hong Kong, on November 27,
    2007.  
    Research.  Through our affiliated
    entity, we acquired 51.0% of the equity of Shanghai Hyperlink
    Market Research Co., Ltd., or Hyperlink, on August 1, 2006.
    On September 18, 2006, we acquired the remaining 49.0% of
    the equity of Hyperlink through our affiliated entity.      86-10-8567-6000.
  1-800-SEC-0330.
  www.xinhuafinancemedia.com Form 20-F
  B.  Business
    Overview
       31




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
    Broadcast, which refers to the production and distribution of
    our programming through television and radio channels in China,
    the advertising services we provide in connection with the
    program air times and the mobile value-added services we provide
    to mobile phone users in China. Our broadcast group engages in
    the distribution of our programming through Inner Mongolia
    Satellite Television; the production and syndication of the
    Fortune Chinaseries of financial programs; the
    production and distribution of bilingual content for China Radio
    Internationals EasyFM stations in Beijing and Shanghai;
    the sale of advertising and provision of content to several
    radio channels of Guangdong Peoples Radio Station; and the
    provision of wireless mobile value-added services in China;
    Print, which refers to our exclusive rights to sell advertising
    for and provide management and information consulting services
    to the magazines Money Journal, Funds Observerand
    Chinese Ventureand the newspaper Economic
    Observer, and our exclusive rights to sell advertising for
    the newspaper Investor Journal;
    Production, which refers to our in-house production studios that
    create and produce a diverse array of high-quality television
    programs, including business, entertainment, educational and
    animation shows, as well as content development and production
    services for motion picture films, special effects and
    television channel packaging services;
    Advertising, which refers to our advertising agency that creates
    and places advertising for television, print media, radio,
    campus billboards, outdoor media and websites, as well as online
    advertising sales and our provision of below-the-line marketing
    services; and
    Research, which refers to our market research group that
    provides research services on products, advertisements and
    markets.      Our
    products and services
  Broadcast
  Television
     32




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Warrior Access Hollywood:
    China My World My Music My Toys My Fashion My Cupid My Celebrity My Night My World The Scene Eats Meets
    West Blog Talk Show Rich Dad, Master
    Mind Fortune China
  Fortune
    China programs
  Fortune China Fortune China Fortune China
  Fortune China
    
    New Fortune Weeklyis a comprehensive financial program,
    reviewing and analyzing popular topics relating to the Chinese
    economy.
    Fortune Talk Showis a popular financial talk show in
    China, hosting guests such as economists, business executives,
    finance professionals and academics.  Fortune China Fortune China Fortune Broadway Fortune China Weekly Fortune
    Celebrity Fortune China Warrior Access Hollywood: China
  Fortune China Fortune China Fortune China Fortune China
   33




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Fortune China
  Radio
        Money Journal
  Mobile
    interactive service
     34




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Print
  Newspaper
  Economic Observer
  Economic Observer Economic Observer
  Economic Observer Economic Observer
  Economic Observer
  Economic Observer Economic Observer
  Economic Observer
  Investor Journal
  Magazines
  Money Journal Funds
    Observer Chinese Venture
  Money Journal Money Journal Money
    Journal Money Journal Money Journal Money
    Journal
  Funds Observer Funds Observer
  Chinese Venture Chinese Venture
   35




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Money Journal
  
    target the affluent by partnering with educational institutions
    and other financial media to carry out events;
    send sponsored gifts to readers of Money Journal; and
    organize presentations and product exhibitions.  Money Journal
    Production
    Television
    production
    Who Will Be Your
    Witness, Floating Dust on Earth Give Marriage a Holiday Indanthrene Indanthrene
  Film
    production
    Animation
    production
   36




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Marriage of Flowers in the Mirror
  Television
    channel packaging services
    Advertising
    Weather Forecast Top Music Star
    Press
  Economic Observer Beijing Evening News Beijing Youth Daily
     37




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Research
          Arrangements
    with partners and suppliers
    Agreements regarding Shanghai Camera.
     38




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My Blue Home
  Fortune China Warrior Access Hollywood: China
  Agreements related to Hunan Satellite
    Television. Fortune Morning 7 a.m. 30-minute
  Agreement regarding our radio broadcast
    business.
   39




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Our print groups relationship with Dow
    Jones. Money Journal Money Journal Money Journal Money Journal
  Our print groups services for Money
    Journal. Money Journal
  Our print groups services for Funds Observer and
    Chinese Venture. Weekly Journal Weekly
    Journal Funds Observer Chinese
    Venture Weekly Journal
  Our print groups services for the Investor
    Journal. Investor Journal Investor Journal
  Agreements regarding the Economic
    Observer.
 40




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Economic Observer
    
    a business cooperation agreement, as amended, entered into by
    Shandong Sanlian Group, Shandong Economic Observer, Economic
    Observer Press Office and Economic Observer Advertising. The
    term of the agreement is 50 years, expiring on May 9,
    2056. It automatically renews thereafter. Under this business
    cooperation agreement, Economic Observer Advertising has the
    exclusive rights to sell advertising for the Economic
    Observerand pays Economic Observer Press Office an
    advertising agency fee. Economic Observer Advertising has the
    right to acquire the intellectual property assets of the
    Economic Observerto the extent permissible under
    applicable law, provides management and information consulting
    services on the distribution of the Economic Observerand
    assists Economic Observer Press Office in the management of the
    printing of the Economic Observer. Economic Observer
    Press Office may terminate the agreement by paying for losses
    incurred by Economic Observer Advertising due to the
    termination, including future losses resulting from such
    termination. Economic Observer Advertising may unilaterally
    terminate and may terminate and seek damages including future
    losses upon certain breaches by Economic Observer Press Office;
    an agreement on organizing an information consultation committee
    entered into by Shandong Sanlian Group, our parent, Xinhua
    Finance Limited, Economic Observer Press Office, and Economic
    Observer Advertising. Shandong Sanlian Group and our parent
    agreed to establish an eight-member committee with four members
    appointed by Shandong Sanlian Group and four members, including
    the chairman of the committee, appointed by our parent. The
    committee is to provide proposals and views on the editing,
    content, appearance, and format of the Economic Observer,
    hold discussions with Economic Observer Press Office and provide
    consultancy to Economic Observer Press Office. Economic Observer
    Press Office retains final editing rights. The parties assume
    their own costs in operating the committee, and there are
    otherwise no payment terms. None of the parties may unilaterally
    terminate the agreement; and
    a business cooperation agreement, as amended, entered into by
    Economic Observer Press Office, Economic Observer Advertising,
    Guangzhou Jingshi, which is our affiliated entity, and Beijing
    Jingshi Jingguan Advertising Co., Ltd., or Jingshi Jingguan, a
    joint venture between Guangzhou Jingshi and Economic Observer
    Advertising. Jingshi Jingguan operates as the advertising agent
    in relation to advertisements placed by financial institutions
    for the Economic Observerand conducts events-related
    businesses. No party may unilaterally terminate the agreement.  Agreements by our advertising group securing advertising
    agency arrangements.
  
    Beijing Xintai Huade Advertising Co., Ltd., or Xintai Huade, our
    affiliated entity, entered into an advertising agency contract
    with Beijing Guangxian Media Co., Ltd., which has the exclusive
    advertising rights and content provision rights for two
    television programs aired on Beijing Television Station.
    Pursuant to this contract, Xintai Huade served as the exclusive
    advertising agent for these two programs during the period from
    January 1, 2007 to December 31, 2007. The programs
    were Top Musicand Star Press, both of which aired
    on Beijing Television Station Channel 2. Xintai Huade also
    serves as the exclusive advertising agent for Weather
    Forecast pursuant to contracts with a combined term from
    January 1, 2007 to December 31, 2008. Weather
    Forecastairs on Beijing Television Station. Exclusive
    advertising agent agreements for programs broadcast on Beijing
    Television Station typically have a term of one year, after
    which one of our affiliated entities in our advertising group
    typically enters into new contracts in relation to different
    programs. 41




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
    Shangtuo Zhiyang International Advertising (Beijing) Co., Ltd.,
    or Shangtuo Zhiyang, a subsidiary of our affiliated entity,
    Beijing Taide, entered into an advertising agent contract with
    Shandong Economic Observer, which at the time was the
    exclusive advertising agent for Economic ObserverPress
    Office. Pursuant to the contract, Shangtuo Zhiyang serves as the
    exclusive advertising agent for the Economic Observerwith respect to the real estate advertisements on certain
    pages of the newspaper in Beijing, Shanghai, and Tianjin. The
    contract expires on April 30, 2009. Either party may
    terminate the contract under certain conditions of breach. There
    are no specific terms in the contract with regard to
    renewability. Currently, Economic Observer Advertising is the
    exclusive advertising agent for Economic ObserverPress
    Office, and the rights of Shangtuo Zhiyang under this contract
    are still observed.  Our
    customers
    Broadcast
    and print
    Fortune China Money
    Journal Funds Observer Chinese
    Venture Investor Journal Economic Observer
    Production
       42




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Advertising
        Research
        Distribution
    Fortune Morning
    7 a.m. Fortune China Fortune China
  Funds
    Observer Chinese Venture Money Journal Economic Observer
  Our sales
    and marketing
   43




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Seasonality
    Competition
    Broadcast
    Fortune China
      Print
  Economic Observer Investor Journal 21st Century Business
    Herald China Business News
  Money Journal Funds Observer Chinese
    Venture Caijing Magazine Harvard Business Review Business Week Fortune Forbes
  Production
    Advertising
   44




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Research
    Intellectual
    property
      Regulation
    Regulatory
    authorities
    
    the National Peoples Congress;
    the State Council;
    the National Development & Reform Commission,
    (formerly the State Development and Planning Commission);
    the Ministry of Commerce, a combination of the former Ministry
    of Foreign Trade and Economic Co-operation, the State Economy
    and Trade Commission, and the State Development and Planning
    Commission; 45




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##### Table of Contents




    the State Administration for Industry and Commerce;
    the Ministry of Culture;
    the State Administration of Radio, Film & Television;
    the General Administration for Press and Publication (formerly
    the State Press and Publications Administration);
    the National Bureau of Statistics; and
    the Ministry of Information Industry.  Regulatory
    framework
    
    laws and regulations restricting and governing investments of
    private capital in general and foreign capital in particular.
    For purposes of these restrictions under PRC laws,
    foreign investment includes investment from Hong
    Kong, Taiwan and Macau. As a result of these restrictions on
    investments of foreign and private capital, we conduct our
    businesses in China substantially through contractual
    arrangements with our affiliated PRC entities. To further comply
    with these restrictions, our affiliated PRC entities in our
    print and broadcasting groups operate through contractual
    arrangements with our business partners, including a television
    station, radio stations, a newspaper press office and a magazine
    press office;
    industry specific laws and regulations that govern the entities
    and business activities within the specified industry;
    copyright and trademark protection and domain name registration
    regulations, which we and our affiliated entities use to protect
    our and their intellectual property;
    regulations on foreign currency exchange; and
    regulations on tax.    Regulations
    on investment of foreign and private capital in the media,
    advertising, market research and telecommunications
    industries
    
    the Foreign Investment Industrial Guidance Catalog, or the
    Catalog, jointly promulgated by the National
    Development & Reform Commission and the Ministry of
    Commerce on October 31, 2007 and which became effective as
    of December 1, 2007;
    the Several Decisions on the Entry of Private Capital into the
    Culture Industry, or the Decisions, issued by the State Council
    on April 13, 2005; and
    the Several Opinions on Foreign Investment in the Culture
    Sector, or the Opinions, jointly issued by the State
    Administration of Radio, Film and Television, the Ministry of
    Culture, the General Administration for Press and Publication,
    the National Development & Reform Commission and the
    Ministry of Commerce on July 6, 2005.   46




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Television
    and radio
  Television and radio stations.
        Television and radio program and drama series
    production.
   47




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Newspapers
    and magazines
  Publication of newspapers or magazines.
  Economic Observer Investor Journal Money Journal Funds Observer Chinese Venture
  Printing.
  Money
    Journal Funds Observer Chinese Venture Economic Observer Investor Journal
  Distribution.
  Money Journal Funds Observer Chinese Venture Economic Observer Investor Journal
 48




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Advertising
      Research
    Telecommunications
      Regulations
    on television and radio industry
  Radio
    and television program production
     49




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##### Table of Contents



Regulations
    on the publication industry
  Publication
    of newspapers or magazines
        Money Journal Funds Observer Chinese Venture Economic
    Observer Investor Journal
  Printing
    of publications
    Money Journal Funds Observer Chinese Venture Economic Observer
 50




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Distribution
    of publications
    Money Journal Funds Observer Chinese Venture Economic Observer Money Journal
  Regulations
    on the advertising industry
  Establishment
    of advertising entities
    
    the Advertising Law promulgated by the National Peoples
    Congress on October 27, 1994;
    the Administration Regulations of Advertising Industry,
    promulgated by the State Council on October 26, 1987;
    the Implementation Rule of Advertising Industry Administration,
    or the Implementation Rule, promulgated by the State
    Administration for Industry and Commence on January 9,
    1988, amended in 1998, 2000 and 2004, and effective as of
    January 1, 2005; and
    the Measures on Administration of Advertising Operation
    Licenses, promulgated by the State Administration for Industry
    and Commence on November 30, 2004.   51




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Advertising
    content
       52




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Operational
    matters of the advertising business
      Outdoor
    advertising
      
    utilize traffic safety facilities and traffic signs;
    impede the use of public facilities, traffic safety facilities
    and traffic signs;
    obstruct commercial and public activities or damage the urban
    area landscape;
    be placed in restricted areas near government offices, cultural
    landmarks or historical or scenic sites; or
    be placed in areas prohibited by the local governments from
    having outdoor advertisements.       53




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[PRC counsel to review]
  Marketing
    services
      Regulations
    on the market research industry
      Regulations
    on telecommunications industry
    
    the Regulation on Telecommunications promulgated by the State
    Council on September 25, 2000;
    the Administrative Measures for Telecommunications Business
    Operating License promulgated by the Ministry of Information
    Industry on December 26, 2001; and
    The Catalogue of Classes of Telecommunications Businesses
    promulgated by the Ministry of Information Industry on
    February 21, 2003.     54




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
    oppose the fundamental principles determined in the PRC
    Constitution;
    compromise state security, divulges state secrets, subvert state
    power or damage national unity;
    harm the dignity or interests of the state;
    incite ethnic hatred or racial discrimination or damages
    inter-ethnic unity;
    sabotage Chinas religious policy or propagates heretical
    teachings or feudal superstitions;
    deliver rumors, disturb social order or disrupt social stability;
    propagate obscenity, pornography, gambling, violence, murder or
    fear or incite the commission of crimes;
    insult or slander a third party or infringe upon the lawful
    rights and interests of a third party; or
    include other content prohibited by laws or administrative
    regulations.    Regulations
    on intellectual property protection
    Copyright
      Economic Observer
 55




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Fortune China Money Journal
  Trademark
    Money Journal Economic Observer
    Domain
    names
      Regulations
    on foreign currency exchange
  Foreign
    currency exchange
   56




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Foreign
    exchange registration of offshore investment by PRC
    residents
        Dividend
    distribution
    
    The Wholly Foreign Owned Enterprise Law, promulgated by the
    National Peoples Congress on April 12, 1986 and
    amended on October 31, 2000;
    The Wholly Foreign Owned Enterprise Law Implementing Rules,
    promulgated by the National Peoples Congress on
    December 12, 1990 and amended on April 12, 2001;
    The Enterprise Income Tax Law, promulgated by the National
    Peoples Congress on March 16, 2007; and
    The Implementation Rules on Enterprise Income Tax Law,
    promulgated by the State Council on December 6, 2007.   57




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Tax
    C.  Organizational
    Structure
  Our group
    structure
    
    Market indices.  Our parent provides equity
    indices and bond indices measuring the performance of
    Chinas stock and bond markets, all developed according to
    methodology used in international markets. Our parent also
    provides a customized U.S. index that tracks
    dividend-paying equities in the U.S.
    Ratings.  Our parent issues public information
    ratings based on publicly available information, according to
    methodology generally used in international markets. The group
    also offers a comprehensive global portfolio of company,
    securities, and financial information along with research and
    analytical tools.
    Financial news and analysis.  Our parent
    provides financial news mainly covering Chinas financial
    markets and international financial markets, as well as a
    comprehensive range of analytical reports and products for China
    and the international markets, covering economic developments,
    fixed-income and foreign exchange, currency and interest rate
    movements, government policies and central bank activities. 58




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
    Investor relations.Our parent offers
    corporate announcement services that allow companies inside and
    outside of China to communicate their news and events. Our
    parent also offers investor and public relations services.  Our
    corporate structure and contractual arrangements
    
    Broadcast  
    Beijing Pioneer Media Advertising Co., Ltd., a wholly-owned
    subsidiary of Shanghai Yuan Zhi Advertising Co., Ltd., our
    affiliated entity, that acts as the exclusive external
    advertising agent for Shanghai Camera Media Investment Co.,
    Ltd., or Shanghai Camera;
    Beijing Perspective, an affiliated entity that primarily engages
    in producing the Fortune Chinaseries of television
    programming;
    Beijing Century Advertising Co., Ltd., or Century Media
    Advertising, an affiliated entity that has the exclusive rights
    to sell advertising for and provides non-news content to China
    Radio Internationals EasyFM stations in Beijing and
    Shanghai;
    Beijing Mobile Interactive Co., Ltd, or M-in, an affiliated
    entity with mobile service provider licenses to operate wireless
    Mobile Value-Added Service (MVAS) platforms nationwide in
    China; and
    Guangzhou Singshine Communication Co., Ltd, or Singshine
    Communication, an affiliated entity that places advertisements,
    provides advertising, design and production services to
    customers, and has exclusive rights to sell advertising for and
    to provide content to channel FM103.6, FM90.0 and FM107.7 of the
    Guangdong Peoples Radio Station.  
    Print  
    Guangzhou Jingshi Culture Intermediary Co., Ltd., or Guangzhou
    Jingshi, an affiliated entity that has the exclusive rights to
    sell advertising for and provides management and information
    consulting services to Money Journalmagazine. Beijing
    Qiannuo Advertising Co., Ltd., a subsidiary of Guangzhou
    Jingshi, has the exclusive rights to sell advertising for and
    provide management and information consulting services to
    Funds Observerand Chinese Venture magazines; and
    Economic Observer Advertising, a wholly-owned subsidiary of
    Beijing Taide, our affiliated entity, that has the exclusive
    rights to sell advertising for, and provide consulting services
    to, the Economic Observer, a financial newspaper.
    Economic Observer Advertising also subcontracts events- related
    business to and serves as advertising agent for financial
    institution advertisers of the Economic Observerthrough
    Beijing Jingshi Jingguan Advertising Co., Ltd., its joint
    venture with Guangzhou Jingshi. Economic Observer Advertising
    also has the exclusive right to sell advertising to the
    Investor Journal, a financial newspaper.  
    Production  
    Beijing Century Media, a wholly-owned subsidiary of Beijing
    Taide, our affiliated entity, that holds a group of subsidiaries
    primarily engaging in producing entertainment programming
    content for television stations, creating three-dimensional
    animations and special effects and providing broadcast design
    for television channels; and
    Shanghai Renhe Movie and Television Intermediary Co., Ltd., or
    Shanghai Renhe, an affiliated entity that principally engages in
    investment in the production and distribution of television
    drama series. 59




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
    Advertising  
    Shenzhen Active Trinity Advertising Co., Ltd., or Shenzhen
    Trinity, an affiliated entity that carries out advertising
    services;
    Beijing Taide Advertising Co., Ltd., or Beijing Taide, an
    affiliated entity whose subsidiaries include Chinese advertising
    agencies that also produce advertising;
    Beijing Xintai Huade Advertising Co., Ltd., or Xintai Huade, an
    affiliated entity that carries out advertising services;
    Shanghai Singshine Marketing Service Co., Ltd., or Shanghai
    Singshine Marketing, an affiliated entity that principally
    engages in below-the-line marketing;
    Beijing Jinjiu Tianyi Tianjiu Lianhe Advertising Co., Ltd., an
    affiliated entity that primarily engages in online advertising;
    Shanghai IF Advertisement Design and Production Co., Ltd.; an
    affiliated entity that primarily engages in below-the-line
    marketing; and
    Shanghai Yifu Advertising Design and Promotion Co., Ltd., an
    affiliated entity that primarily engages in below-the-line
    advertising.  
    Research  
    Hyperlink, a subsidiary of Beijing Taide that primarily engages
    in market research in China and provides services including
    overall market evaluation, consumer analysis, brand analysis and
    product evaluation.    
    Broadcast  
    Jia Luo Business Consulting (Shanghai) Co., Ltd., or Jia Luo,
    which provides consulting services and advisory services to
    Shanghai Camera;
    New China Media (Shanghai) Co., Ltd., or New China, which
    primarily engages in providing services to Century Media
    Advertising; and
    Small World Television Ltd., or Small World, which primarily
    engages in the production of television programs and also offers
    television channel packaging services.  
    Print  
    EconWorld (Shanghai) Co., Ltd., or EconWorld Shanghai, which
    primarily engages in organizing events in China.  
    Production  
    Xinhua Media Entertainment, which engages in the development,
    production and pre-production of film entertainment content.  
    Advertising  
    Active Advertising (Guangzhou) Co., Ltd., or Active Guangzhou,
    which primarily operates as advertising agent for PRC customers.    
    Print  
    Money Journal Publication Limited, or Money Journal Publication
    Hong Kong, which engages primarily in providing management and
    information consulting services, including with respect to
    distribution, to Money Journaland its 100% owned
    subsidiary, Money JournalAdvertising Company Limited, or
    Money 60




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JournalAdvertising Hong Kong, which engages primarily in
    advertising for Money Journalin Hong Kong.  
    Advertising  
    Active Advertising Agency Limited, or Active Advertising Hong
    Kong, which primarily operates as an advertising agent to place
    advertising on media in Hong Kong;
    Convey Advertising Company Limited and Convey Advertising
    (China) Limited, each of which primarily engages in outdoor
    advertising; and
    JTT Advertising Limited, or JTT, which primarily engages in
    below-the-line marketing in Hong Kong.    
   (1)
    
    In addition to the subsidiaries and affiliated entities shown in
    the above corporate structure chart, Xinhua Finance Media also
    wholly owns a Hong Kong company, namely, Xinhua Finance Media
    (Hong Kong) Limited, and three PRC companies, namely, Xinhua
    Finance Media (Shanghai) Co., Ltd., Xinhua Finance Media
    (Beijing) Co., Ltd. and Zhongxi Taihe Culture Consultation
    (Shanghai) Co., Ltd. Xinhua Finance Media also holds 75% of the
    equity interest in Xinhua Media Entertainment Limited, a Cayman
    Islands company, and 19% of the equity interest in Hyperlink
    E-data
    International Ltd., a company incorporated in the British Virgin
    Islands, which in turn owns 100% of equity interest in Hyperlink
    E-data
    International (Shanghai) Co., Ltd., a PRC company.(2)
    
    Xinhua Finance Media owns 70% of the equity interest in Small
    World. The remaining 30% of the equity interest in Small World
    is owned by Jon Goodman. Small World in turn owns 100% of the
    equity interest in Small World Television LLC, a
    U.S. company.(3)
    
    Profitown owns 100% of the equity interest in JCBN Company
    Limited, a Hong Kong company, which in turn owns 100% of the
    equity interest in JTT Advertising Limited, a Hong Kong company.(4)
    
    Xinhua Finance Media owns 100% of the equity interest in Accord
    Group Investments Ltd., a British Virgin Islands company, which
    owns 100% of the equity interest in Great Triumph Investments
    Ltd., or Great 61




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Triumph, a British Virgin Islands company. Great Triumph is the
    100% owner of the equity interest in New China Media (Shanghai)
    Co., Ltd, or New China, a PRC company.(5)
    
    Xinhua Finance Media owns 100% of the equity interest in Upper
    Step Holdings Limited, or Upper Step, a British Virgin Islands
    company. Upper Step is the 100% equity owner of China Lead
    Profits Limited, or China Lead, a British Virgin Islands
    company. China Lead is the 100% equity holder of Jia Luo
    Business Consulting (Shanghai) Co., Ltd., or Jia Luo.(6)
    
    Xinhua Finance Media (Convey) owns 100% of the equity interest
    in each of Convey Advertising (China) Limited, or Convey
    Advertising (China), Convey Advertising Company Limited and
    Convey Media Advertising Limited, all of which are Hong Kong
    companies. Convey Advertising (China) in turn owns 100% of the
    equity interest in Giant Whale Financial Advisory (Shenzhen)
    Co., Ltd., a PRC company.(7)
    
    Xinhua Finance Media owns 100% of the equity interest in Xinhua
    Finance Advertising Limited, or Xinhua Finance Advertising,
    formerly known as Ming Shing International Limited, a British
    Virgin Islands company. Xinhua Finance Advertising owns 100% of
    the equity interest in Upper Will Enterprises Limited, a British
    Virgin Islands company, which in turn owns 100% of the equity
    interest in Active Advertising Agency Limited, or Active
    Advertising Hong Kong, a Hong Kong company. Active Advertising
    Hong Kong owns 100% of the equity interest in Active Advertising
    (Guangzhou) Co., Ltd., or Active Guangzhou.(8)
    
    EconWorld Media owns 100% of the equity interest in Money
    Journal Publication Limited, or Money Journal Publication Hong
    Kong, a Hong Kong company, 100% of the equity interest in
    EconWorld Publishing Limited, a Hong Kong company, and 100% of
    the equity interest in Financial World (Shanghai) Co., Ltd., a
    PRC company. Money Journal Advertising Company Limited, a Hong
    Kong company, is a wholly-owned subsidiary of Money Journal
    Publication Hong Kong.(9)
    
    Contractual agreements consist of a secured loan agreement
    entered by New China and Wang Yonghong, a member of the
    management team of and the 50% shareholder of Beijing Century
    Media Advertising Co., Ltd., or Century Media Advertising, an
    exclusive equity purchase option agreement, an equity pledge
    agreement and a subrogation agreement entered into among New
    China, Century Media Advertising, and Wang Yonghong; a secured
    loan agreement entered by New China and Kuang Peiyue, the 50%
    shareholder of Century Media Advertising, an exclusive equity
    purchase option agreement, an equity pledge agreement and a
    subrogation agreement entered into among Kuang Peiyue, New China
    and Century Media Advertising.(10)
    
    Contractual agreements consist of a secured loan agreement
    entered by Wuxianshijie (Beijing) Information Technology
    Co. Ltd, or Wuxianshijie and Gao Fei, the 50% shareholder
    of Beijing Mobile Interactive Co., Ltd, or M-in, an
    exclusive equity purchase option agreement, an equity pledge
    agreement and a subrogation agreement entered into among M-In,
    Wuxianshijie and Gao Fei; a secured loan agreement entered by
    Wuxianshijie and Xue Donghua, the 50% shareholder of M-in, an
    exclusive equity purchase option agreement, an equity pledge
    agreement and a subrogation agreement entered into among M-in,
    Wuxianshijie and Xue Donghua.(11)
    
    Contractual agreements consist of a secured loan agreement
    entered into among Jia Luo, Wan Jun, the 51% shareholder of
    Shanghai Yuan Zhi Advertising Co., Ltd., or Yuan Zhi, and Li
    Guang Jie, the 49% shareholder of Yuan Zhi, an exclusive equity
    purchase option agreement, an equity pledge agreement and a
    subrogation agreement entered into among Jia Luo, Yuan Zhi, Wan
    Jun and Li Guang Jie.(12)
    
    Contractual agreements consist of a secured loan agreement
    entered by EconWorld (Shanghai) Co., Ltd., or EconWorld Shanghai
    and Liu Yan, the 50% shareholder of Guangzhou Jingshi Culture
    Intermediary Co., Ltd., or Guangzhou Jingshi, an exclusive
    equity purchase option agreement, an equity pledge agreement and
    a subrogation agreement entered into among EconWorld Shanghai,
    Guangzhou Jingshi and Liu Yan; a secured loan agreement entered
    into by EconWorld Shanghai and Wang Yonghong, the 50%
    shareholder of Guangzhou Jingshi, an exclusive equity purchase
    option agreement, an equity pledge agreement and a subrogation
    agreement entered into among EconWorld Shanghai, Guangzhou
    Jingshi and Wang Yonghong.(13)
    
    Shanghai Yuan Zhi owns 100% of the equity interest in Beijing
    Pioneer Media Advertising Co., Ltd., a PRC company that in turn
    owns 100% of the equity interest in Beijing Linghang Dongli
    Advertising Co., Ltd., a PRC company, and owns 40% of the equity
    interest in Beijing Xintai Huazhong Media Technology Co., Ltd.,
    or Beijing Xintai Huazhong, also a PRC company. The remaining
    60% of the equity interest in Beijing Xintai Huazhong is owned
    by Beijing Xintai Huade Advertising Co., Ltd. 62




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(14)
    
    Guangzhou Jingshi has a wholly-owned subsidiary Beijing Qiannuo
    Advertising Co., Ltd., a PRC company. It also owns 50% of the
    equity interest in Beijing EWEO Advertising Co., Ltd., or
    Beijing EWEO, a PRC company. Economic Observer Advertising owns
    the other 50% of the equity interest in Beijing EWEO.(15)
    
    Contractual agreements consist of a secured loan agreement
    entered by Guangzhou Excellent and Liu Yan, the 100% shareholder
    of Guangzhou Singshine Communication Co., Ltd., or Singshine
    Communication, an exclusive equity purchase option agreement, an
    equity pledge agreement and a subrogation agreement entered
    among Liu Yan, Singshine Communication and Guangzhou Excellent.(16)
    
    Contractual agreements consist of a secured loan agreement
    entered into among Guangzhou Excellent Consulting Service Co.,
    Ltd, or Guangzhou Excellent, He Jiayue and Kuang Peiyue, the two
    individual shareholders each holding 50% of the equity interest
    in Shanghai Singshine Marketing Service Co., Ltd., or Shanghai
    Singshine Marketing, an exclusive equity purchase option
    agreement, an equity pledge agreement and a subrogation
    agreement entered into among He Jiayue, Kuang Peiyue, Shanghai
    Singshine Marketing and Guangzhou Excellent.(17)
    
    Shanghai Singshine Marketing owns 100% of the equity interest in
    Shanghai Fenghuo Marketing Consulting Co., Ltd. and Shanghai
    Heju Marketing Consulting Co., Ltd., both of which were
    incorporated in the PRC. Shanghai Singshine Marketing also owns
    60% of the equity interest in Shanghai Liangdian Zhongduan
    Zhanshi Co., Ltd., or Shanghai Liangdian, a PRC company. The
    remaining 40% of the equity interest in Shanghai Liangdian is
    owned as to 23% by Wu Xiuhui, 7% by Leng Liming, 5% by Hu
    Shengzhong and 5% by Yin Zijian.(18)
    
    Contractual agreements consist of a secured loan agreement
    entered into among Active Guangzhou, An Lizhang and Zhang
    Wenjin, the two individual shareholders each holding 50% of the
    equity interest in Shenzhen Active Trinity Advertising Co.,
    Ltd., or Shenzhen Trinity, an exclusive equity purchase option
    agreement, an equity pledge agreement and a subrogation
    agreement entered into among Active Guangzhou, Shenzhen Trinity,
    An Lizhang and Zhang Wenjin.(19)
    
    Contractual agreements consist of a secured loan agreement
    entered by Active Guangzhou and Kuang Peiyue, the 50%
    shareholder of Beijing Xintai Huade Advertising Co., Ltd., or
    Xintai Huade, an exclusive equity purchase option agreement, an
    equity pledge agreement and a subrogation agreement entered into
    among Xintai Huade, Active Guangzhou and Kuang Peiyue, a secured
    loan agreement entered by Active Guangzhou and Wang Yue, the 50%
    shareholder of Xintai Huade, an exclusive equity purchase option
    agreement, an equity pledge agreement and a subrogation
    agreement entered into among Xintai Huade, Active Guangzhou and
    Wang Yue.(20)
    
    Contractual agreements consist of a secured loan agreement
    entered into among Active Guangzhou, An Lizhang and Wang
    Yonghong, the two individual shareholders each holding 50% of
    the equity interest in Beijing Taide Advertising Co., Ltd., or
    Beijing Taide, an exclusive equity purchase option agreement, an
    equity pledge agreement and a subrogation agreement entered into
    among Active Guangzhou, Beijing Taide, An Lizhang and Wang
    Yonghong.(21)
    
    Beijing Taide is the 80% shareholder of the following entities:
    Shangtuo Zhiyang International Advertising (Beijing) Co., Ltd.,
    or Shangtuo Zhiyang and Beijing Longmei Television and Broadcast
    Advertising Co., Ltd., or Beijing Longmei. Wang Xiao Yu is the
    20% equity holder of Shangtuo Zhiyang. Zhang Yi Ran and Zhou Jia
    are both the 10% equity holders of Beijing Longmei. Wang Xiao Yu
    is a manager of Shangtuo Zhiyang. Zhou Jia is a manager of
    Beijing Longmei. Beijing Taide is the 100% shareholder of
    Shanghai Yuanxin Advertising Intermediary Co., Ltd., a PRC
    company.(22)
    
    Shanghai Paxi is the shareholder of Beijing Jinjiu Tianyi
    Tianjiu Lianhe Advertising Co., Ltd., or Beijing Jinjiu Tianyi,
    and Shanghai IF Advertisement Design and Production Co., Ltd.,
    or Shanghai IF. Beijing Jinjiu Tianyi in turn owns 100% of the
    equity interest in Tianjin Tianyi Tianjiu Advertising Co., Ltd.,
    a PRC company. Shanghai IF has entered into contractual
    arrangements with Wang Yue that give us effective control over
    Shanghai Yifu Advertisement Design and Production Co., Ltd., or
    Shanghai Yifu. The contractual agreements consist of a secured
    loan agreement entered by Shanghai IF and Wang Yue, the 100%
    shareholder of Shanghai Yifu, an exclusive equity purchase
    option agreement, an equity pledge agreement and a subrogation
    agreement entered into among Shanghai Yifu, Shanghai IF and Wang
    Yue.(23)
    
    Economic Observer Advertising owns 50% of the equity interest in
    Beijing EWEO Advertising Co., Ltd. 63




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(24)
    
    Hyperlink has a wholly-owned subsidiary Guangzhou Hyperlink
    Market Research Co., Ltd., a PRC company.(25)
    
    Contractual agreements consist of a secured loan agreement
    entered into among Beijing Century Media Culture Co., Ltd, or
    Beijing Century Media, He Jiayue and Xue Donghua, the two
    individual shareholders each holding 50% of the equity interest
    in Shanghai Renhe Movie and Television Intermediary Co.,Ltd, or
    Shanghai Renhe, an exclusive equity purchase option agreement,
    an equity pledge agreement and a subrogation agreement entered
    into among Shanghai Renhe, Beijing Century Media, He Jiayue and
    Xue Donghua.(26)
    
    The remaining 3.33% of the equity interest of Beijing Century
    Workshop Communications Co., Ltd. is owned equally by Yu Gang
    and Xia Huai. Yu Gang is the Managing Director of our production
    group. Xia Huai is Yu Gangs wife.(27)
    
    The remaining 1% of the equity interest of Beijing Golden Ways
    Animation Production Co., Ltd., or Beijing Golden Ways, formerly
    Beijing Golden Ways Culture Development Co., Ltd., is owned
    equally by Yu Gang and Xia Huai.(28)
    
    Beijing Perspective Orient Movie and Television Intermediary
    Co., Ltd., or Beijing Perspective, is the 100% shareholder of
    Beijing Perspective Orient Advertising Co., Ltd., or Beijing
    Perspective Orient Advertising, a PRC company.(29)
    
    Beijing Xintai Huade owns 100% of the equity interest in Beijing
    Xintai Huaqing Media Technology Co., Ltd. and owns 60% of the
    equity interest in Beijing Xintai Huazhong.(30)
    
    Beijing Golden Ways owns 100% of the equity interest in
    Changzhou Golden Ways Digital Technology Co., Ltd.      
    exercise effective control over these affiliated entities and
    their respective subsidiaries;
    in the case of Century Media Advertising, to receive a
    substantial portion of the economic benefits from the affiliated
    entity and its subsidiaries in consideration for the services
    provided by our subsidiary, New China; and
    have an exclusive option to purchase all or part of the equity
    interests in the various affiliated entities and certain of
    their subsidiaries in each case when and to the extent permitted
    by PRC law.   64




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Agreements
    that provide effective control over our affiliated
    entities
    Loan agreement.
    
    a loan agreement in the amount of RMB100,000 ($14,000), entered
    into between Wan Jun, the 51% shareholder of Yuan Zhi and Li
    Guang Jie, the 49% shareholder of Yuan Zhi, as borrowers, and
    Jia Luo, as lender;
    a loan agreement in the amount of RMB5.0 million
    ($0.7 million), entered into between Wang Yong Hong, the
    50% shareholder of Century Media Advertising, as borrower, and
    New China, as lender;
    a loan agreement in the amount of RMB5.0 million
    ($0.7 million), entered into between Kuang Peiyue, the 50%
    shareholder of Century Media Advertising, as borrower, and New
    China, as lender;
    a loan agreement in the amount of RMB0.5 million ($69,000),
    entered into between Liu Yan, the 50% shareholder of Guangzhou
    Jingshi, as borrower, and EconWorld Shanghai, as lender;
    a loan agreement in the amount of RMB0.5 million ($69,000),
    entered into between Wang Yong Hong, the 50% shareholder of
    Guangzhou Jingshi, as borrower, and EconWorld Shanghai as lender;
    a loan agreement in the amount of RMB0.3 million ($41,000),
    entered into between Zhang Wen Jin and Eric An, each a 50%
    shareholder of Shenzhen Trinity, as borrowers, and Active
    Guangzhou, as lender;
    a loan agreement in the amount of RMB10.0 million
    ($1.4 million), entered into between Eric An and Wang Yong
    Hong, each a 50% shareholder of Beijing Taide, as borrowers, and
    Active Guangzhou, as lender;
    a loan agreement in the amount of RMB2.5 million
    ($0.3 million), entered into between Kuang Peiyue, the 50%
    shareholder of Xintai Huade, as borrower, and Active Guangzhou,
    as lender;
    a loan agreement in the amount of RMB2.5 million
    ($0.3 million), entered into between Wang Yue, the 50%
    shareholder of Xintai Huade, as borrower, and Active Guangzhou,
    as lender;
    a loan agreement in the amount of RMB5.0 million
    ($0.7 million), entered into between Gao Fei, the 50%
    shareholder of M-in, as borrower, and Wuxianshijie (Beijing)
    Information Technology Co., Ltd., as lender; 65




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
    a loan agreement in the amount of RMB5.0 million
    ($0.7 million), entered into between Xue Donghua, the 50%
    shareholder of M-in, as borrower, and Wuxianshijie (Beijing)
    Information Technology Co., Ltd., as lender;
    a loan agreement in the amount of RMB1.0 million
    ($140,000), entered into between He Jiayue and Kuang Peiyue,
    each a 50% shareholder of Shanghai Singshine Marketing, as
    borrowers, and Guangzhou Excellent Consulting Service Co., Ltd.,
    as lender;
    a loan agreement in the amount of RMB1.0 million
    ($140,000), entered into between Liu Yan, the 100% shareholder
    of Singshine Communication, as borrower, and Guangzhou Excellent
    Consulting Service Co., Ltd., as lender;
    a loan agreement in the amount of RMB3.0 million
    ($0.4 million), entered into between He Jiayue and Xue
    Donghua, each a 50% shareholder of Shanghai Renhe, as borrowers,
    and Beijing Century Media Culture Co., Ltd., as lender; and
    a loan agreement in the amount of RMB0.5 million ($70,000),
    entered into between Wang Yue, the 100% shareholder of Shanghai
    Yifu, as borrower, and Shanghai IF, as lender.  Equity pledge agreement.
  Subrogation agreement.
  Agreements
    that provide the option to purchase the equity interest in the
    affiliated entity
  Exclusive equity purchase option
    agreement.
 66




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30-day
  Agreements
    that transfer economic benefits to us
  Service agreement.
      
    the ownership structures of our affiliated entities, Yuan Zhi,
    Century Media Advertising, Beijing Taide, Shenzhen Trinity,
    Xintai Huade, Guangzhou Jingshi, M-in, Shanghai Singshine
    Marketing, Singshine Communication, and Shanghai Renhe, and our
    subsidiaries in China, comply in all material respects with all
    existing PRC laws and regulations;
    the contractual arrangements among our PRC subsidiaries,
    affiliated entities and their shareholders governed by PRC law
    are valid, binding and enforceable, and will not result in any
    violation of PRC laws or regulations currently in
    effect; and
    the business operations of our subsidiaries in China and our
    affiliated entities and their respective subsidiaries comply in
    all material respects with existing PRC laws and regulations.    D.  Property,
    Plants and Equipment
   67




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Item 4A.
    Unresolved
    Staff Comments    Item 5.
    Operating
    and Financial Review and Prospects  Form 20-F. Form 20-F.
  A.  Operating
    Results
      
    Advertisers and marketing services
    customers.  Our primary source of revenue is
    advertising in various forms, including advertisements broadcast
    during advertising breaks during or between television or radio
    programs, advertisements placed in print pages, advertising
    delivered over the Internet and to mobile phones, and outdoor
    advertising, as well as advertisements in the form of
    sponsorship and sponsored programming. We also derive revenue
    from below-the-line services, which help advertisers plan,
    manage and execute marketing events at shopping malls,
    supermarkets, campuses, clubs and other entertainment outlets.
    Below-the-line events can create a person-to-person marketing
    experience and enhance the effectiveness of related advertising
    campaigns.
    Sponsorship can take various forms, including when products,
    services or expertise are promoted during a program. Sponsored
    programming refers to programs that typically are supplied by
    the advertiser and promote a product or service. We serve
    advertisers not only by providing the media platform, but also
    by creating the advertisements, and providing research services
    to enable the advertiser to better understand its target market.    
    Audience and readers.  We seek to
    attract audience and readers to the media platforms of our
    strategic partners. We have staff working to provide some of the
    content for various media outlets including Inner Mongolia
    Satellite Television, various local stations airing Fortune
    China, China Radio Internationals EasyFM stations in
    Beijing and Shanghai, and channels FM103.6, FM90.0 and FM107.7
    of the Guangdong Peoples Radio Station. We also offer
    management and information consulting services to our strategic
    partners to help improve the content of the Economic
    Observer, Funds Observer, Chinese Ventureand
    Money Journal. In addition, we obtain content from other
    providers, such as Dow Jones.
    Television stations or channels.  In
    addition to creating content for the media platforms of our
    strategic partners, our production group produces television
    programs, including drama series for other customers. For these
    types of customers, our production group also engages in
    broadcast design as well as animation and post-production
    services.
    Research customers.  In addition to
    providing research services to our other operating groups, our
    research group serves international and China-based customers
    who need to conduct market research in China. We 68




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study market characteristics, consumer preferences and opinions
    with respect to advertising and media content, and business and
    technology issues as needed for each project.  Money Journal
  Fortune China
  Our
    operating groups
      
    Broadcast group.  Our broadcast group
    was formed through the following transactions:  
    Upper Step.  We signed a series of agreements
    pursuant to which we acquired 19.0% of the equity of Upper Step
    on February 28, 2006, at an initial price of
    $5.1 million. This amount was paid by Xinhua Financial
    Network and included in our promissory notes to Xinhua Financial
    Network and our parent. As part of the same series of
    agreements, Sino Investment Holdings Limited, or Sino
    Investment, also purchased 37.0% of Upper Step. We also injected
    an additional $3.2 million into Upper Step. Of that amount,
    $2.0 million was a loan from us paid by Xinhua Financial
    Network, and we subsequently repaid Xinhua Financial Network. On
    September 22, 2006, we acquired an additional 37.0% of the
    equity of 69




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Upper Step from Sino Investment for a consideration of 6,478,437
    class A common shares, $9.1 million paid by our parent
    and 4,099,968 warrants to purchase our class A common
    shares at $3.659 per share. The warrants are immediately
    exercisable and valid for five years. In addition, Sino
    Investment issued a demand promissory note to us in the amount
    of $7.9 million as part of this transaction. On
    October 24, 2006, we made an additional payment of
    $10.0 million partially under our obligations for the
    purchase of 19.0% of Upper Step and partially to meet the
    obligations of Sino Investment for its purchase of 37.0% of
    Upper Step. On November 1, 2006, we acquired the remaining
    44.0% of the equity of Upper Step from Honour Rise Services
    Limited, or Honour Rise, a wholly-owned subsidiary of Shanghai
    Wai Gao Qiao Free Trade Zone Development Co., Ltd., for
    6,407,018 class A common shares. Primarily through Upper
    Steps subsidiaries and affiliated entities, we have our
    strategic partnership with Shanghai Camera Media Investment Co.,
    Ltd., or Shanghai Camera, the content and advertising provider
    to Inner Mongolia Satellite Television. Until Upper Step entered
    into this strategic partnership, it had no operations.  
    Beijing Perspective.  Through Beijing Century
    Media, an affiliated entity, we acquired 51.0% of the equity of
    Beijing Perspective Orient Movie and Television Intermediary
    Co., Ltd., or Beijing Perspective, on July 28, 2006. Xinhua
    Financial Network financed the purchase price for this
    acquisition. On November 13, 2007, we acquired the
    remaining 49% of the equity of Beijing Perspective for
    approximately $10.5 million, of which approximately
    $8.3 million was settled by the issuance of 2,043,347 of
    our class A common shares valued at $4.06 per share.
    Beijing Perspective engages in the production, distribution and
    syndication of Fortune China.
    Accord Group.  We acquired 19.0% of the equity
    of Accord Group on January 23, 2006 at a price of $440,000,
    which was paid by Xinhua Financial Network. This amount was
    included in our promissory notes to Xinhua Financial Network and
    our parent. On September 22, 2006, we acquired 61.0% of the
    equity of Accord Group from Sino Investment by issuing 451,107
    of our class A common shares to Sino Investment. On
    November 1, 2006, we acquired the remaining 20.0% of the
    equity of Accord Group from Honour Rise for 125,053 of our
    class A common shares. Through Accord Group and its
    affiliated entity, Century Media Advertising, we have a
    partnership with China Radio Internationals exclusive
    advertising agent to provide content to and exercise the
    exclusive right to sell advertising for the EasyFM stations of
    Beijing and Shanghai.
    M-in.  We acquired 100% of the ordinary shares
    of East Alliance Limited on June 4, 2007 at an initial
    price of approximately $9.5 million. East Alliance Limited
    is an investment holding company for its wholly-owned
    subsidiaries and VIEs, collectively M-in. In addition to the
    initial consideration, the equity owners of M-in are entitled to
    additional consideration, 60% payable in cash and 40% in our
    common shares, based on a predetermined earn-out formula applied
    to aggregate audited operating results through December 31,
    2007 and 2008. M-in is a mobile service provider that provides
    mobile value added services such as wireless application
    protocol, or WAP, text messaging, multimedia messaging service,
    or MMS, and color ring back tone variously supported by major
    mobile telecommunication operators in China. M-in also has
    marketing and distribution channels including television, print,
    Internet and other media, and creates and manages a wide range
    of mobile and online interactive products.
    Singshine Communication.  We acquired 100% of
    Guangzhou Singshine Communication Co., Ltd., or Singshine
    Communication, on June 11, 2007 for an initial price of
    approximately $2.0 million, of which $195,000 was settled
    by the issuance of 50,000 of our class A common shares
    valued at $3.90 per share upon closing, and another $195,000 was
    settled by the issuance of another 50,000 of our class A
    common shares valued at $3.90 per share in April 2008. Singshine
    Communication places advertisements, provides advertising
    services to customers in the PRC and has the exclusive rights to
    sell advertising for and the rights to provide content to
    channels FM103.6, FM90.0 and FM107.7 of the Guangdong
    Peoples Radio Station. Singshine Communication also
    provides design and production services.
    Small World.  We acquired 70% of the equity of
    Small World Television Ltd., or Small World, and control of a
    majority of its board of directors on August 23, 2007 for
    an initial price of approximately $6.7 million, of which
    approximately $1.7 million was settled by the issuance of
    546,248 class A common 70




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shares valued at $3.19 per share. Small World principally is
    engaged in the production of television programs and also offers
    broadcast design services.  
    Print.  Our print group was formed
    through the following transactions:  
    Economic Observer Advertising.  Through Beijing
    Taide Advertising Co., Ltd., or Beijing Taide, an affiliated
    entity, we acquired 50.0% of the equity of Beijing Jingguan
    Xincheng Advertising Co., Ltd., or Economic Observer
    Advertising, on June 8, 2006. Our parent financed the
    purchase price for this acquisition, and we subsequently issued
    5,761,317 class B common shares to our parent as
    consideration. We acquired the remaining 50.0% of the equity of
    Economic Observer Advertising through Beijing Taide on
    September 15, 2006. In 2007, we recorded additional
    consideration of $9.3 million pursuant to a predetermined
    earn-out formula applied to aggregate audited operating results
    through December 31, 2006. This amount was settled on our
    behalf by our parent company. Economic Observer Advertising has
    the exclusive rights to sell advertising for and provides
    advisory services and other management consulting services to
    the Economic Observernewspaper.
    EconWorld Media.  Our parent subscribed for
    60.0% of the equity of EconWorld Media Limited, or EconWorld
    Media, on May 26, 2005 at an initial price of
    $1.5 million and transferred that interest to us on
    January 12, 2006. On June 8, 2006, we subscribed to
    one additional share of EconWorld Media at a price of
    $2.8 million in fulfillment of an earn-out obligation,
    which was paid by our parent. We issued one share to our parent
    as consideration, which was subsequently divided into
    1,000 shares. We acquired another 12.0% of the equity of
    EconWorld Media on June 21, 2006 at a price of
    $1.1 million, which was also paid by our parent. On
    December 28, 2006, we acquired the remaining 28.0% at a
    price of $5.0 million, which was paid by our parent.
    EconWorld Media operates the magazine business of our print
    group and is our predecessor.  
    Production.  Our production group was
    formed through the following transactions:  
    Beijing Century Media.  Our parent, through a
    subsidiary, lent funds to two PRC citizens, who used the funds
    to buy a combined 100% equity interest in Beijing Century Media
    on September 9, 2005. On the same day, the subsidiary of
    our parent entered into a set of agreements with these two PRC
    citizens to give our parent effective control over Beijing
    Century Media. Our parent transferred its control of Beijing
    Century Media to us through one of our affiliated entities on
    March 16, 2006 at a price of $11.4 million. This
    amount was included in our promissory notes to our parent and
    Xinhua Financial Network. In 2007, we recorded additional
    consideration of $7.4 million pursuant to a predetermined
    earn-out formula applied to aggregate audited operating results
    through December 31, 2006. This amount was settled on our
    behalf by our parent company through an issuance of our parent
    companys shares.
    Xinhua Media Entertainment.  We established
    Xinhua Media Entertainment Limited, or Xinhua Media
    Entertainment, in April of 2008, and hold 75% of its equity
    interest.  
    Advertising.  Our advertising group was
    formed through the following transactions:  
    Xinhua Finance Advertising.  Our parent
    acquired 100% of the equity in Ming Shing at a cost of
    $29.0 million plus a series of earn-out obligations, which,
    together with the first payment, were estimated to be
    $80.5 million, on January 12, 2006 and subsequently
    transferred Ming Shing to us on March 16, 2006, at a price
    of $80.5 million. Our parent is responsible for the future
    earn-out payments. This amount was included in our promissory
    notes to our parent and Xinhua Financial Network. Ming Shing
    subsequently changed its name to Xinhua Finance Advertising
    Limited on June 19, 2006. Xinhua Finance Advertising and
    certain of its subsidiaries and affiliated entities are engaged
    in advertising design, production and placement services for
    television, print media and outdoor billboards on university
    campuses to customers in the PRC and Hong Kong. In 2007, we
    recorded additional consideration of $25.0 million pursuant
    to a predetermined earn-out formula applied to aggregate audited
    operating results through December 31, 2006. This amount
    was settled on our behalf by our parent company, partially
    through an issuance of our parent companys shares. 71




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
    Singshine Marketing.  We acquired 100% of
    Singshine (Holdings) Hongkong Ltd.s ordinary shares, and
    its subsidiaries and VIEs, collectively Singshine Marketing, on
    June 11, 2007 for an initial prices of approximately
    $6.4 million. In addition, the shareholders of Singshine
    Marketing are entitled to additional cash consideration based on
    a predetermined earn-our formula applied to aggregate audited
    operating results through December 31, 2007, 2008 and 2009.
    Singshine Marketing is engaged in below-the-line marketing
    services.
    Convey.  We acquired 100% of Xinhua Finance
    Media (Convey) Ltd.s ordinary shares, and its
    subsidiaries, collectively Convey, on July 2, 2007 for an
    initial price of $33.0 million. In addition to the initial
    consideration, the equity owners of Convey are entitled to
    additional consideration, 50% payable in cash and 50% in our
    common shares, based on a pre-determined earn-out formula
    applied to aggregate audited operating results through
    June 30, 2008 and 2009. Convey operates an outdoor
    advertising network principally located in southern China and
    Hong Kong.
    JCBN China.  We acquired 100% of the ordinary
    shares of Shanghai Paxi Advertising Co. Ltd. and its
    subsidiaries, collectively JCBN China, on November 27, 2007
    for an initial price of approximately $40.8 million. In
    addition, the equity owners of JCBN China are entitled to
    additional consideration, 60% payable in cash and 40% in our
    common shares based on a predetermined earn-out formula applied
    to aggregate audited operating results through December 31,
    2008 and 2009. JCBN China is a leading advertising agency in
    Chinas online property and imported spirits sectors.
    JCBN Hong Kong.  We acquired 100% of the
    ordinary shares of Profitown Development Ltd. and its
    subsidiaries, collectively JCBN Hong Kong, on November 27,
    2007 for an initial price of approximately $2.2 million. In
    addition to the initial consideration, the equity owners of JCBN
    Hong Kong are entitled to additional consideration, 60% payable
    in cash and 40% in our common shares, based on a predetermined
    earn-out formula applied to aggregate audited operating results
    through December 31, 2008 and 2009. JCBN Hong Kong is
    principally engaged in below-the-line marketing.  
    Research.  Through Beijing Taide, an
    affiliated entity, we acquired 51.0% of the equity of Hyperlink
    on August 1, 2006. Our parent financed the purchase price
    for this 51.0% equity, and we subsequently issued 1,679,012
    class B common shares to our parent as consideration. On
    September 18, 2006, we acquired the remaining 49.0% of the
    equity of Hyperlink through Beijing Taide. Hyperlink operates as
    our research group.    General
    factors affecting our results of operations
     72




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Specific
    factors affecting our results of operations
    
    the quality of the content and ratings of our strategic
    partners broadcast programs;
    the reach and timing of our strategic partners broadcast;
    the circulation numbers, the quality of the content of, and the
    composition and location of the readership of, our strategic
    partners publications;
    the quality of the advertising we produce for advertisers;
    the quality of the research services that we offer to
    advertisers;
    the pricing of our advertising; and
    the pricing and quality of our marketing services, including
    events organization.    
    the quality of the programming we create;
    the popularity of the programs; and
    the pricing of our television programs and production services.           73




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Our
    revenues
  Net revenues.
    
    advertising sales, which accounted for 7.2%, 11.3% and 29.1% of
    our total net revenues for the period from May 26, 2005 to
    December 31, 2005 and the years ended December 31,
    2006 and 2007, respectively;
    content production, which accounted for 67.5%, 11.1% and 5.7% of
    our total net revenues for the period from May 26, 2005 to
    December 31, 2005 and the years ended December 31,
    2006 and 2007, respectively;
    advertising services, which accounted for 10.7%, 76.1% and 64.3%
    of our total net revenues for the period from May 26, 2005
    to December 31, 2005 and the years ended December 31,
    2006 and 2007, respectively; and
    publishing services, which accounted for 14.6%, 1.5% and 0.9% of
    our total net revenues for the period from May 26, 2005 to
    December 31, 2005 and the years ended December 31,
    2006 and 2007, respectively. 74




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Advertising sales revenues.
  
    Inner Mongolia Satellite Television (by the broadcast group);
    Hunan Satellite Televisions and certain local television
    channels broadcasts of Fortune Chinaprograms (by
    the broadcast group);
    China Radio Internationals EasyFM stations in Beijing and
    Shanghai (by the broadcast group);
    Channel FM107.7 of the Guangdong Peoples Radio Station (by
    the broadcast group);
    advertising, sponsorship and sponsored programming on Inner
    Mongolia Satellite Television and design and production services
    for customers of channels FM103.6, FM90.0 and FM 107.7 and other
    radio stations (by the broadcast group and the advertising
    group);
    Economic Observer(by the print group);
    Money Journal(by the print group);
    Funds Observer(by the print group);
    Chinese Venture(by the print group);
    Top Music(by the advertising group);
    Star Press(by the advertising group);
    Weather Forecast (by the advertising group); and
    outdoor advertising (by the advertising group).   75




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Fortune Morning 7 a.m. Fortune Morning 7 a.m. Fortune China Fortune China
      Economic Observer Economic Observer Economic Observer
  Money Journal Funds Observer Chinese
    Venture Money Journal Money Journal Money Journal Funds
    Observer Chinese Venture
  Top Music Star Press.
 76




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Weather Forecast. Weather Forecast
      Content production revenues.
  
    sales of television programs;
    sales of television drama series;
    broadcast design;
    production of animation;
    production of visual effects for television commercials and
    films; and
    post-production services.         77




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Advertising services revenues.
  
    advertising and user service fees for mobile value-added
    services (by the broadcast group);
    marketing services, primarily for online real estate, spirits
    and events organization (by the broadcast group, the print group
    and the advertising group);
    acting as an advertising agent to place advertisements on
    certain programs aired by various television stations, on
    billboards on some university campuses in Shanghai and in
    certain print and electronic media (by the advertising group);
    designing and producing television, radio, print and billboard
    advertisements (by the advertising group); and
    research services (by the research group).    Money Journal Money Journal
       78




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Publishing services revenues. Money Journal Money Journal
  Money
    Journal Money Journal Money Journal Money
    Journal
  Funds Observer Chinese Venture
  Beijing Review
  Operating
    costs and expenses
    The Period fromMay 26, 2005(1)

Year Endedto December 31,

December 31,

Year Ended2005

2006

December 31, 2007(In thousands, except percentages)$

%

$

%

$

%Total net revenues


5,395



100.0



58,966



100.0



134,839



100.0Operating costs and expenses:Cost of revenuesContent production


651



12.1



2,829



4.8



3,707



2.7Advertising sales


85



1.6



1,912



3.2



19,490



14.5Advertising services


154



2.9



27,654



46.9



58,048



43.0Publishing services


534



9.9



1,386



2.4



854



0.6Selling and distribution


293



5.4



5,277



8.9



14,877



11.0General and administrative


1,248



23.1



12,840



21.8



24,349



18.1Total operating costs and expenses


2,965



55.0



51,898



88.0



121,325



89.9     (1)
    
    Date our parent acquired 60% of EconWorld Media, our predecessor. 79




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Cost of revenues.
  
    Advertising sales. Advertising sales costs primarily consist of
    (1) the fees we pay to our strategic partners, and
    amortization of these fees, in return for advertising revenues
    generated from Inner Mongolia Satellite Television, China Radio
    Internationals EasyFM stations in Beijing and Shanghai,
    channel FM107.7 of the Guangdong Peoples Radio Station,
    Money Journal, Funds Observer, Chinese Ventureand the Economic Observer; (2) costs to maintain
    and operate our outdoor advertising network; (3) program
    production costs for the Fortune Chinaand other programs
    and (4) royalties to Dow Jones.
    Content production. Content production costs are primarily
    direct costs we incur in producing television programs,
    including production overhead, development costs and
    pre-production costs, the cost of purchasing distribution rights
    of programs produced by other production companies, salaries and
    purchases of software and hardware.
    Advertising services. Advertising services costs primarily
    consist of our direct costs to secure advertising time or space
    with various broadcast and print media, costs to produce
    advertisements, mobile value-added services costs, marketing
    services costs and research costs. Mobile value-added services
    costs represent our direct costs of providing mobile value-added
    services. Marketing services costs represent our direct costs of
    providing marketing services, including events organization.
    Research costs are the direct costs relating to providing
    research services to companies that hire us to conduct market
    research for them including costs for conducting interviews and
    holding focus groups.
    Publishing services. Publishing services costs primarily
    represent our costs incurred relating to the publication and
    distribution of Money Journaland certain books.    Selling and distribution expenses.
  General and administrative expenses.
 80




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Share-based compensation expenses.
      and/or
 81




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
    We granted the following restricted class A common shares
    to our chief executive officer:  Number of



Fair Value ofCommon

Share

Non-vested

Type ofGrant Date

Shares Granted

Purchase Price

Shares

ValuationJune 13, 2006


11,050,000



Par value


$
0.60



Market approach   
    We granted options to our employees as follows:  Number of



Fair Value ofCommon

Option

Underlying

Fair Value ofShares Underlying

Exercise

Common

Option at

Type ofGrant Date

Options Granted

Price

Shares at Grant date

Grant Date

ValuationJuly 11, 2006


11,198,180
(1)

$
0.78


$
0.60


$
0.14



Market approachApril 25, 2007


90,000



6.50



5.20



1.85



Market approachSept. 26, 2007


120,000



4.39



4.39



1.85



Market approach     (1)
    
    Total number of options granted in 2006 was 11,198,180 of which
    an aggregate of 2,877,934 options were exercised during 2007
    while 851,519 options lapsed during 2006 and 2007, mostly due to
    termination of employment. Options representing 7,678,727 common
    shares were outstanding as of December 31, 2007.    Taxation
    The
    Cayman Islands, the British Virgin Islands and Hong
    Kong
    PRC
     82




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83




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Critical
    Accounting Policies
    Revenue
    recognition
    Money Journal Funds Observer Chinese Venture
       84




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Impairment
    of goodwill and long-lived assets
        Income
    taxes
      Valuation
    of share-based compensation
   85




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Recent
    Accounting Pronouncements
      contract-by-contract
  06-11 (EITF 06-11). EITF 06-11 EITF 06-11 EITF 06-11
  07-3, (EITF 07-3). EITF 07-3 EITF 07-3.
 86




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Results
    of Operations
    Period fromMay 26,2005(1) to


Year Ended


Year EndedDecember 31,


December 31,


December 31,2005


2006


2007(In thousands, except per share data)Net revenues:Content production

$
3,641


$
6,545


$
7,681Advertising sales


387



6,691



39,282Advertising services


580



44,862



86,681Publishing services


787



868



1,195Total net revenues


5,395



58,966



134,839Cost of revenues:Content production


651



2,829



3,707Advertising sales


85



1,912



19,490Advertising services


154



27,654



58,048Publishing services


534



1,386



854Total cost of revenues


1,424



33,781



82,099 87




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Period fromMay 26,2005(1) to


Year Ended


Year EndedDecember 31,


December 31,


December 31,2005


2006


2007(In thousands, except per share data)Operating expenses:Selling and distribution


293



5,277



14,877General and administrative(2)


1,248



12,840



24,349Total operating expenses


1,541



18,117



39,226Other operating income










2,262Income from operations


2,430



7,068



15,776Other income (expense), net


(21
)


(898
)


1,340Provision for income taxes (benefit)


929



1,070



(12,226
)Minority interest


129



1,704



1,303Equity loss of an investment






52



Net income

$
1,351


$
3,344


$
28,039Deemed dividend on redeemable convertible preferred shares






(2,157
)


Dividends declared to redeemable convertible preferred shares






(5,335
)


(1,338
)Net income (loss) attributable to holders of common shares

$
1,351


$
(4,148
)

$
26,701Net income (loss) per share:Basic  Class A common share

$



$
(0.08
)

$
0.23Basic  Class B common share

$
0.03


$
(0.08
)

$
0.23Diluted  Class A common share

$



$
(0.08
)

$
0.21Diluted  Class B common share

$
0.03


$
(0.08
)

$
0.21Shares used in computation:Basic  Class A common share






5,084



66,166Basic  Class B common share


42,613



44,693



50,055Diluted  Class A common share






5,084



86,315Diluted  Class B common share


42,613



44,693



50,055     (1)
    
    Date our parent acquired 60% of EconWorld Media, our predecessor.(2)
    
    Includes share-based compensation expense of $2.4 million
    and $3.1 million for the years ended December 31, 2006
    and 2007, respectively.  Year
    ended December 31, 2007 Compared to Year Ended
    December 31, 2006
  Net revenues.
  
    Content production.  Our net revenues from
    content production were $6.5 million and $7.7 million,
    and constituted 11.1% and 5.7% of our total net revenues, for
    the years ended December 31, 2006 and 2007, respectively.
    Our content production revenues for 2006 and 2007 represented
    primarily revenues from the production and distribution of drama
    series and other television programs, graphic design services,
    provision of post-production services and animation. Although
    our revenues from content production increased between 2006 and
    2007, our revenues from content production as a percentage of
    total net revenues 88




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decreased due primarily to greater growth in other parts of our
    business and in particular to our acquisition of entities that
    produce revenues from other sources.  
    Advertising sales.  Our net revenues from
    advertising sales were $6.7 million and $39.3 million,
    and constituted 11.3% and 29.1% of our total net revenues, for
    the years ended December 31, 2006 and 2007, respectively.
    Our advertising sales revenues for 2006 primarily consisted of
    advertising sales generated by the Economic Observerand
    Money Journal, provision of content and sales of
    advertising in relation to radio, sales of advertising and
    sponsorship on our Fortune Chinaprograms and our
    agreement with Shanghai Camera. Our advertising sales revenues
    for 2007 included increased sales from the preceding revenue
    sources from organic growth, which includes advertising revenues
    generated by Funds Observer, Chinese Venture,
    Weather Forecastand our agreement with Shanghai Camera,
    as well as increased revenues due to acquisitions, which
    includes advertising sales generated by our outdoor advertising
    network and the provision of content and sales of advertising in
    relation to channel FM107.7 of the Guangdong Peoples Radio
    Station.
    Advertising Services.  Our net revenues from
    advertising services were $44.9 million and
    $86.7 million, and constituted 76.1% and 64.3% of our total
    net revenues, for the years ended December 31, 2006 and
    2007, respectively. Our advertising services revenues for 2006
    were derived primarily from advertising agency services for
    print and television for advertising, marketing services,
    including events organization, visual design and production,
    advertising services for billboards and websites and research
    services. Our advertising services for 2007 included increased
    sales from the preceding revenue sources from organic growth as
    well increased revenues due to acquisitions, which includes
    sales of mobile value-added services.
    Publishing services.  Our net revenues from
    publishing services were $0.9 million and
    $1.2 million, and constituted 1.5% and 0.9% of our total
    net revenues, for the years ended December 31, 2006 and
    2007, respectively. Our publishing services revenues for 2006
    primarily consisted of subscription fees and retail sales of
    Money Journalwhile our publishing services revenues for
    2007 primarily consisted of subscription fees and retail sales
    of Money Journal, Funds Observerand China
    Venture. Although our revenues from publishing services
    increased between 2006 and 2007, our revenues from publishing
    services as a percentage of total net revenues decreased due
    primarily to greater growth in other parts of our business and
    in particular to our acquisition of entities that produce
    revenues from other sources.  Cost of revenues.
  
    Content production.  Our content production
    cost of $2.8 million and $3.7 million constituted 8.4%
    and 4.5% of our total cost of revenues for the years ended
    December 31, 2006 and 2007, respectively, and represented
    primarily costs of purchasing distribution rights of programs,
    development costs, pre-production costs, production overhead and
    purchases of software and hardware. Our cost of revenues
    attributable to content production as a percentage of total cost
    of revenues decreased due primarily to greater growth in other
    parts of our business and in particular to our acquisition of
    entities that produce other types of revenues.
    Advertising sales.  Our advertising sales cost
    of $1.9 million and $19.5 million constituted 5.6% and
    23.8% of our total cost of revenues for the years ended
    December 31, 2006 and 2007, respectively. Our cost of
    revenues from advertising sales in 2006 primarily consisted of
    amortization of advertising rights in relation to the
    Economic Observer, production fees for our Fortune
    Chinaoperations, and costs to secure advertising time for
    radio. Our cost of revenues from advertising sales in 2007
    included the preceding costs as well as increased costs due to
    organic growth, including costs associated with Funds
    Observer, Chinese Ventureand Weather
    Forecast, and costs attributable to our acquisitions,
    including costs associated with our outdoor advertising network
    and the provision of content and sales of advertising in
    relation to channel FM107.7 of the Guangdong Peoples Radio
    Station. Our cost of revenues attributable to advertising sales
    as a percentage of total cost of revenues increased primarily
    due to organic growth and acquisitions.
    Advertising services.  Our advertising services
    cost of $27.7 million and $58.0 million accounted for
    81.9% and 70.7% of our total cost of revenues for the years
    ended December 31, 2006 and 2007, respectively. Our 89




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cost of revenues from advertising services in 2006 was incurred
    primarily in connection with the purchase of advertising time or
    space from various media and events organization cost. Our cost
    of revenues from advertising services in 2007 included the
    preceding costs as well as increased cost due to organic growth
    and cost attributable to our acquisitions, including cost
    associate with our provision of mobile value-added services. Our
    cost of revenues attributable to advertising services as a
    percentage of total cost of revenues fell approximately in line
    with the decrease in revenues attributable to advertising
    services as a percentage of total net revenues.  
    Publishing services.  Our publishing services
    cost of $1.4 million and $0.9 million constituted 4.1%
    and 1.0% of our total cost of revenues for the years ended
    December 31, 2006 and 2007, respectively, and primarily
    consisted of costs incurred relating to the publication and
    distribution of Money Journaland certain books as well
    as, for 2007, costs incurred relating to the publication and
    distribution of Funds Observerand China Venture.
    Our cost of revenues attributable to publishing services
    decreased due to allocation of part of our publishing services
    costs to advertising services in 2007. Our cost of revenues
    attributable to publishing services as a percentage of total
    cost of revenues decreased due primarily to a decrease in cost
    of revenues from publishing services and due to greater growth
    in other parts of our business and in particular to our
    acquisition of entities that incur other types of costs.  Operating expenses.
  
    Selling and distribution expenses.  Our selling
    and distribution expenses of $5.3 million and
    $14.9 million, representing 29.1% and 37.9% of our total
    operating expenses for the years ended December 31, 2006
    and 2007, respectively, primarily consisted of amortization of
    intangible assets, salaries and benefits for our sales and
    marketing personnel, and promotional and marketing expenses. Our
    selling and distribution expenses as a percentage of our total
    operating expenses increased between 2006 and 2007 primarily due
    to an increase in amortization expenses of $1.8 million, an
    increase in marketing costs of $5.1 million and an increase
    in staff costs of $2.4 million.
    General and administrative expenses.  Our
    general and administrative expenses of $12.8 million and
    $24.3 million, or 70.9% and 62.1% of our total operating
    expenses for the years ended December 31, 2006 and 2007,
    respectively, primarily consisted of compensation and benefits
    of our administrative staff, rental and travel expenses. Our
    general and administrative expenses as a percentage of our total
    operating expenses decreased between 2006 and 2007 as we
    benefited from greater economies of scale.  Other operating income.
  Other expense, net.
  Provision for income taxes.
 90




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##### Table of Contents



Minority interest.
  Net income.
  Our
    consolidated results of operations for the period from
    May 26, 2005 to December 31, 2005
  Net revenues.
  
    Content production.  Net revenues of
    $3.6 million from content production constituted 67.5% of
    our total net revenues and represented primarily revenues earned
    by Beijing Century Media in producing and distributing
    television drama series and other programs, providing graphic
    design services and creating animation.
    Advertising sales.  Net revenues of $387,000
    from advertising sales, representing 7.1% of our total net
    revenues, primarily consisted of revenues generated by placing
    advertisements on the pages of Money Journal.
    Advertising services.  Net revenues of $580,000
    from advertising services accounted for 10.8% of our total net
    revenues and were derived primarily from providing marketing
    services, including events organization services.
    Publishing services.  Net revenues of $787,000
    from publishing services, representing 14.6% of our total net
    revenues, primarily consisted of subscription fees and retail
    sales of Money Journal.  Cost of revenues.
  
    Content production.  Content production cost of
    $651,000 constituted 45.7% of our total cost of revenues and
    represented primarily amortization of capitalized cost in
    producing, purchasing and distributing television drama series
    and other programs.
    Advertising sales.  Advertising sales cost of
    $85,000, representing 6.0% of our total cost of revenues,
    primarily consisted of commissions we paid to advertising agents
    for placing advertisements on the pages of Money Journal.
    Advertising services.  Advertising services
    cost of $154,000 accounted for 10.8% of our total cost of
    revenues and was incurred primarily in connection with our
    events organization services, including booking venues, printing
    material and purchasing flight tickets for certain guests.
    Publishing services.  Publishing services cost
    of $534,000, representing 37.5% of our total cost of revenues,
    primarily consisted of costs incurred relating to the
    publication and distribution of Money Journaland certain
    books.  Operating expenses.
 91




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##### Table of Contents




    Selling and distribution expenses.  Our selling
    and distribution expenses of $293,000 represented 19.0% of our
    total operating expenses and primarily consisted of salaries and
    benefits for our sales and marketing personnel and promotional
    and marketing expenses.
    General and administrative expenses.  Our
    general and administrative expenses of $1.2 million
    accounted for 81.0% of our total operating expenses and
    primarily consisted of compensation and benefits of
    administrative staff, rental and travel expenses.  Other income (expense), net.
  Provision for income taxes.
  Minority interest.
  Net income.
  Discussion
    of segment operations
    Period fromMay 26, 2005(1) to


Year Ended


Year EndedDecember 31, 2005


December 31, 2006


December 31, 2007(In thousands)Net revenues of reportable segments:Broadcast

$



$
1,401


$
28,214Print


1,754



13,589



19,757Production


3,641



6,545



7,681Advertising






35,628



74,141Research






1,803



5,046Total net revenues of our company


5,395



58,966



134,839Cost of revenues and other operating expenses excluding
    depreciation and amortization:Broadcast






1,988



13,721Print


1,627



7,112



8,786Production


460



2,539



2,924Advertising






26,178



57,154Research






1,079



3,891XFM Corporate


301



7,767



12,401
(2)Total cost of revenues and other operating expenses excluding
    depreciation and amortization


2,388



46,663



98,877 92




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##### Table of Contents



Period fromMay 26, 2005(1) to


Year Ended


Year EndedDecember 31, 2005


December 31, 2006


December 31, 2007(In thousands)Depreciation and amortization:Broadcast






571



12,105Print


116



795



1,831Production


461



1,263



2,128Advertising






2,489



3,684Research






110



300XFM Corporate






7



138Total depreciation and amortization


577



5,235



20,186Operating income (loss):Broadcast






(1,158
)


2,388Print


11



5,682



9,140Production


2,720



2,743



2,629Advertising






6,961



13,303Research






614



855XFM Corporate


(301
)


(7,774
)


(12,539
)Total operating income

$
2,430


$
7,068


$
15,776     (1)
    
    Date our parent acquired 60% of EconWorld Media, our predecessor.(2)
    
    Offset by $2,261,788 in other operating income due to
    reimbursement of initial public offering expenses by the
    depositary bank pursuant to a deposit agreement in March 2007.
    Those initial public offering expenses had been recorded in the
    2006 income statement as operating expenses because they were
    not considered to be directly related to sales of securities.  Year
    ended December 31, 2007 Compared to Year Ended
    December 31, 2006
  Net Revenues.
  
    Broadcast group.  Our net revenues from the
    broadcast group were $1.4 million and $28.2 million
    and constituted 2.4% and 20.9% of our total net revenues for the
    years ended December 31, 2006 and 2007, respectively. Our
    net revenues from the broadcast group in 2006 primarily
    consisted of provision of content and sales of advertising in
    relation to radio, sales of advertising and sponsorship on Inner
    Mongolia Satellite Television, and sales of advertising and
    sponsorship on our Fortune Chinaprograms. Increases in
    our net revenues for the broadcast group in 2007 primarily
    consisted of organic growth in the above as well as revenues
    attributed to our acquisitions of M-in and Singshine
    Communication.
    Print.  Net revenues of $13.6 million and
    $19.8 million from the print group, or 23.0% and 14.7% of
    our total net revenues for the years ended December 31,
    2006 and 2007, respectively, were derived primarily from
    marketing services, including events organizing, advertising
    sales relating to the Economic Observerand Money
    Journal, and publishing revenues. Although our revenues from
    the print group increased between 2006 and 2007 partly due to
    publishing the new magazines Funds Observerand
    Chinese Venture, our revenues from the print group as a
    percentage of total net revenues decreased due primarily to
    acquisitions and greater growth in other operating groups.
    Production.  Net revenues of $6.5 million
    and $7.7 million from the production group constituted
    11.1% and 5.7% of our total net revenues for the years ended
    December 31, 2006 and 2007, respectively, and represented
    primarily revenues from the production and distribution of drama
    series and other television programs, animation, graphic design
    services and provision of post-production services. Although our 93




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##### Table of Contents



revenues from production increased between 2006 and 2007 due to
    organic growth, our revenues from production as a percentage of
    total net revenues decreased due primarily to acquisitions and
    greater growth in other operating groups.  
    Advertising.  Our net revenues from the
    advertising group were $35.6 million and
    $74.1 million, representing 60.4% and 55.0% of our total
    net revenues, for the years ended December 31, 2006 and
    2007, respectively. Our net revenues from the advertising group
    in 2006 primarily consisted of advertising services revenues
    derived from advertising agency services for print and
    television, revenues derived from marketing services, including
    events organization, visual design, and advertising services for
    billboard and websites. Increases in our net revenues for the
    advertising group in 2007 primarily consisted of organic growth
    in the above in addition to revenues attributed to our
    acquisitions of Singshine Marketing, Convey, JCBN China and JCBN
    Hong Kong.
    Research.  Net revenues of $1.8 million
    and $5.0 million from the research group constituted 3.1%
    and 3.7% of our total net revenues for the years ended
    December 31, 2006 and 2007, respectively. Increases in net
    revenues for the research group in 2007 were primarily due to
    organic growth.  Cost of revenues and other expenses excluding depreciation
    and amortization.
  
    Broadcast group.  Broadcast group costs of
    $2.0 million and $13.7 million constituted 4.3% and
    13.9% of our total cost of revenues and other operating expenses
    excluding depreciation and amortization for the years ended
    December 31, 2006 and 2007, respectively. Broadcast group
    costs in 2006 primarily consisted of production fees and
    salaries of reporters and editors. Broadcast group costs in 2007
    primarily consisted of the same costs as well as cost associated
    with our operation of our mobile value-added services system.
    Our cost of revenues attributable to the broadcast group grew
    between 2006 and 2007 primarily due to organic growth and
    increased costs due to acquisitions while cost of revenues as a
    percentage of total cost of revenues increased primarily due to
    costs attributed to our acquisitions of M-in and Singshine
    Communication.
    Print.  Print group costs of $7.1 million
    and $8.8 million, or 15.2% and 8.9% of our total cost of
    revenues and other operating expenses excluding depreciation and
    amortization for the years ended December 31, 2006 and
    2007, were incurred primarily from event organization costs,
    including booking venues, printing material and purchasing
    flight tickets for certain guests, costs incurred relating to
    the publication and distribution of Money Journaland
    certain books and sales commissions. Our cost of revenues
    attributable to the print group grew between 2006 and 2007
    primarily due to organic growth while cost of revenues as a
    percentage of total cost of revenues decreased primarily due
    greater growth in cost of revenues in other operating groups.
    Production.  Production group costs of
    $2.5 million and $2.9 million constituted 5.4% and
    3.0% of our total cost of revenues and other operating expenses
    excluding depreciation and amortization for the years ended
    December 31, 2006 and 2007, and represented primarily costs
    of purchasing distribution rights of programs, development
    costs, pre-production costs, salaries and allowances, production
    overhead and purchases of software and hardware. Our cost of
    revenues attributable to production grew between 2006 and 2007
    primarily due to organic growth while cost of revenues as a
    percentage of total cost of revenues decreased primarily due to
    greater growth in cost of revenues in other operating groups.
    Advertising.  Advertising group costs of
    $26.2 million and $57.1 million, representing 56.1%
    and 57.8% of our total cost of revenues and other operating
    expenses excluding depreciation and amortization for the years
    ended December 31, 2006 and 2007, primarily consisted of
    the purchase of advertising time or space from various media
    outlets, events organization costs, salaries and allowances,
    marketing costs, and sales commissions. Our cost of revenues
    attributable to the advertising group grew between 2006 and 2007
    primarily due to organic growth and increased costs due to our
    acquisitions of Singshine Marketing, Convey, JCBN China and JCBN
    Hong Kong while cost of revenues as a percentage of total cost
    of revenues decreased primarily due to due greater growth in
    cost of revenues in other operating groups. 94




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
    Research.  Research group costs of
    $1.1 million and $3.9 million constituted 2.3% and
    3.9% of our total cost of revenues and other operating expenses
    excluding depreciation and amortization for the years ended
    December 31, 2006 and 2007, respectively, and primarily
    consisted of salaries, costs for outsourcing research,
    translation costs and transportation costs. Our cost of revenues
    attributable to the research group grew between 2006 and 2007
    primarily due to organic growth while cost of revenues as a
    percentage of total cost of revenues increased primarily due to
    organic growth.
    XFM corporate.  Corporate costs of
    $7.8 million and $12.4 million constituted 16.7% and
    12.5% of our total cost of revenues and other operating expenses
    excluding depreciation and amortization for the years ended
    December 31, 2006 and 2007, respectively, and consisted
    primarily of staff benefits, staff salary, auditor remuneration
    and legal and professional fees. Our cost of revenues
    attributable to the XFM corporate grew between 2006 and 2007
    primarily due to our increased size from organic growth and
    acquisitions while cost of revenues as a percentage of total
    cost of revenues decreased primarily due to our benefiting from
    increased economies of scale.  Period
    from May 26, 2005 to December 31, 2005
  Net Revenues.
  
    Print.  Net revenues of $1.8 million from
    the print group, or 32.5% of our total net revenues, are derived
    from selling Money Journalthrough subscription and
    retail channels, providing events organization services and
    selling advertisements on the pages of Money Journal.
    Production.  Net revenues of $3.6 million
    from the production group constituted 67.5% of our total net
    revenues and represented primarily revenues earned by Beijing
    Century Media in producing and distributing television drama
    series and other programs, creating animation and providing
    graphic design services.  Cost of revenues and other expenses excluding depreciation
    and amortization.
  
    Print.  Print group cost of $1.6 million,
    or 68.1% of our total cost of revenues and other operating
    expenses excluding depreciation and amortization, consisted
    primarily of cost in connection with the publication and
    distribution of Money Journal and certain books, events
    organization cost, and commissions paid to advertising agents.
    Production.  Production group cost of $460,000
    constituted 19.3% of our total cost of revenues and other
    operating expenses excluding depreciation and amortization and
    represented primarily amortization of capitalized cost in
    producing, purchasing and distributing television drama series
    and other programs marketing and promotion expenses and other
    costs related to our selling and marketing activities, and
    compensation and benefits of administrative staff.  Holding
    company structure
   95




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##### Table of Contents



Inflation
    Foreign
    Currency
    B.
    Liquidity
    and Capital Resources       96




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##### Table of Contents



Period fromMay 26, 2005(1) to


Year Ended


Year EndedDecember 31, 2005


December 31, 2006


December 31, 2007(In thousands)Net cash provided by (used in) operating activities

$
109


$
(4,463
)

$
20,293Net cash provided by (used in) investing activities


376



(32,214
)


(164,922
)Net cash provided by financing activities


1,594



70,104



151,259Effect of exchange rate changes


2



846



1,452Net increase in cash


2,081



34,273



8,083Cash at beginning of period






2,081



36,354Cash at end of period

$
2,081


$
36,354


$
44,436     (1)
    
    Date our parent acquired 60% of EconWorld Media, our predecessor.  Operating
    activities
          Investing
    activities
   97




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##### Table of Contents



Financing
    activities
          Lender

Principal

Date of Loan

Due Date

Interest RateBank loan

RMB21.5 million ($2.9 million)


September 9, 2007


September 8, 2008


6.32% per yearBank loan

RMB17.0 million ($2.3 million)


December 28, 2007


June 28, 2008


5.91% per yearBank loan

RMB39.0 million ($5.3 million)


October 9, 2007


April 9, 2008


5.83% per yearBank loan

RMB42.0 million ($5.7 million)


December 17, 2007


June 17, 2008


5.83% per yearBank loan

RMB25.0 million ($3.4 million)


July 26, 2007


January 28, 2008


5.43% per yearBank loan

RMB22.4 million ($3.0 million)


December 25, 2007


June 25, 2008


5.91% per yearBank loan

RMB20.5 million ($2.8 million)


May 18, 2007


May 17, 2008


4.79% per monthBank loan

RMB21.0 million ($2.8 million)


October 23, 2007


October 22, 2008


6.56% per yearBank loan

RMB21.0 million ($2.8 million)


March 26, 2007


March 25, 2008


4.79% per monthBank loan

RMB21.0 million ($2.8 million)


January 25, 2007


January 24, 2008


5.51% per year     Capital
    expenditures
   98




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##### Table of Contents



C.
    Research
    and Development    D.
    Trend
    Information    E.
    Off-Balance
    Sheet Arrangements    F.
    Contractual
    Obligations and Commercial Commitments    Less Than


1-3


3-5


More ThanPayment Due by December 31

Total


1 Year


Years


Years


5 Years(In thousands)Debt obligations(1)


33,856



33,780



45



31



Interest related to short-term debt obligations(2)


927



927











Capital lease obligations


197



189



8







Operating lease obligations


6,935



3,847



2,755



333



Purchase obligations(3)


91,299



16,077



7,286



8,695



59,241Other long-term liabilities reflected on the balance sheet(4)


69,630



4,564



14,744



8,633



41,689Total

$
202,844


$
59,384


$
24,838


$
17,692


$
100,930     (1)
    
    Mainly represents loans from Shenzhen Development Bank, Shanghai
    Pudong Development Bank and ABN Shanghai branch. See
     B. Liquidity and Capital Resources 
    Financing activities.(2)
    
    Interest on short-term debt is calculated based on the interest
    rates under the relevant loans, ranging from 4.8% to 6.6%. The
    loans are the loans mentioned above under  B.
    Liquidity and Capital Resources  Financing
    activities for Shenzhen Development Bank, Shanghai Pudong
    Development Bank and ABN Shanghai branch.(3)
    
    Represents obligations to purchase advertising rights on various
    media outlets, to purchase advertising rights for our magazine
    operations, to pay for production costs for television programs,
    to pay for obtaining network services from internet providers,
    to obtain a publishing right from a publisher, to pay for
    outsourcing of research services, to pay for consulting services
    to partners and vendors of the research group and to pay for
    events organizing services.(4)
    
    Represents commitments under contracts in relation to our
    newspaper operations and securing advertising rights in relation
    to Shanghai Camera and Guangdong Radio Station. 99




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##### Table of Contents



Item 6.
    Directors,
    Senior Management and Employees  A.
    Directors
    and Senior Management    Directors and Executive Officers

Age

PositionFredy Bush


49


Chairman of Board of Directors and Chief Executive OfficerAndrew Chang


38


Chief Financial OfficerZhu Shan


39


Chief Operating Officer and DirectorJoseph Chan


46


Managing Director of Business Development and IntegrationChen Hui


47


President, Print Group (Newspaper)Teddy Liu Weidong


37


President, Advertising Group and DirectorYu Gang


40


President, Production GroupStephen Xie Wei


38


President, Research GroupGraham Earnshaw


55


President and DirectorXu Lang


41


Vice President, BroadcastFang Quan


45


Vice President, Print Group (Magazine)Aloysius T. Lawn


49


Independent DirectorJohn H. Springer


51


Independent DirectorZhao Li


37


DirectorLong Qiu Yun


44


Independent DirectorDavid Olson


52


Independent DirectorLarry Kramer


58


Independent DirectorSteve Richards


39


Independent DirectorLi Shantong


63


Independent DirectorDavid Green


59


Independent Director   Directors
  Fredy Bush
    Zhu Shan China Business
 100




---



##### Table of Contents



Graham Earnshaw Editor-in-Chief
  Aloysius T. Lawn
  John H. Springer
  Zhao Li Investor Journal Economic
    Observer
  Teddy Liu Weidong
  Long Qiu Yun
  David Olson
 101




---



##### Table of Contents



Larry Kramer
  Steve Richards
  Li Shantong
  David Green
  Executive
    officers
  Andrew Chang
  Joseph Chan
 102




---



##### Table of Contents



Chen Hui editor-in-chief
  Yu Gang
  Stephen Xie Wei
  Xu Lang
  Fang Quan editor-in-chief Capital Week
  B.
    Compensation
    of Directors and Executive Officers    Share
    options
   103




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##### Table of Contents



CommonSharesUnderlyingGranted

Exercise



ExpirationOptions

Price

Grant Date

Date($/Share)Name:Fredy Bush


0



N/A



N/A



N/AAndrew Chang


900,000



0.78



July 11, 2006



July 10, 2011Zhu Shan


700,000



0.78



July 11, 2006



July 10, 2011Graham Earnshaw


700,000



0.78



July 11, 2006



July 10, 2011Alex Fan


294,186



0.78



July 11, 2006



July 10, 2011Teddy Liu Weidong


136,860



0.78



July 11, 2006



July 10, 2011Yu Gang


540,982



0.78



July 11, 2006



July 10, 2011Stephen Xie Wei


335,260



0.78



July 11, 2006



July 10, 2011Chen Hui


79,460



0.78



July 11, 2006



July 10, 2011Zhao Li


113,176



0.78



July 11, 2006



July 10, 2011Other individuals as a group


7,400,256



0.78



July 11, 2006



July 10, 2011Aloysius T. Lawn


30,000



6.50



Apr. 25, 2007



Apr. 24, 201730,000



1.64



Apr. 30, 2008



Apr. 29, 2018John H. Springer


30,000



6.50



Apr. 25, 2007



Apr. 24, 201730,000



1.64



Apr. 30, 2008



Apr. 29, 2018Long Qiu Yun


30,000



6.50



Apr. 25, 2007



Apr. 24, 2017David Olson


30,000



4.39



Sept. 25, 2007



Sept. 25, 2017Larry Kramer


30,000



4.39



Sept. 25, 2007



Sept. 25, 2017Steve Richards


30,000



4.39



Sept. 25, 2007



Sept. 25, 2017Li Shantong


30,000



4.39



Sept. 25, 2007



Sept. 25, 2017Total


11,408,180     Termination of options.
  Administration.
 104




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##### Table of Contents



Vesting schedule.
  Option agreement.
  Option exercise.
  Third-party acquisition.
  Termination of plan.
    Termination of options.
  Administration.
  Vesting schedule.
  Option exercise.
  Third-party acquisition.
  Termination of grant.
  C.
    Board
    Practices  Board of
    Directors
   105




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##### Table of Contents



Committees
    of the Board of Directors
    Audit
    committee
  Rule 10A-3
  
    appointing, retaining and overseeing the work of the independent
    auditors, including resolving disagreements between the
    management and the independent auditors relating to financial
    reporting;
    pre-approving all auditing and non-auditing services permitted
    to be performed by the independent auditors;
    reviewing annually the independence and quality control
    procedures of the independent auditors;
    discussing material off-balance sheet transactions, arrangements
    and obligations with the management and the independent auditors;
    reviewing and approving all proposed related party transactions;
    discussing the annual audited financial statements with the
    management;
    annually reviewing and reassessing the adequacy of our audit
    committee charter;
    meeting separately with the independent auditors to discuss
    critical accounting policies, management letters,
    recommendations on internal controls, the auditors
    engagement letter and independence letter and other material
    written communications between the independent auditors and the
    management; and
    attending to such other matters that are specifically delegated
    to our audit committee by our board of directors from time to
    time.  Compensation
    committee
    
    reviewing and approving executive compensation;
    reviewing periodically and managing any long-term incentive
    compensation plans, share option plans, annual bonuses, employee
    pension and welfare benefit plans;
    determining our policy with respect to change of control or
    parachute payments; and
    managing and reviewing director and executive officer
    indemnification and insurance matters.  Nominating
    and corporate governance committee
   106




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##### Table of Contents




    recommending to the board nominees for election or re-election
    to the board or for appointments to fill any vacancies;
    reviewing annually the performance of each incumbent director in
    determining whether to recommend such director for an additional
    term;
    overseeing the board in the boards annual review of its
    own performance and the performance of the management; and
    considering, preparing and recommending to the board such
    policies and procedures with respect to corporate governance
    matters as may be required to be disclosed under the applicable
    laws or otherwise considered to be material.  Investment
    committee
    
    reviewing acquisition strategies with management and
    investigating acquisition candidates on our behalf;
    recommending acquisition strategies and candidates to the board
    of directors; and
    authorizing and approving acquisitions and investments by us
    valued in an amount not to exceed, for any particular
    acquisition or investment, $5.0 million in cash, stock or a
    combination thereof.  Terms of
    Directors and Executive Officers
    Employment
    Agreement with Fredy Bush
    D.
    Employees   107




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##### Table of Contents



AdvertisingMedia

andFunction

Headquarters

Broadcast

Print

Production

Research

TotalAdministration


13



40



9



17



74



153Analyst


1



59



34



4



43



141Design


3



25



12



30



74



144Content production


1



37



0



53



1



92Finance


23



20



13



11



44



111General management


4



12



4







23



43Information technology


2



19



2



2



16



41Miscellaneous






















55Research


















102



102Sales and marketing


5



101



103



10



268



487Total


52



313



177



127



645



1,369       E.
    Share
    Ownership    
    each of our current directors and executive officers; and
    each person known to us to own beneficially more than 5.0% of
    our shares.  Shares Beneficially Owned(1)(2)Number

%Directors and Executive Officers:Fredy Bush(3)


9,198,333



6.4Zhu Shan(4)


331,777



0.2Graham Earnshaw(5)


86,667



0.1Alex Fan(6)


28,000



0.0Teddy Liu Weidong(7)


28,000



0.0Yu Gang(8)


24,000



0.0Stephen Xie Wei(9)


1,602,132



1.1Zhao Li(10)


750,041



0.5Aloysius T. Lawn(11)


10,000



0.0 108




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##### Table of Contents



Shares Beneficially Owned(1)(2)Number

%John H. Springer(12)


10,000



0.0Long Qiu Yun(13)


10,000



0.0Andrew Chang


*



*Joseph Chan


*



*Chen Hui


*



*David Olson


*



*Larry Kramer


*



*Steve Richards


*



*Li Shantong


*



*Xu Lang


*



*David Green


*



*Fang Quan


*



*All directors and executive officers as a group(14)


12,723,347



8.8Principal Shareholders:Xinhua Finance Limited(15)


50,054,618



34.8Patriarch Partners Media Holdings, LLC(16)


10,139,655



7.0Dragon Era Group Limited(17)


8,865,000



6.2Yucaipa Global Partnership Fund L.P.(18)


8,574,022



6.0     *
    
    Upon exercise of all options granted, would beneficially own
    less than 1.0% of our outstanding common shares.(1)
    
    Beneficial ownership is determined in accordance with
    Rule 13d-3
    of the General Rules and Regulations under the Securities
    Exchange Act of 1934, as amended, and includes voting or
    investment power with respect to the securities(2)
    
    Percentage of beneficial ownership of each listed person is
    based on 143,905,321 common shares outstanding as of
    April 30, 2008, as well as the common shares underlying
    share options and warrants exercisable by such person within
    60 days of the date of this annual report.(3)
    
    Includes 8,865,000 class A common shares owned by Dragon
    Era Group Limited that are restricted and held in the form of
    restricted ADR. The business address of Ms. Bush is Rooms
    3905-3909,
    Tower 1, Grand Gateway, 1 Hongqiao Lu, Shanghai
    200030 Peoples Republic of China. The 8,865,000
    class A common shares held by Dragon Era Group Limited are
    subject to staggered
    lock-up
    periods ranging up to five years from June 13, 2006 with
    40,000 class A common shares vested on January 22,
    2008, 2,170,000 will vest on June 13, 2008, 2,210,000 will
    vest on June 13, 2009, 2,210,000 will vest on June 13,
    2010 and 2,235,000 will vest on June 13, 2011. Also
    includes 333,333 restricted shares held by Ms. Bush that
    have vested as of the date of this annual report. Does not
    include a further 666,667 restricted shares that will vest on
    March 31, 2009 and 2010.(4)
    
    Includes 225,110 class A common shares issuable upon
    exercise of options held by Mr. Zhu within 60 days of
    the date of this annual report. Does not include a further
    350,000 options. Also includes 106,667 restricted shares held by
    Mr. Zhu that have vested as of the date of this annual
    report. Does not include a further 213,333 restricted shares
    that will vest on March 31, 2009 and 2010. The business
    address of Mr. Zhu is Rooms
    3905-3909,
    Tower 1, Grand Gateway, 1 Hongqiao Lu, Shanghai
    200030 Peoples Republic of China.(5)
    
    Includes 40,000 class A common shares issuable upon
    exercise of options held by Mr. Earnshaw within
    60 days of the date of this annual report. Does not include
    a further 350,000 options. Also includes 46,667 restricted
    shares held by Mr. Earnshaw that have vested as of the date
    of this annual report. Does not include a further 93,333
    restricted shares that will vest on March 31, 2009 and
    2010. The business address of Mr. Earnshaw is Rooms
    3905-3909,
    Tower 1, Grand Gateway, 1 Hongqiao Lu, Shanghai
    200030 Peoples Republic of China. 109




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##### Table of Contents



(6)
    
    Includes 28,000 restricted shares held by Mr. Fan that have
    vested as of the date of this annual report. Does not include a
    further 56,000 restricted shares that will vest on
    March 31, 2009 and 2010. Does not include a further 147,094
    options. The business address of Mr. Fan is Room 408,
    55 Dongan Menda Street, Dongcheng District, Beijing,
    Peoples Republic of China.(7)
    
    Includes 28,000 restricted shares held by Mr. Liu that have
    vested as of the date of this annual report. Does not include a
    further 56,000 restricted shares that will vest on
    March 31, 2009 and 2010. Does not include an additional
    68,430 options. The business address of Mr. Liu is 1706
    Tower A, Jing Song Qiao Fu Dun Center, Beijing, Peoples
    Republic of China.(8)
    
    Includes 24,000 restricted shares held by Mr. Yu that have
    vested as of the date of this annual report. Does not include a
    further 48,000 restricted shares that will vest on
    March 31, 2009 and 2010. Also does not include a further
    270,491 options held by Mr. Yu and 41,316 options held by
    Xia Huai, the wife of Mr. Yu. The business address of
    Mr. Yu is D-10, 798 Art Zone, 4 Jiu Xian Qiao Road,
    Chaoyang District, Beijing, Peoples Republic of China.(9)
    
    Includes 1,580,799 class A common shares held as nominee
    for members of the management team of Hyperlink. Includes 21,333
    restricted shares held by Mr. Xie that have vested as of
    the date of this annual report. Does not include a further
    42,667 restricted shares that will vest on March 31, 2009
    and 2010. Does not include an additional 167,630 options. The
    business address of Mr. Xie is 12th Floor, Xincheng
    Building, No. 167 Jiangning Road, Shanghai, Peoples
    Republic of China.(10)
    
    Includes 56,588 class A common shares issuable upon
    exercise of options held by Mr. Zhao within 60 days of
    the date of this annual report, 20,000 restricted shares held by
    Mr. Zhao that have vested as of the date of this annual
    report, and 673,453 class A common shares. Does not include
    an additional 56,588 options and does not include a further
    40,000 restricted shares that will vest on March 31, 2009
    and 2010. The business address of Mr. Zhaos business
    address is No. 7 Building Xinghua Dongli, Heping Li Street, Dong
    Cheng District, Beijing, Peoples Republic of China.(11)
    
    Includes 10,000 class A common shares issuable upon
    exercise of options held by Aloysius T. Lawn within 60 days
    of the date of this annual report. Does not include a further
    50,000 options, including 30,000 issued on April 30, 2008.
    The business address of Aloysius T. Lawn is Rooms 3905-3909,
    Tower 1, Grand Gateway, 1 Hongqiao Lu, Shanghai 200030
    Peoples Republic of China.(12)
    
    Includes 10,000 class A common shares issuable upon
    exercise of options held by John H. Springer within 60 days
    of the date of this annual report. Does not include a further
    50,000 options, including 30,000 issued on April 30, 2008.
    The business address of John H. Springer is 1345 SW
    Burlington Ave., Beaverton, OR, 97006.(13)
    
    Includes 10,000 class A common shares issuable upon
    exercise of options held by Long Qiu Yun within 60 days of
    the date of this annual report. Does not include a further
    20,000 options. The business address of Long Qiu Yun is Rooms
    3905-3909, Tower 1, Grand Gateway, 1 Hongqiao Lu,
    Shanghai 200030 Peoples Republic of China.(14)
    
    Includes common shares held by all of our directors and
    executive officers as a group and common shares issuable upon
    the exercise of all of the options within 60 days of the
    date of this annual report held by all of our directors and
    executive officers.(15)
    
    Shares are class B common shares. Xinhua Finance Limited is
    a public company listed on the Mothers Board of the Tokyo Stock
    Exchange. The business address of Xinhua Finance Limited is
    Suite 2003-2005
    Vicwood Plaza, 199 Des Voeux Road Central, Hong Kong. The
    holdings of our parent in our shares have decreased from 100%
    holding at our founding.(16)
    
    Includes 10,139,655 class A Common shares of which
    10,139,654 are restricted and held in restricted ADR form. The
    business address of Patriarch Partners is 40 Wall Street, 25th
    Floor, New York, NY 10005.(17)
    
    Shares are class A common shares that are restricted and
    held in restricted ADR form. Dragon Era Group Limited is owned
    by Fredy Bushs family trust. The business address of
    Dragon Era Group Limited is 31/F, The Center, 99 Queens Road
    Central, Hong Kong. The 8,865,000 class A common shares
    held by Dragon Era Group Limited are subject to staggered
    lock-up
    periods ranging up to five years from June 13, 2006 with
    40,000 class A common shares vested on January 22,
    2008. 2,170,000 class A common shares will vest on 110




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##### Table of Contents



June 13, 2008, 2,210,000 will vest on June 13, 2009,
    2,210,000 will vest on June 13, 2010 and 2,235,000 will
    vest on June 13, 2011.(18)
    
    Includes 8,574,022 class A Common shares of which 2,400,000
    are restricted and held in restricted ADR form. Does not include
    300,000 series B convertible preferred shares that may be
    converted into class A common shares at any time after
    February 28, 2009 or upon the occurrence of certain other
    events. See Item 7.B. Related Party
    Transactions  Transactions with Yucaipa for
    additional information on the convertible preferred shares and
    our agreements with Yucaipa. Yucaipa Global Partnership
    Fund L.P. is controlled by Ronald W. Burkle and its
    business address is 9130 W. Sunset Boulevard, Los
    Angeles, CA 90069.          Item 7.
    Major
    Shareholders and Related Party Transactions  A.
    Major
    Shareholders    B.
    Related
    Party Transactions  Contractual
    arrangements with our affiliated entities and their
    shareholders
   111




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##### Table of Contents



Transactions
    with our parent or its subsidiaries
    Contracts
    between us and our parent or its subsidiaries
          Loan
    agreements between us and our parent or its
    subsidiaries
        Transactions
    involving our acquisitions
   112




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##### Table of Contents



Transactions
    with David U. Lee, Leeding Media LLC, K-Jam Media Inc. and Kia
    Jam
      Transactions
    with Shanghai Wai Gao Qiao Free Trade Zone Development Co.,
    Ltd.
    Agreements
    regarding Shanghai Camera Media Investment Co.,
    Ltd.
      Transactions
    with Sino Investment Holdings
   113




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##### Table of Contents



Transactions
    with Patriarch Partners
      Proxy
    agreement and amendment to our Memorandum and Articles of
    Association
    Share
    purchase agreement between us and Patriarch
    Partners
      Investor
    rights agreement among us, Patriarch Partners and our
    parent
  Form F-3
 114




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##### Table of Contents



Credit
    agreement among us, Patriarch Partners, Patriarch Partners
    Agency Services, LLC and our direct subsidiaries, as
    guarantors
    Advisory
    agreement among us, our parent, and Patriarch Partners
    Management Group, LLC
    Transactions
    with Yucaipa
  Share
    purchase agreement between us and Yucaipa
       115




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##### Table of Contents



Shareholders
    agreement among us, Yucaipa and our parent
    Registration
    rights agreement between us and Yucaipa
    Transactions
    with Hunan Television & Broadcast Intermediary Co.,
    Ltd.
      Share
    restructuring
     116




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##### Table of Contents



Employment
    agreements
    Share
    option agreements
    C.
    Interests
    of Experts and Counsel    Item 8.
    Financial
    Information  A.
    Consolidated
    Statements and Other Financial Information    Legal
    Proceedings
      Dividend
    Policy
     117




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##### Table of Contents



B.
    Significant
    Changes    Item 9.
    The
    Offer and Listing  A.
    Offering
    and Listing Details      Sales PriceHigh

LowAnnual High and Law2007 (from March 9, 2007)


13.00



5.06Quarterly Highs and LowsSecond Quarter 2007


12.75



6.15Third Quarter 2007


10.18



5.06Fourth Quarter 2007


10.34



5.60Monthly Highs and LowsNovember 2007


9.3



5.6December 2007


7.14



5.81January 2008


6.28



3.65February 2008


5.79



3.80March 2008


4.03



2.02April 2008


4.39



2.81May 2008 (through May 16, 2008)


4.40



3.52  118




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##### Table of Contents



B.
    Plan
    of Distribution    C.
    Markets    D.
    Selling
    Shareholders    E.
    Dilution    F.
    Expenses
    of the Issue    Item 10.
    Additional
    Information  A.
    Share
    Capital    B.
    Memorandum
    and Articles of Association  No. 333-140808)
  C.
    Material
    Contracts  Form 20-F.
  D.
    Exchange
    Controls    E.
    Taxation    Cayman
    Islands Taxation
   119




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##### Table of Contents



United
    States Federal Income Taxation
      
    banks;
    financial institutions;
    insurance companies;
    regulated investment companies;
    real estate investment trusts;
    broker dealers;
    traders that elect to mark to market;
    U.S. expatriates;
    tax-exempt entities;
    persons liable for alternative minimum tax;
    persons holding an ADS or common share as part of a straddle,
    hedging, conversion or integrated transaction;
    persons that actually or constructively own 10% or more of our
    voting stock;
    persons who acquired ADSs or common shares pursuant to the
    exercise of any employee share option or otherwise as
    compensation; or
    persons holding ADSs or common shares through partnerships or
    other pass-through entities.  PROSPECTIVE PURCHASERS ARE URGED TO CONSULT THEIR TAX
    ADVISORS ABOUT THE APPLICATION OF THE U.S. FEDERAL TAX
    RULES TO THEIR PARTICULAR CIRCUMSTANCES AS WELL AS THE
    STATE, LOCAL,
    NON-U.S. AND
    OTHER TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND
    DISPOSITION OF ADSs OR COMMON SHARES.
    
    an individual who is a citizen or resident of the United States;
    a corporation (or other entity taxable as a corporation for
    U.S. federal income tax purposes) organized under the laws
    of the United States, any State thereof or the District of
    Columbia;
    an estate, the income of which is subject to U.S. federal
    income taxation regardless of its source; or 120




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##### Table of Contents




    a trust that (1) is subject to the primary supervision of a
    court within the United States and the control of one or more
    U.S. persons for all substantial decisions or (2) has
    a valid election in effect under applicable U.S. Treasury
    regulations to be treated as a U.S. person.      Taxation
    of dividends and other distributions on the ADSs or common
    shares
          Taxation
    of disposition of ADSs or common shares
   121




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##### Table of Contents



Passive
    foreign investment company
  non-U.S. corporation
  
    at least 75% of its gross income for such year is passive
    income, or
    at least 50% of the value of its assets (based on an average of
    the quarterly values of the assets during such year) is
    attributable to assets that produce passive income or are held
    for the production of passive income.        
    the excess distribution or gain will be allocated ratably over
    your holding period for the ADSs or common shares;
    the amount allocated to the current taxable year, and any
    taxable year prior to the first taxable year in which we were a
    PFIC, will be treated as ordinary income; and
    the amount allocated to each other year will be subject to the
    highest tax rate in effect for that year and the interest charge
    generally applicable to underpayments of tax will be imposed on
    the resulting tax attributable to each such year.     122




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##### Table of Contents



non-U.S. corporation
      Information
    reporting and backup withholding
  Form W-9.
    F.
    Dividends
    and Paying Agents    G.
    Statement
    by Experts    H.
    Documents
    on Display  Form F-1,
 123




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##### Table of Contents



Form 20-F, 1-800-SEC-0330
  I.
    Subsidiary
    Information    Item 11.
    Quantitative
    and Qualitative Disclosures About Market Risk    Interest
    rate risk
    Foreign
    currency risk
     124




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##### Table of Contents



Item 12.
    Description
    of Securities Other Than Equity Securities   PART II  Item 13.
    Defaults,
    Dividend Arrearages and Delinquencies    Item 14.
    Material
    Modifications to the Rights of Security Holders and Use of
    Proceeds    Form F-1 333-140808)
    
    approximately $50.0 million to repay outstanding
    indebtedness to related parties, including our parent and
    affiliates;
    approximately $85.3 million for our acquisition of
    subsidiaries; and
    approximately $65.0 million for our purchase of financial
    instruments including currency linked notes and principal
    protected notes.    Item 15.
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures
  Rules 13a-15(e)
   125




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##### Table of Contents



Managements
    Annual Report on Internal Control over Financial
    Reporting
    Changes
    in Internal Control over Financial Reporting
  Form 20-F
    Item 16A.
    Audit
    Committee Financial Expert    Item 16B.
    Code
    of Ethics  Form F-1 (No. 333-140808).
  Item 16C.
    Principal
    Accountant Fees and Services    2006

2007Audit Fees(1)

$
760,000


$
1,440,000Audit-Related Fees(2)





$
2,870,000     (1)
    
    Audit Fees means the aggregate fees billed in each
    of the fiscal years listed for professional services rendered by
    our principal auditors for the audit of our annual financial
    statements in 2006 and 2007.(2)
    
    Audit-Related Fees means the aggregate fees billed
    in each of the fiscal years listed for assurance and related
    services by our principal auditors that are reasonably related
    to the performance of the audit or review of our financial
    statements and are not reported under Audit Fees.
    Services comprising the fees disclosed under the category of
    Audit-Related Fees in 2007 involve principally the
    issue of comfort letter, rendering of listing advice in
    connection with our initial public offering and interim review.  pre-approve non-audit
  Item 16D.
    Exemptions
    from the Listing Standards for Audit Committees   126




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##### Table of Contents



Item 16E.
    Purchases
    of Equity Securities by the Issuer and Affiliated
    Purchasers    ApproximateTotal Number of

Dollar Value ofShares Purchased

Shares that MayTotal Number of

Average Price Paid

as Part of Publicly

Yet Be PurchasedPeriod

Shares Purchased

Per Share(1)

Announced Plan(2)

Under the Plan(1)June 12  June 19, 2007


1,932,000


$
4.47



1,932,000


$
41,371,946March 19  March 31, 2008


2,034,236


$
1.42



2,034,236


$
38,489,716Total


3,966,236


$
2.90



3,966,236


$
38,489,716     (1)
    
    Each of our ADSs represents two class A common shares.(2)
    
    The repurchase plan was publicly announced on May 29, 2007
    and provides for the repurchase of up to $50.0 million of
    our common shares. PART III  Item 17.
    Financial
    Statements    Item 18.
    Financial
    Statements    Item 19.
    Exhibits  ExhibitNumber

Description of Document1
.1

Amended and Restated Memorandum and Articles of Association
    (incorporated by reference to Exhibit 3.2 from our F-1
    registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)2
.1

Registrants specimen American depositary receipt
    (incorporated by reference to Exhibit 4.1 from our
    F-1
    registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)2
.2

Registrants specimen certificate for common shares
    (incorporated by reference to Exhibit 4.2 from our
    F-1
    registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)2
.3

Form of Deposit Agreement, among the Registrant, the depositary
    and holders of the American depositary receipts (incorporated by
    reference to Exhibit 4.3 from our
    F-1
    registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.1

Irrevocable Proxy, dated as of July 24, 2006, by Xinhua
    Finance Limited in favor of Patriarch Partners Media Holdings
    LLC (incorporated by reference to Exhibit 4.4 from our
    F-1
    registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.2

Share Purchase Agreement, dated as of March 16, 2006,
    amended as of March 16, 2006, between the Registrant and
    Patriarch Partners Media Holdings LLC (incorporated by reference
    to Exhibit 4.5 from our F-1 registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007) 127




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##### Table of Contents



ExhibitNumber

Description of Document4
.3

Investor Rights Agreement dated as of March 16, 2006, among
    the Registrant, Xinhua Finance Limited and Patriarch Partners
    Media Holdings LLC (incorporated by reference to
    Exhibit 4.6 from our
    F-1
    registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.4

2007 Share Option Plan (incorporated by reference to
    Exhibit 10.1 from our
    F-1
    registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.5

Form of Indemnification Agreement with the Registrants
    directors (incorporated by reference to Exhibit 10.2 from
    our F-1 registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.6

Form of Employment Agreement between the Registrant and a Senior
    Executive Officer of the Registrant (incorporated by reference
    to Exhibit 10.3 from our F-1 registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.7

Trademark License Agreement, dated as of September 21,
    2006, between the Registrant and Xinhua Financial Network
    Limited (incorporated by reference to Exhibit 10.4 from our
    F-1 registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.8

English translation of Business Cooperation Agreement, amended
    and restated as of November 6, 2006, among Economic
    Observer Press Office, Guangzhou Jingshi Culture Intermediary
    Co., Ltd., Beijing Jingguan Xincheng Advertising Co., Ltd and
    Beijing Jingshi Jingguan Advertising Co., Ltd. (incorporated by
    reference to Exhibit 10.5 from our F-1 registration
    statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.9

Form of Stock Option Agreements (incorporated by reference to
    Exhibit 10.6 from our F-1 registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.10

Group Service Agreement, dated as of September 13, 2006,
    and amended as of January 25, 2007, between the Registrant
    and Xinhua Finance Limited (incorporated by reference to
    Exhibit 10.7 from our
    F-1
    registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.11

Credit Agreement, amended and restated as of September 20,
    2006, among the Registrant, Patriarch Partners Media Holdings
    LLC, Patriarch Partners Agency Services LLC and the
    Registrants direct subsidiaries as guarantors
    (incorporated by reference to Exhibit 10.8 from our F-1
    registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.12

Pledge Agreement and Irrevocable Proxy, dated as of
    March 16, 2006, among Patriarch Partners Agency Services
    LLC (as agent for itself and the lender Patriarch Partners Media
    Holdings LLC), the Registrant and Xinhua Finance Advertising
    Limited (incorporated by reference to Exhibit 10.9 from our
    F-1
    registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.13

Security Agreement, dated as of March 16, 2006, among the
    Registrant, its subsidiaries and Patriarch Partners Agency
    Services, LLC (incorporated by reference to Exhibit 10.10
    from our F-1 registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.14

Advisory Agreement dated as of April 18, 2006 among the
    Registrant, Xinhua Finance Limited and Patriarch Partners
    Management Group, LLC (incorporated by reference to
    Exhibit 10.11 from our F-1 registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.15

Consulting Agreement, dated as of November 1, 2006, between
    Jia Luo Business Consulting (Shanghai) Co., Ltd. and Shanghai
    Camera Media Investment Co., Ltd. (incorporated by reference to
    Exhibit 10.12 from our F-1 registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.16

Strategic Partnership Agreement, dated and supplemented as of
    June 15, 2006, among Beijing Century Media Culture Co.,
    Ltd., Hunan Television & Broadcast Intermediary Co.,
    Ltd., Shenzhen Ronghan Investment Co., Ltd. and Beijing
    Perspective Orient Movie & Television Intermediary
    Co., Ltd. (incorporated by reference to Exhibit 10.13 from
    our F-1 registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007) 128




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##### Table of Contents



ExhibitNumber

Description of Document4
.17

English Translation of Equity Call Option Agreement, dated as of
    September 22, 2006, between Shanghai Wai Gao Qiao Free
    Trade Zone Development Co., Ltd and Jia Luo Business Consulting
    (Shanghai) Co., Ltd. (incorporated by reference to
    Exhibit 10.14 from our F-1 registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.18

Advertising Services Agreement, dated as of December 23,
    2006, between Beijing Pioneer Media Advertising Co., Ltd. and
    Shanghai Media Investment Co., Ltd. (incorporated by reference
    to Exhibit 10.15 from our F-1 registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.19

Cooperation Agreement, dated as of November 1, 2006,
    between Beijing Century Media Culture Co., Ltd. and Shanghai
    Camera Media Investment Co., Ltd. (incorporated by reference to
    Exhibit 10.16 from our
    F-1
    registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.20

Cooperation Agreement, dated as of June 5, 2006, between
    the Registrant and Small World Television (incorporated by
    reference to Exhibit 10.17 from our F-1 registration
    statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.21

English Translation of Cooperation Agreement, dated as of
    October 2004, between Hunan Television Station and Beijing
    Perspective Orient Advertising Co., Ltd. (incorporated by
    reference to Exhibit 10.18 from our F-1 registration
    statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.22

English translation of Call Option Agreement regarding Economic
    Observer Press Office, dated as of November 6, 2006, among
    Shandong Sanlian Group, Shandong Economic Observer Co., Ltd.,
    Economic Observer Press Office and Beijing Jingguan Xincheng
    Advertising Co., Ltd. (incorporated by reference to
    Exhibit 10.19 from our F-1 registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.23

English translation of Exclusive Advertising Agreement regarding
    Beijing FM91.5 and Shanghai FM87.9 of China Radio International,
    amended and restated as of November 28, 2006, between
    Beijing Guoguang Guangrong Advertising Co., Ltd. and Beijing
    Century Advertising Co., Ltd. (incorporated by reference to
    Exhibit 10.20 from our
    F-1
    registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.24

English translation of Money Journal Cooperation Agreement,
    amended and restated as of September 20, 2006, among Hunan
    Television and Broadcasting Intermediary Co., Ltd., Money
    Journal Press Office and Guangzhou Jingshi Culture Intermediary
    Co., Ltd. (incorporated by reference to Exhibit 10.21 from
    our F-1
    registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.25

English Translation of Cooperation Agreement, dated as of
    September 25, 2005, between Guangzhou Jingyu Culture
    Development Co., Ltd. and Beijing Qiannuo Advertising Co., Ltd.
    (incorporated by reference to Exhibit 10.22 from our
    F-1
    registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.26

Information Consulting Committee Organization Agreement, amended
    and restated as of November 6, 2006, among Shandong Sanlian
    Group, Xinhua Finance Limited, Economic Observer Press Office
    and Beijing Jingguan Xincheng Advertising Co., Ltd.
    (incorporated by reference to Exhibit 10.23 from our
    F-1
    registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.27

English Translation of Business Cooperation Agreement, amended
    and restated as of November 6, 2006, among Shandong Sanlian
    Group, Shandong Economic Observer Co., Ltd., Economic Observer
    Press Office and Beijing Jingguan Xincheng Advertising Co., Ltd.
    (incorporated by reference to Exhibit 10.24 from our F-1
    registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.28

Cooperation Agreement in relation to Economic Observer, dated as
    of April 20, 2006, among Xinhua Finance Limited, Shandong
    Economic Observer Co., Ltd., Shandong Sanlian Group and Beijing
    Jingguan Xincheng Advertising Co., Ltd. (incorporated by
    reference to Exhibit 10.25 from our F-1 registration
    statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007) 129




---



##### Table of Contents



ExhibitNumber

Description of Document4
.29

Form of Equity Pledge Agreement among the affiliated entity, the
    shareholder of the affiliated entity and WFOE (incorporated by
    reference to Exhibit 10.26 from our F-1 registration
    statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.30

Form of Exclusive Equity Purchase Option Agreement between WFOE
    and shareholder of affiliated entity (incorporated by reference
    to Exhibit 10.27 from our F-1 registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.31

Form of Subrogation Agreement among the affiliated entity, the
    shareholder of the affiliated entity and the WFOE (incorporated
    by reference to Exhibit 10.28 from our F-1 registration
    statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.32

Service Agreement, dated as of January 23, 2006, between
    New China Media Co., Ltd. and Beijing Century Advertising Co.,
    Ltd. (incorporated by reference to Exhibit 10.29 from our
    F-1 registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.33

English translation of Equity Transfer Agreement in relation to
    Beijing Jingguan Xincheng Advertising Co., Ltd., dated as of
    May 10, 2006, between Shandong Economic Observer Co., Ltd.
    and Beijing Taide Advertising Co., Ltd. (incorporated by
    reference to Exhibit 10.30 from our F-1 registration
    statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.34

Form of Deed of Non-Competition Undertaking and Release between
    shareholder and the Registrant (incorporated by reference to
    Exhibit 10.31 from our F-1 registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.35

Form of Share Subscription Agreement dated as of
    September 22, 2006 (incorporated by reference to
    Exhibit 10.32 from our F-1 registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.36

English translation of Agreement for Equity Transfer and Capital
    Increase, dated as of June 26, 2006, among Beijing Century
    Media Culture Co., Ltd., Hunan Television and Broadcast
    Intermediary Co., Ltd., Shenzhen Ronghan Investment Co., Ltd.
    and Beijing Perspective Orient Movie and Television Intermediary
    Co., Ltd. (incorporated by reference to Exhibit 10.33 from
    our F-1 registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.37

Agreement for the Sale and Purchase of Equity Interest and
    Subscription in Shanghai Hyperlink Market Research Co., Ltd.,
    dated as of June 14, 2006, among Stephen Xie Wei, Lu
    Qinyong, Win Jei-Ching, Yang Jing, Shi Hui, Pang Lu, Yang
    Weidong, Xinhua Finance Limited, Beijing Taide Advertising Co.,
    Ltd., and Shanghai Hyperlink Market Research Co., Ltd.
    (incorporated by reference to Exhibit 10.34 from our F-1
    registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.38

English translation of Equity Transfer Agreement, dated as of
    June 14, 2006, among Stephen Xie Wei, Lu Qinyong and
    Beijing Taide Advertising Co., Ltd. (incorporated by reference
    to Exhibit 10.35 from our F-1 registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.39

Loan and Share Purchase Agreement in respect of shares in the
    capital of Upper Step Holdings Limited, dated as of
    February 28, 2006, among the Registrant, Sino Investment
    Holdings Limited and Sungolden Limited. (incorporated by
    reference to Exhibit 10.36 from our F-1 registration
    statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.40

Subscription Agreement in respect of EconWorld Media Limited
    shares, dated as of May 26, 2005, amended as of
    November 2, 2005 among Xinhua Finance Limited, Fan Cho Tak
    Alex and others, and EconWorld Media Limited. (incorporated by
    reference to Exhibit 10.37 from our F-1 registration
    statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.41

Share Purchase Agreement in respect of shares of EconWorld Media
    Limited, dated as of June 8, 2006, among the Registrant and
    Cheung Wah Keung and others (incorporated by reference to
    Exhibit 10.38 from our F-1 registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007) 130




---



##### Table of Contents



ExhibitNumber

Description of Document4
.42

Share Purchase Agreement in respect of shares of Ming Shing
    International Limited, dated as of December 21, 2005, among
    Xinhua Finance Limited, Lu Chin Chien, Li Tong and Ming Shing
    International Limited (incorporated by reference to
    Exhibit 10.39 from our F-1 registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.43

Agreement for Sale and Purchase of Equity Interest in Beijing
    Century Media Culture Co., Ltd., dated as of September 9,
    2005 among Yu Gang, Xia Huai and our parent (incorporated by
    reference to Exhibit 10.40 from our F-1 registration
    statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.44

Share Subscription Agreement in respect of shares in the capital
    of Accord Group Investments Limited, dated as of
    January 17, 2006, between the Registrant and Accord Group
    Investments Limited (incorporated by reference to
    Exhibit 10.41 from our F-1 registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.45

Agreement for Sale and Purchase of Shares dated as of
    September 22, 2006, amended as of November 10, 2006,
    among Sino Investment Holdings Limited, Fine Power Limited,
    Quality Idea Limited and the Registrant (incorporated by
    reference to Exhibit 10.42 from our F-1 registration
    statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.46

English translation of Share Purchase and Sale Agreement dated
    as of September 12, 2006 among Stephen Xie Wei, Lu Qin Yong
    and Beijing Taide Advertising Co., Ltd. (incorporated by
    reference to Exhibit 10.43 from our F-1 registration
    statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.47

English translation of Share Transfer Agreement dated as of
    September 12, 2006 between Shandong Sanlian Group Co., Ltd.
    and Beijing Taide Advertising Co., Ltd. (incorporated by
    reference to Exhibit 10.44 from our F-1 registration
    statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.48

Agreement for Sale and Purchase of Shares dated as of
    November 1, 2006 between the Registrant and Honour Rise
    Services Limited (incorporated by reference to
    Exhibit 10.45 from our F-1 registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.49

Promissory Note dated as of November 10, 2006 issued by
    Sino Investment Holdings Limited in favor of the Registrant
    (incorporated by reference to Exhibit 10.46 from our F-1
    registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.50

Share Purchase Agreement in respect of shares in the capital of
    EconWorld Media Limited, dated as of December 18, 2006,
    among the Registrant, Fan Cho Tak Alex and others (incorporated
    by reference to Exhibit 10.47 from our F-1 registration
    statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.51

Form of Employment Agreement between the Registrant and a Chief
    Officer of the Registrant (incorporated by reference to
    Exhibit 10.48 from our F-1 registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.52

English translation of Strategic Cooperation Agreement, dated as
    of December 18, 2003 and supplemented as of
    November 30, 2005, between Inner Mongolia Television
    Station and Shanghai Camera Media Investment Co., Ltd.
    (incorporated by reference to Exhibit 99.2 from our F-1
    registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.53

English translation of Zhou Mo Wen Hui Cooperation Agreement
    dated as of August 8, 2005, between Zhou Mo Wen Hui Press
    Office and Guangzhou Jingyu Culture Development Co., Ltd.
    (incorporated by reference to Exhibit 99.3 from our F-1
    registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.54

Content License Agreement, dated as of December 15, 2001,
    between China Economic Information Service of Xinhua News Agency
    and Xinhua Financial Network Limited (incorporated by reference
    to Exhibit 99.4 from our F-1 registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)4
.55*

Form of loan agreement between a wholly foreign-owned entity and
    a shareholder of an affiliated entity.4
.56*

Waiver of loan issued by Xinhua Finance Limited to the
    Registrant, dated June 30, 2007 131




---



##### Table of Contents



ExhibitNumber

Description of Document4
.57*

Series B Preferred Share Purchase Agreement between Yucaipa
    Global Partnership Fund L.P. and the Registrant, dated
    February 18, 20084
.58*

Shareholders agreement among Yucaipa Global Partnership
    Fund L.P., Xinhua Finance Limited and the Registrant, dated
    February 28, 20084
.59*

Registration rights agreement between the Registrant and Yucaipa
    Global Partnership Fund L.P., dated February 28, 2008.4
.60*

Share subscription agreement in respect of shares in the capital
    of Xinhua Finance Media Limited, between Whole Fortune Limited
    and Xinhua Finance Media Limited, dated October 31, 20074
.61*

Equity transfer agreement in respect of shares in Beijing
    Perspective Orient Movie and Intermediary Co., Ltd., between
    Hunan Television & Broadcast Intermediary Co., Ltd. and
    Beijing Century Culture Co., Ltd., dated October 31, 20074
.62*

Purchase agreement in respect of shares in the capital of
    Profitown Development Limited and other assets therein, among
    Xinhua Finance Media Limited, Flash Star Worldwide Limited,
    Profitown Development Limited and Chow Chi Yan, dated
    November 26, 20074
.63*

Purchase agreement in respect of shares in the capital of East
    Alliance Limited and other assets therein, among Xinhua Finance
    Media Limited, East Alliance Limited and other parties set out
    herein, dated June 4, 20074
.64*

Purchase agreement in respect of Convey Advertising Group, among
    Xinhua Finance Media Limited, Pariya Holdings Limited and Good
    Speed Holdings Limited, dated June 29, 20074
.65*

Purchase agreement in respect of shares in the capital of
    Singshine (Holdings) Hongkong Limited and other assets set out
    herein, among Xinhua Finance Media Limited, Singshine (Holdings)
    Hongkong Limited, Zhang Jingyu, Hu Shengzhong, He Zhihao, Lu
    Qibo, Chen Hao and Lu Hang, dated June 11, 20074
.66*

Cooperation agreement between Zhoumo Wen Hui Press Office and
    Beijing Qiannuo Advertising Co., Ltd., dated November 10,
    20064
.67*

Advertising agency agreement between Guangdong Peoples
    Radio Station and Guangzhou Singshine Communication Co., Ltd.,
    dated December 14, 20074
.68*

Cooperation agreement between Guangdong Peoples Radio
    Station and Guangzhou Singshine Communication Co., Ltd., dated
    November 1, 20068
.1*

List of Subsidiaries11
.1

Code of Business Conduct and Ethics of the Registrant
    (incorporated by reference to Exhibit 99.1 from our F-1
    registration statement (File
    No. 333-140808),
    as amended, initially filed with the Commission on
    February 21, 2007)12
.1*

CEO Certification Pursuant to Section 302 of the
    Sarbanes-Oxley Act of 200212
.2*

CFO Certification Pursuant to Section 302 of the
    Sarbanes-Oxley Act of 200213
.1*

CEO Certification Pursuant to Section 906 of the
    Sarbanes-Oxley Act of 200213
.2*

CFO Certification Pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002     *
    
    Filed with this Annual Report on
    Form 20-F 132




---



##### Table of Contents



SIGNATURES
  Form 20-F
    By:
    /s/  Fredy
    Bush  Name:
    Fredy BushTitle:
    Chairman and Chief Executive Officer   133




---



##### 



Xinhua
    Finance Media Limited
  Index to consolidated financial statements
   
 PageReport of independent registered public
    accounting firm


F-2Consolidated balance sheets as of
    December 31, 2006 and December 31, 2007


F-3Consolidated statements of operations for the
    period from May 26, 2005 (Date Xinhua Finance Limited
    acquired EconWorld Media Limited, the predecessor to Xinhua
    Finance Media Limited) to December 31, 2005 and for the
    years ended December 31, 2006 and December 31, 2007


F-5Consolidated statements of shareholders
    equity and comprehensive income for the period from May 26,
    2005 (Date Xinhua Finance Limited acquired EconWorld Media
    Limited, the predecessor to Xinhua Finance Media Limited) to
    December 31, 2005, for the years ended December 31,
    2006 and December 31, 2007


F-7Consolidated statements of cash flows for the
    period from May 26, 2005 (Date Xinhua Finance Limited
    acquired EconWorld Media Limited, the predecessor to Xinhua
    Finance Media Limited) to December 31, 2005 and for the
    years ended December 31, 2006 and December 31, 2007


F-9Notes to consolidated financial statements


F-12   F-1




---



##### Table of Contents



Report of
    independent registered public accounting firm  
           F-2




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Consolidated balance sheets
  December 31,


December 31,2006


2007(In U.S. dollars)ASSETSCurrent assets:Cash

$
36,353,547


$
44,436,087Restricted cash


12,579,822



47,252,191Accounts receivable, net of allowance for doubtful allowance of
    nil in 2006 and $301,217 in 2007


17,403,632



45,706,766Deposits for program advertising right


1,507,071



6,752Prepaid advertising program space and airtime


3,419,607



5,382,498Prepaid expenses


3,671,257



2,777,025Amounts due from related parties


8,787,141



7,389,211Promissory note receivable  related party


7,900,000



Interest receivable on promissory note receivable 
    related party






722,038Deferred tax assets  current


32,437



22,634Other current assets


5,394,902



5,361,890Total current assets


97,049,416



159,057,092Capitalized content production costs, net


1,397,206



8,855,896Deposits for content production


4,457,065



Property and equipment, net


4,367,329



9,191,959License agreements, net


103,844,443



98,490,161Exclusive advertising agreement, net  Economic
    Observer Advertising


60,781,306



71,886,011Other intangible assets, net


11,575,779



63,129,741Goodwill


83,670,010



180,125,488Investment


500,000



500,000Deposits for acquisition of subsidiaries


29,246,500



25,634,000Deposits for acquisition of intangible asset


2,561,246



Deferred tax assets  non-current






94,598Principal protected note






24,909,929Promissory note receivable  related party






7,900,000Other long term assets






1,027,338Total assets

$
399,450,300


$
650,802,213 F-3




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Consolidated balance sheets  (Continued)
  December 31,


December 31,2006


2007(In U.S. dollars)LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable

$
3,236,493


$
8,126,537Accrued expenses and other payables


7,899,210



19,201,194Amounts due to Parent and its affiliates


138,694,299



5,251,224Amounts due to other related parties


2,367,163



602,698Capital lease obligations, current portion






188,590Long term payables, current portion


8,900,988



4,564,177Bank overdraft






960,157Bank borrowings, current portion


11,218,256



33,780,188Income taxes payable


2,750,480



6,538,946Total current liabilities


175,066,889



79,213,711Deferred tax liabilities


41,168,035



37,741,579Convertible loan


14,017,289



Bank borrowings, non-current portion






75,436Long term payables, non-current portion


64,937,958



65,066,299Capital lease obligations, non-current portion






8,875Total liabilities


295,190,171



182,105,900Commitments and contingencies (Note 26)Minority Interests


3,010,407



2,060,745Shareholders equity:Convertible preferred shares (par value $0.001; 15,600,000 as of
    December 31, 2006 shares authorized; 15,585,254 as of
    December 31, 2006 shares issued and outstanding; and
    nil as of December 31, 2007 shares issued and
    outstanding)


15,585



Class A common shares and Non-vested Shares (par value
    $0.001; 69,035,751 as of December 31, 2006 and 143,822,874
    as of December 31, 2007 shares authorized; 32,011,154
    as of December 31, 2006 and 90,061,269 as of
    December 31, 2007 shares issued and outstanding)


32,011



90,061Class B common shares (par value $0.001; 50,054,619 as of
    December 31, 2006 and December 31, 2007 shares
    authorized; 50,054,618 as of December 31, 2006 and
    December 31, 2007 shares issued and outstanding)


7,442



7,442Additional paid-in capital


103,155,391



439,516,974(Deficits) retained earnings


(2,797,112
)


23,903,560Accumulated other comprehensive income


836,405



3,117,531Total shareholders equity


101,249,722



466,635,568Total liabilities, minority interests and shareholders
    equity

$
399,450,300


$
650,802,213   See notes to consolidated financial statements
 F-4




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Consolidated statements of operations
  For the Period fromMay 26, 2005 (DateXinhua Finance Limitedacquired EconWorldMedia Limited, thepredecessor to XinhuaFinance Media Limited)


Year ended


Year endedto December 31, 2005


December 31, 2006


December 31, 2007(In U.S. dollars)Net revenues:Advertising services

$
580,133


$
44,861,952


$
86,681,143Content production


3,640,792



6,545,148



7,680,580Advertising sales


386,668



6,691,543



39,281,540Publishing services


787,451



867,789



1,195,427Total net revenues


5,395,044



58,966,432



134,838,690Cost of revenues:Advertising services


154,186



27,653,769



58,047,996Content production


650,993



2,829,311



3,707,062Advertising sales


84,652



1,912,260



19,490,013Publishing services


534,289



1,386,162



854,020Total cost of revenues


1,424,120



33,781,502



82,099,091Operating expenses:Selling and distribution


292,845



5,276,751



14,876,682General and administrative


1,247,646



12,840,202



24,348,827Total operating expenses


1,540,491



18,116,953



39,225,509Other operating income










2,261,788Income from operations


2,430,433



7,067,977



15,775,878Other income (expense):Interest expense


(24,785
)


(2,618,398
)


(6,627,685
)Interest income


2,657



1,743,368



6,264,103Other, net






(22,621
)


1,703,693Income before provision for income taxes and minority interest


2,408,305



6,170,326



17,115,989Provision for income taxes


928,634



1,069,537



(12,225,650
)Net income before minority interest and equity in loss of an
    investment


1,479,671



5,100,789



29,341,639Minority interest


128,773



1,704,287



1,302,634Equity in loss of an investment






52,211



Net income

$
1,350,898


$
3,344,291


$
28,039,005Deemed dividend on redeemable convertible preferred shares

$



$
(2,157,301
)

$
Dividends declared to redeemable convertible preferred shares

$



$
(5,335,000
)

$
(1,338,333
) F-5




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Consolidated statements of
    operations  (Continued)
  For the Period fromMay 26, 2005 (DateXinhua Finance Limitedacquired EconWorldMedia Limited, thepredecessor to XinhuaFinance Media Limited)


Year ended


Year endedto December 31, 2005


December 31, 2006


December 31, 2007(In U.S. dollars)Net income (loss) attributable to holders of common shares

$
1,350,898


$
(4,148,010
)

$
26,700,672Net income (loss) per share:Basic  Class A common share

$



$
(0.08
)

$
0.23Basic  Class B common share

$
0.03


$
(0.08
)

$
0.23Diluted  Class A common share

$



$
(0.08
)

$
0.21Diluted  Class B common share

$
0.03


$
(0.08
)

$
0.21Weighted average number of common shares used in computation:Basic  Class A common share






5,084,366



66,165,765Basic  Class B common share


42,613,000



44,693,266



50,054,618Diluted  Class A common share






5,084,366



86,314,773Diluted  Class B common share


42,613,000



44,693,266



50,054,618   See notes to consolidated financial statements
 F-6




---



##### Table of Contents






Xinhua
    Finance Media Limited
  Consolidated
    statements of shareholders equity and comprehensive
    income
  Class A


Class B








Convertible








Accumulatedcommon Shares


common Shares


Non-vested Shares


Preferred Shares


Additional


Retained


otherNumber of





Number of





Number of





Number of





paid-in


earnings


comprehensive





Comprehensiveshares


Amount


shares


Amount


shares


Amount


shares


Amount


capital


(deficits)


income


Total


income(In U.S. dollars)Balance, May 25, 2005





$







$







$







$



$



$



$



$
Issuance of common shares










1,000



1































1Foreign currency translation gain










































2,173



2,173



2,173Net income






































1,350,898







1,350,898



1,350,898Balance, December 31, 2005





$




1,000


$
1






$







$



$



$
1,350,898


$
2,173


$
1,353,072


$
1,353,071Issuance of common shares in a stock split










42,612,289



































Issuance of common shares arising from acquisitions of
    subsidiaries


20,961,154



20,961



























32,815,563











32,836,524Issue of common shares to Parent










7,441,329



7,441



















8,176,923











8,184,364Issuance of Non-vested Shares


















11,050,000



11,050











(11,050
)










Reclassification of preferred shares from mezzanine equity


























16,404,926



16,404



62,140,897











62,157,301Redemption of redeemable convertible preferred shares


























(819,672
)


(819
)


(3,104,870
)










(3,105,689
)Gain on redemption of redeemable convertible preferred shares


































105,688











105,688Issuance of warrants


































739,000











739,000Declared dividend on redeemable convertible preferred shares






































(5,335,000
)






(5,335,000
)Deemed dividend on redeemable convertible preferred shares






































(2,157,301
)






(2,157,301
)Share-based compensation


































2,293,240











2,293,240Foreign currency translation gain










































834,232



834,232



834,232Net income






































3,344,291







3,344,291



3,344,291Balance, December 31, 2006


20,961,154


$
20,961



50,054,618


$
7,442



11,050,000


$
11,050



15,585,254


$
15,585


$
103,155,391


$
(2,797,112
)

$
836,405


$
101,249,722


$
4,178,523  F-7




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Consolidated
    statements of shareholders equity and comprehensive
    income  (Continued)
  Class A


Class B








Convertible








Accumulatedcommon Shares


common Shares


Non-vested Shares


Preferred Shares


Additional


Retained


otherNumber of





Number of





Number of





Number of





paid-in


earnings


comprehensive





Comprehensiveshares


Amount


shares


Amount


shares


Amount


shares


Amount


capital


(deficits)


income


Total


income(In U.S. dollars)Balance, December 31, 2006


20,961,154


$
20,961



50,054,618


$
7,442



11,050,000


$
11,050



15,585,254


$
15,585


$
103,155,391


$
(2,797,112
)

$
836,405


$
101,249,722Issuance of common shares arising from acquisitions of
    subsidiaries


2,639,595



2,640



























10,230,881











10,233,521Issuance of common shares for share option plan


3,587,019



3,587



























2,170,288











2,173,875Issuance of common shares upon initial public offering, net of
    issuance cost of $24,740,470


34,615,846



34,616



























200,227,913











200,262,529Conversion of preferred shares into common shares


15,585,254



15,585



















(15,585,254
)


(15,585
)














Conversion of convertible loan into common shares


3,554,401



3,554



























14,281,197











14,284,751Transfer of Non-vested Shares into common shares


1,500,000



1,500











(1,500,000
)


(1,500
)






















Share-based compensation


































3,071,573











3,071,573Repurchase of common shares


(1,932,000
)


(1,932
)


























(8,628,054
)










(8,629,986
)Waiver of amounts due to Parent and a shareholder


































115,007,785











115,007,785Dividend declared to preferred shares






































(1,338,333
)






(1,338,333
)Foreign currency translation gain










































2,281,126



2,281,126



2,281,126Net income






































28,039,005







28,039,005



28,039,005Balance, December 31, 2007


80,511,269


$
80,511



50,054,618


$
7,442



9,550,000


$
9,550






$



$
439,516,974


$
23,903,560


$
3,117,531


$
466,635,568


$
30,320,131   See notes to consolidated financial statements


F-8




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Consolidated
    statements of cash flows
  For the Period fromMay 26, 2005 (DateXinhua Finance Limitedacquired EconWorldMedia Limited, thepredecessor to XinhuaFinance Media Limited)


Year ended


Year endedto December 31, 2005


December 31, 2006


December 31, 2007(In U.S. dollars)Cash flows from operating activities:Net income (loss) attributable to holders of common shares

$
1,350,898


$
(4,148,010
)

$
26,700,672Deemed dividend on redeemable convertible preferred shares






2,157,301



Dividends declared to redeemable convertible preferred shares






5,335,000



1,338,333Net income


1,350,898



3,344,291



28,039,005Adjustments to reconcile net income to net cash provided by
    (used in) operating activities:Minority interests


128,773



1,704,287



524,569Share-based compensation






2,404,240



3,071,573Amortization of discount on convertible loan






1,017,289



267,462Depreciation and amortization


577,323



5,235,852



20,185,864Equity in loss of an investment






52,211



Imputed interest on long term payables






792,872



4,496,020Loss (gain) on disposal of property and equipment


4,581



(620
)


49,410Deferred income taxes


88,094



(700,740
)


(15,518,106
)Unrealized loss on principal protected note










90,076Realized gain on currency linked note










(668,280
)Changes in operating assets and liabilities (net of effects of
    acquisitions):Accounts receivable


(1,984,858
)


(11,073,471
)


(18,163,199
)Capitalized content production costs


(61,737
)


(4,457,065
)


(4,503,725
)Prepaid advertising programme space and airtime






(2,336,744
)


(1,962,891
)Prepaid expenses and other current assets


(123,871
)


(3,774,437
)


(6,167,982
)Amounts due from related parties


(26,065
)


(526,174
)


11,616Accounts payable


168,659



777,419



473,450Accrued expenses and other payables


(847,308
)


1,726,560



8,266,160Interest income from promissory note receivable










(722,038
)Income taxes payable


834,841



1,351,661



2,524,239Net cash provided by (used in) operating activities


109,330



(4,462,569
)


20,293,223 F-9




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Consolidated
    statements of cash flows  (Continued)
  For the Period fromMay 26, 2005 (DateXinhua Finance Limitedacquired EconWorldMedia Limited, thepredecessor to XinhuaFinance Media Limited)


Year ended


Year endedto December 31, 2005


December 31, 2006


December 31, 2007(In U.S. dollars)Cash flows from investing activities:Purchases of property and equipment


(88,063
)


(2,097,795
)


(4,504,811
)Purchase and deposit for acquisition of intangible assets






(4,226,056
)


Repayment from (advance to) an independent third party






(4,603,493
)


4,603,493Loans to related parties






(3,550,668
)


(3,263,687
)Amount paid for cost method investment






(500,000
)


Proceeds from disposal of property and equipment






92,854



456,781Increase in restricted cash






(9,446,274
)


(34,672,369
)Cash received from (paid for) acquisition of subsidiaries, net
    of cash paid


464,116



(7,882,839
)


(103,209,310
)Investment in currency linked note










(40,000,000
)Investment in principal protected note










(25,000,005
)Proceeds from disposal of currency linked note










40,668,280Net cash provided by (used in) investing activities


376,053



(32,214,271
)


(164,921,628
)Cash flows from financing activities:Advance from (repayment to) related parties


1,587,663



434,242



(48,382,702
)Proceeds from issuance of convertible loan






10,000,000



Proceeds from issuance of redeemable convertible preferred shares






60,000,000



Proceeds from issuance of common shares


1







Issuance of shares for share option plan










2,170,288Repurchase of common shares










(8,629,986
)Proceeds from public offering










225,002,999Expenses on public offering






(2,283,138
)


(22,360,852
)Bank borrowings raised






5,621,934



48,743,861Bank borrowings repaid










(25,772,569
)Payment of long term payables










(16,487,283
)Dividend paid to minority interest






(20,810
)


Dividend paid on redeemable convertible shares






(3,648,333
)


(3,025,000
) F-10




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Consolidated
    statements of cash flows  (Continued)
  For the Period fromMay 26, 2005 (DateXinhua Finance Limitedacquired EconWorldMedia Limited, thepredecessor to XinhuaFinance Media Limited)


Year ended


Year endedto December 31, 2005


December 31, 2006


December 31, 2007(In U.S. dollars)Redemption of redeemable convertible preferred shares






(1
)


Capital contribution from minority interest


6,174







Net cash provided by financing activities


1,593,838



70,103,894



151,258,756Effect of exchange rate changes


1,525



845,747



1,452,189Net increase in cash


2,080,746



34,272,801



8,082,540Cash, beginning of the period/year






2,080,746



36,353,547Cash, end of the period/year

$
2,080,746


$
36,353,547


$
44,436,087Supplemental disclosure of cash flow information:Income taxes paid

$
5,356


$
164,087


$
768,216Interest paid

$
24,785


$
1,825,526


$
1,864,203Supplemental schedule of non-cash investing and financing
    activities:Issuance of common shares for acquisitions of subsidiaries

$



$
28,284,605


$
10,233,521Issuance of warrants for acquisitions of subsidiaries






628,000



Consideration payable for acquisition of subsidiaries










2,607,715Conversion of Preferred Shares into common shares










15,585Conversion of convertible loan into common shares










14,284,751Wavier of amounts due to Parent and its affiliates










115,007,785  F-11




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial statements
  1.
    Organization
    and principal activities        and/or Consolidation of Variable
    Interest Entities  an Interpretation of ARB
    No. 51
    2005


2006


2007Total assets

$
4,554,574


$
220,249,961


$
300,356,736Total liabilities


1,781,647



142,765,680



153,983,859Total net revenues


3,640,792



41,287,316



117,162,467Total operating expenses


365,767



7,878,997



19,766,126Net (loss) income


(1,708,642
)


9,548,238



35,697,419   2.
    Summary
    of principal accounting policies  (a)  Basis
    of presentation
    (b)  Basis
    of consolidation
     F-12




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
  (c)  Use
    of estimates
    (d)  Revenue
    recognition
             F-13




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
      (e)  Restricted
    cash
    (f)  Capitalized
    content production costs
    (g)  Investment
    (h)  Principal
    protected note
    (i)  Property
    and equipment
    Leasehold improvements

Lesser of 5 years or lease termBillboards and lampposts

10 yearsFurniture, fixtures and equipment

4-5 yearsMotor vehicles

5 years  F-14




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
  (j)  Intangible
    assets
      Advertising agency right

6.5 yearsBacklog order

1 yearCustomer base

5 yearsDistribution network

8.5 yearsExclusive advertising agreements

40.5 yearsLicense agreements

20 yearsLicense rights

3.5 yearsNoncompete agreements

3.5 yearsPublishing title

8 yearsRadio advertising agency right

10 yearsResearch customer relationship

4 yearsTrademark

10 yearsIndefinite life trademark

IndefiniteOthers

5 years   (k)  Goodwill
   F-15




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
  (l)  Capital
    lease obligations
    (m)  Impairment
    of long-lived assets
    (n)  Income
    taxes
    (o)  Foreign
    currency translation
        (p)  Fair
    value of financial instruments
       F-16




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
  (q)  Net
    income per share
      (r)  Share-based
    compensation
    (s)  License
    agreements
    (t)  Recent
    accounting pronouncements
      contract-by-contract
  06-11, (EITF 06-11). EITF 06-11 EITF 06-11 EITF 06-11
 F-17




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
  07-3, (EITF 07-3). EITF 07-3
  EITF 07-3.
        3.
    Concentration
    of risk  Concentration
    of credit risk
       F-18




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
      Concentration
    of location
    4.
    Acquisitions  (a)  East
    Alliance Limited
       F-19




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
    Assets acquired:Cash

$
1,087,862Accounts receivable


2,318,995Prepaid expenses and other current assets


321,849Property and equipment


234,966Total


3,963,672Liabilities assumed:Accounts payable


600,932Accrued expenses and other payables


344,036Amounts due to related parties


1,242,141Deferred tax liability


1,148,951Income taxes payable


65,339Total


3,401,399Intangible assets


9,592,000Net assets acquired


10,154,273Initial cash consideration in 2007

$
10,154,273   AmortizationPeriod(Years)Intangible assets comprised of:License rights

$
9,372,000



3.5Noncompete agreement


220,000



1Total

$
9,592,000     2006


2007Pro forma net revenues

$
69,323,445


$
139,344,314Pro forma income from operations


8,183,010



16,563,288Pro forma net income


4,522,290



28,733,810  F-20




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
  (b)  Guangzhou
    Singshine Communication Co., Ltd.
            Assets acquired:Cash

$
40,689Accounts receivable


60,189Prepaid expenses and other current assets


88,616Amounts due from related parties


2,336Property and equipment


101,687Total


293,517Liabilities assumed:Accounts payable


144,684Accrued expenses and other payables


125,487Amounts due to related parties


71,506Long term payables


5,540,927Deferred tax liabilities


497,827Total


6,380,431Intangible assets


7,706,220Net assets acquired


1,619,306Consideration  cash


1,603,958Consideration  issuance of XFMs shares


390,000Goodwill

$
374,652   F-21




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
  Amortizationperiod(Years)Intangible assets comprised of:Radio advertising agency right

$
7,029,220


7.6Indefinite life trademark


457,000


IndefiniteNoncompete agreement


220,000


3.8Total

$
7,706,220     2006


2007Pro forma net revenues

$
61,556,741


$
135,337,304Pro forma income from operations


7,096,300



15,511,283Pro forma net income


3,363,416



27,619,188   (c)  Singshine
    (Holdings) Hongkong Ltd.
       F-22




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
    Assets acquired:Cash

$
1,140,230Accounts receivable


1,567,372Prepaid expenses and other current assets


306,557Property and equipment


364,782Other long term assets


131,456Total


3,510,397Liabilities assumed:Accounts payable


97,905Accrued expenses and other payables


589,048Amounts due to related parties


424,197Income taxes payable


94,941Amount due to former shareholders


125,722Deferred tax liabilities


567,827Total


1,899,640Intangible assets


3,767,000Net assets acquired


5,377,757Initial cash consideration


6,637,325Goodwill

$
1,259,568   Amortizationperiod(Years)Intangible assets comprised of:Indefinite life trademark

$
1,584,000


IndefiniteCustomer base


1,588,000


4.5Noncompete agreement


595,000


3.8Total

$
3,767,000     2006


2007Pro forma net revenues

$
68,075,090


$
138,410,203Pro forma income from operations


9,767,616



16,068,832Pro forma net income


5,696,314



28,275,790  F-23




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
  (d)  Xinhua
    Finance Media (Convey) Ltd
          Assets acquired:Accounts receivable

$
1,536,045Prepaid expenses and other current assets


771,307Property and equipment


495,722Other assets


64,263Total


2,867,337Liabilities assumed:Accounts payable


527,558Accrued expenses and other payables


1,237,539Bank overdraft.


319,050Bank loans


125,580Capital lease obligations


496,494Amounts due to related parties


79,073Income taxes payable


17,263Deferred tax liabilities


3,130,977Total


5,933,534Intangible assets


17,415,579Net assets acquired


14,349,382Initial cash consideration


33,257,411Goodwill

$
18,908,029   F-24




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
  Amortizationperiod(Years)Intangible assets comprised of:Indefinite life trademark

$
8,059,482


IndefiniteDistribution network


5,402,375


9Customer base


3,702,354


15Backlog order


251,368


1Total

$
17,415,579     2006


2007Pro forma net revenues

$
68,870,950


$
139,395,603Pro forma income from operations


6,964,711



15,247,143Pro forma net income


3,094,579



27,473,952   (e)  Small
    World Television Ltd.
       F-25




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
    Assets acquired:Cash

$
320,060Prepaid expenses and other current assets


168,957Property and equipment


66,194Total


555,211Liabilities assumed:Accounts payable


28,075Deferred tax liabilities


254,154Total


282,229Minority interest


158,141Intangible assets(1)


1,452,311Net assets acquired


1,567,152Purchase consideration  cash


5,081,162Purchase consideration  issuance of XFMs shares


1,742,531Goodwill

$
5,256,541   Amortizationperiod(Years)Intangible assets comprised of:Alliance agreement

$
953,984



5Distribution right


155,698



5Noncompete agreement


281,219



3Noncompete agreement


61,410



1Total

$
1,452,311         2006


2007Pro forma net revenues

$
58,966,432


$
134,838,690Pro forma income from operations


6,992,271



15,293,839Pro forma net income


3,300,569



27,565,535  F-26




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
  (f)  Shanghai
    Paxi Advertising Co. Ltd.
          Assets acquired:Cash

$
947,777Accounts receivable


4,609,190Prepaid expenses and other current assets


784,533Amount due from related parties


133,141Property and equipment


143,616Total


6,618,257Liabilities assumed:Accounts payable


2,279,020Accrued expenses and other payables


534,984Amounts due to related parties


91,821Income taxes payable


1,038,571Deferred tax liabilities


2,761,298Total


6,705,694Intangible assets


10,951,764Net assets acquired


10,864,327Initial purchase consideration


41,627,662Goodwill

$
30,763,335   F-27




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
  Amortizationperiod(Years)Intangible assets comprised of:Customer base

$
8,824,516



5Exclusive advertising agreement


75,350



1Noncompete agreement


1,655,221



5Backlog order


35,940



1Distribution network


360,737



5Total

$
10,951,764     2006


2007Pro forma net revenues

$
73,599,532


$
140,925,473Pro forma income from operations


10,229,885



16,959,460Pro forma net income


7,322,114



28,889,087   (g)  Profitown
    Development Limited
       F-28




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
    Assets acquired:Cash

$
66,689Accounts receivable


48,143Prepaid expenses and other current assets


9,873Amounts due from related parties


217,115Property and equipment


24,064Total


365,884Liabilities assumed:Accounts payable


33,519Accrued expenses and other payables


12,690Income tax payables


48,114Bank overdraft.


22,768Capital lease obligations


13,034Deferred tax liabilities


271,650Total


401,775Intangible assets


1,552,285Net assets acquired


1,516,394Initial purchase consideration


2,319,189Goodwill

$
802,795   Amortizationperiod(Years)Intangible assets comprised of:Customer base

$
1,339,657



5Noncompete agreement


191,319



5Backlog order


21,309



1Total

$
1,552,285  F-29




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
    2006


2007Pro forma net revenues

$
60,688,264


$
135,520,288Pro forma income from operations


7,131,611



15,977,328Pro forma net income


3,366,152



28,223,719   (h)  EconWorld
    Media
             F-30




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
    As of May 26,


As of June 21,


As of December 28,2005(1)


2006(2)


2006(3)Assets acquired:Cash

$
46,267


$
114,951


$
402,065Accounts receivable


153,499



379,644



1,178,169Prepaid expenses and other current assets


23,135



58,105



107,572Subscription receivables


1,500,000







Amounts due from related parties


14,876



14,476



29,985Property and equipment


71,060



11,358



53,196Total


1,808,837



578,534



1,770,987Liabilities assumed:Accounts payable


123,687



190



Accrued expenses and other payables


313,050



28,600



117,470Amounts due to related parties


1,381,648



1,668



143,364Deferred tax liabilities


200,295



35,997



71,328Income taxes payable


38,854



69,187



270,472Total


2,057,534



135,642



602,634Intangible assets


723,600



109,082



216,145Net assets acquired


474,903



551,974



1,384,498Cash consideration, paid by XFL on behalf of XFM


1,733,599



1,082,910



5,039,985Goodwill

$
1,258,696


$
530,936


$
3,655,487   As of May 26,


As of June 21,


As of December 28,


Amortization2005(4)


2006(5)


2006(6)


period(Years)Intangible assets comprised of:Advertising customer base

$
33,000


$
5,408


$
11,336



6Consulting customer base


153,600



25,966



55,467



7Distribution network


7,200



1,284



2,828



10Noncompete agreement


304,200



38,870



67,037



3Publishing title


102,000



18,190



40,063



10Subscriber base


123,600



19,364



39,414



5Total

$
723,600


$
109,082


$
216,145       (1)
    
    Assets and liabilities are reflected at 100% of their historical
    cost plus a 60% step up for the acquisition. There is no
    minority interest because the company was in a net liabilities
    position.(2)
    
    12% minority interest in respective assets and liabilities were
    acquired.(3)
    
    28% minority interest in respective assets and liabilities were
    acquired. F-31




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
   (4)
    
    60% of intangible assets relating to the acquisition of 60%
    interest in EconWorld Media were recognized.(5)
    
    12% of intangible assets relating to the acquisition of 12%
    minority interest in EconWorld Media were recognized.(6)
    
    28% of intangible assets relating to the acquisition of 28%
    minority interest in EconWorld Media were recognized.    2005


2006Pro forma net revenues

$
5,743,400


$
58,966,432Pro forma income from operations


1,431,156



6,974,770Pro forma net income


389,900



3,281,842   (i)  Beijing
    Century Media
         F-32




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
    Assets acquired:Cash

$
417,849Accounts receivable


325,802Capitalized content production costs


921,000Prepaid expenses and other current assets


129,006Property and equipment


40,201Deferred tax assets


125,271Total


1,959,129Liabilities assumed:Accounts payable


95,336Accrued expenses and other payables


1,216,640Amounts due to related parties


246,944Income taxes payable


123,316Total


1,682,236Minority interest


32,016Net assets acquired


244,877Initial purchase consideration


3,056,384Goodwill

$
2,811,507            F-33




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
      2005


2006Pro forma net revenues

$
6,045,820


$
58,966,432Pro forma income from operations


2,748,912



7,067,977Pro forma net income


1,578,092



3,344,291   (j)  Xinhua
    Finance Advertising Limited
         F-34




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
    Assets acquired:Cash

$
1,181,173Restricted cash


115,385Accounts receivable


3,419,313Prepaid advertising space program and airtime


1,082,863Prepaid expenses and other current assets


72,743Amounts due from related parties


1,104,072Rent deposits


15,657Property and equipment


829,515Deferred tax asset


147,211Total


7,967,932Liabilities assumed:Accounts payable


1,759,712Accrued expenses and other payables


756,419Deferred revenue


41,195Income taxes payable


264,956Amounts due to related parties


4,600,491Deferred tax liabilities


3,267,000Total


10,689,773Minority interest


636,681Intangible assets


9,900,000Net assets acquired


6,541,478Initial consideration paid in 2006


29,650,889Contingent consideration paid in 2006


31,424,973Total consideration paid in 2006


61,075,862Goodwill

$
54,534,384   Amortizationperiod(Years)Intangible assets comprised of:Television advertising agency right

$
3,109,000



4-5Newspaper advertising agency right


57,000



4Lamp post advertising agency right


1,564,000



20Advertising customer base


3,858,000



3-10Backlog order


270,000



1CEPA Certificate


2,000



1Noncompete agreement


1,040,000



4Total

$
9,900,000  F-35




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
      2005


2006Pro forma net revenues

$
13,096,450


$
58,966,432Pro forma income from operations


999,783



7,067,977Pro forma net income


444,687



3,344,291   (k)  Beijing
    Jingguan Xincheng Advertising Co., Ltd.
          Net tangible assets acquired; representing Cash

$
617,360Deferred tax liability


19,575,591Long term payable


25,093,827Minority Interest


308,680Intangible assets, exclusive advertising agreement


55,831,815Net assets acquired

$
11,471,077Initial consideration paid


9,241,465Transaction costs


2,229,612$
11,471,077    F-36




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
      Assets acquired:Cash

$
212,530Investment in an affiliate


370,416Accounts receivables


1,552,851Other receivables


580,321Prepaid expenses


7,531,794Property and equipment


35,528Total


10,283,440Liabilities assumed:Other payables


8,134,283Loan from shareholders


37,106Amounts due to related parties


401,477Taxation


374,959Deferred tax liability


9,787,796Long term payable


12,943,349Total


31,678,970Intangible assets, exclusive advertising agreement


28,103,751Net assets acquired


6,708,221Consideration, issuance of XFMs shares


6,337,449Cash consideration paid


308,680Transaction costs


62,092$
6,708,221       (l)  Accord
    Group Investments Ltd.
     F-37




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
        As of


As ofSeptember 22, 2006(1)


November 1, 2006(2)Assets acquired:Cash

$
259,661


$
665,174Accounts receivables


202,234



59,640Prepaid expense and other current assets


81,628



15,617Property and equipment, net


133,901



25,945Total


677,424



766,376Liabilities assumed:Accounts payables


197,837



50,524Other payables and other current liabilities


1,290,053



29,540Loan from shareholders


2,464



Amounts due to related parties


1,626,282



1,106,424Income taxes payable


219



Deferred tax liability


450,670



Total


3,567,525



1,186,488Intangible assets


1,309,221



33,779Loss of Accord Group previously equity accounted for


52,211



Net (liabilities assumed) assets acquired


(1,528,669
)


33,779Cash consideration paid in 2006


440,000



Issuance of XFMs shares


633,776



237,600Total considerations


1,073,776



237,600Goodwill

$
2,602,445


$
203,821   F-38




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
  As of


As of


AmortizationSeptember 22, 2006(3)


November 1, 2006(4)


period(Years)Intangible assets comprised of:Exclusive advertising agreement

$
1,163,000


$




5Advertising customer base


146,221



33,779



3Total

$
1,309,221


$
33,779       (1)
    
    Assets and liabilities are reflected at 100% of their historical
    cost plus a 80% step up for the acquisition. There is no
    minority interest because the company was in net liabilities
    position.(2)
    
    20% minority interest in respective assets and liabilities were
    acquired. The net liabilities were not assumed from the
    acquisition because the minority interest had not shared the
    attributable loss in the company in excess of its capital
    contribution.(3)
    
    80% of total intangible assets relating to the acquisitions of
    80% interest in Accord Group were recognized.(4)
    
    20% of total intangible assets relating to the acquisitions of
    20% interest in Accord Group were recognized.      2005


2006Pro forma net revenues

$
5,886,360


$
60,088,070Pro forma income from operations


938,920



6,456,903Pro forma net (loss) income


(210,408
)


2,880,912   (m)  Beijing
    Perspective Orient Movie and Television Intermediary Co.,
    Ltd.
       F-39




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
    As of


As ofJuly 28, 2006(1)


November 13, 2007(2)Assets acquired:Cash

$
2,733,530


$
481,183Accounts receivables


21,220



399,562Prepaid expenses and other current assets


100,628



80,037Amounts due from related parties


1,929



850,052Property and equipment


1,585,096



915,873Other assets






270,796Total


4,442,403



2,997,503Liabilities assumed:Accounts payables


56,887



29,427Accrued expenses and other payables


904,488



638,578Amounts due to related parties


51,957



369,571Other taxes payable


23,718



22,095Deferred revenue






97,458Deferred tax liability


194,755



285,464Total


1,231,805



1,442,593Minority Interest


1,996,338



Intangible assets


1,258,975



1,559,850Net assets acquired


2,473,235



3,114,760Total consideration, paid by XFL


6,275,052



Purchase consideration  cash






2,164,705Purchase consideration  issuance of XFMs shares






8,295,990Transaction costs


662,092



Goodwill

$
4,463,909


$
7,345,935   As of


As of


AmortizationJuly 28, 2006(3)


November 13, 2007(4)


period(Years)Intangible assets comprised of:Trademark

$
844,345


$
1,205,909



8-15Television station contract


68,340







3Advertising customer base


72,420







3Supplier relationship






208,816



1Customer relationship






92,677



6Noncompete agreement


273,870



52,448



4-5Total

$
1,258,975


$
1,559,850  F-40




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
      (1)
    
    Assets and liabilities are reflected at 100% of their historical
    cost plus a 51% step up for the acquisition.(2)
    
    49% minority interest in respective assets and liabilities were
    acquired. As at the date of this report, XFM is still in the
    midst of finalizing the fair values of this business combination
    of acquiring the remaining interest in Beijing Perspective,
    which is to be determined by professional valuers. Therefore,
    the initial accounting for this business combination has been
    determined only provisionally and thus the carrying value of the
    goodwill, assets, liabilities and the related deferred tax
    liabilities arising from this business combination during the
    year is subject to changes on completion of initial accounting.(3)
    
    51% of intangible assets relating to the acquisition of 51%
    interest in Beijing Perspective were recognized.(4)
    
    49% of intangible assets relating to the acquisition of 49%
    minority interest in Beijing Perspective were recognized.      2005


2006Pro forma net revenues

$
8,130,358


$
59,797,031Pro forma income from operations


1,949,884



6,137,829Pro forma net income


777,243



2,476,867   (n)  Shanghai
    Hyperlink Market Research Co., Ltd
         F-41




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
    As of


As ofAugust 1, 2006(1)


September 15, 2006(2)Assets acquired:Cash

$
304,672


$
164,851Accounts receivable


220,156



187,858Other receivables


81,575



45,006Amounts due from related parties


36,610



23,210Property and equipment


278,370



151,585Total


921,383



572,510Liabilities assumed:Accounts payables


56,953



18,020Accrued expenses and other payable


256,562



203,188Amounts due to related parties


88,433



47,559Other taxes payables


103,918



Income tax payable


136,291



81,571Deferred tax liabilities


142,214



130,943Total


784,371



481,281Minority Interest


136,821



Intangible assets


430,950



396,798Net assets acquired


431,141



488,027Initial consideration  issuance of XFMs shares






1,774,486Initial cash consideration paid


2,227,333



30,251Total transaction costs


742,948



Goodwill

$
2,539,140


$
1,316,710   As of


As of


AmortizationAugust 1, 2006(3)


September 15, 2006(4)


period(Years)Intangible assets comprised of:Research customer relationship

$
211,140


$
194,408



4Noncompete agreement


219,810



202,390



4Total

$
430,950


$
396,798       (1)
    
    Assets and liabilities are reflected at 100% of their historical
    cost plus a 51% step up for the acquisition.(2)
    
    49% minority interest in respective assets and liabilities were
    acquired.(3)
    
    51% of total intangible assets relating to the acquisitions of
    51% interest in Shanghai Hyperlink were recognized.(4)
    
    49% of total intangible assets relating to the acquisitions of
    49% interest in Shanghai Hyperlink were recognized. F-42




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
       2005


2006Pro forma net revenues

$
7,748,321


$
60,250,623Pro forma income from operations


2,518,351



6,900,362Pro forma net income


1,370,109



3,364,955   (o)  Upper
    Step Holdings Ltd
       F-43




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
    As of


As ofSeptember 22, 2006


November 1, 2006Assets acquired:Cash

$
2,784,144


$
833,806Restricted cash


3,018,163



1,327,992Other receivables


3,556,659



1,639,896Amounts due from related parties


363,609



306,769Total


9,722,575



4,108,463Liabilities assumed:Accrued expenses and other payables


400,429



233,418Loan from a shareholder


2,002,066



Short term loan


5,596,322



2,462,383Amounts due to related parties


512,249



909Total


8,511,066



2,696,710Intangible assets, licensing agreements


25,731,906



10,761,581Minority interests


1,413,064



Net assets acquired

$
25,530,351


$
12,173,334       5.
    Accounts
    receivable  At December 31, 2006


At December 31, 2007Accounts receivable

$
17,403,632


$
46,007,983Less: Allowance for doubtful accounts






(301,217
)Total

$
17,403,632


$
45,706,766   2007Movements in allowance for doubtful accountsBalance at the beginning of the year

$
Add: Amount charged to expenses


301,217Balance at the end of the year

$
301,217   6.
    Investment  E-data
 F-44




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
    7.
    Deposits
    for acquisition of subsidiaries    8.
    Capitalized
    content production costs, net    At December 31, 2006


At December 31, 2007Television programs:Released

$
1,787,645


$
11,099,159In production


1,163,915



3,204,099Total


2,951,560



14,303,258Less: accumulated amortization


1,554,354



5,447,362Capitalized content production costs, net

$
1,397,206


$
8,855,896     9.
    Other
    current assets    At December 31, 2006


At December 31, 2007Advances to employees

$
172,708


$
1,321,150Rent deposits


213,857



141,711Interest income receivable






623,016Other loan receivables


4,603,493



Others


404,844



3,276,013Total

$
5,394,902


$
5,361,890      F-45




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
  10.
    Property
    and equipment, net    At December 31, 2006


At December 31, 2007Leasehold improvements

$
2,123,204


$
1,809,461Billboards and lampposts


635,804



2,954,557Furniture, fixtures and equipment


1,940,980



6,100,742Motor vehicles


427,268



785,455Total


5,127,256



11,650,215Less: accumulated depreciation and amortization


759,927



2,458,256Property and equipment, net

$
4,367,329


$
9,191,959     11.
    Intangible
    assets, net  At December 31, 2006


At December 31, 2007License agreements in Upper Step License agreement

$
36,493,488


$
36,493,488 Television advertising services contract


67,591,471



67,591,471104,084,959



104,084,959Less: Accumulated amortization License agreement


240,516



1,618,850 Television advertising services contract






3,975,948240,516



5,594,798$
103,844,443


$
98,490,161Exclusive advertising agreement in Economic Observer Advertising

$
61,338,472


$
73,846,560Less: accumulated amortization


557,166



1,960,549$
60,781,306


$
71,886,011Other intangible assets, net consisted of the following:Customer base

$
4,577,575


$
20,124,779License rights






9,372,000Radio advertising agency rights






11,176,731Research customer relationship


405,548



405,548Trademark


844,345



12,181,758Advertising agency right


4,730,000



4,730,000Backlog order


270,000



578,617Noncompete agreements


2,146,177



5,422,795Exclusive advertising agreement


1,163,000



1,302,613Distribution network






5,774,424 F-46




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
  At December 31, 2006


At December 31, 2007Publishing title


160,253



187,249Others


81,652



2,540,532Total

$
14,378,550


$
73,797,046Less: accumulated amortizationCustomer base

$
1,142,771


$
2,831,293License rights






1,562,000Radio advertising agency rights






1,872,632Research customer relationship


34,673



138,173Trademark


33,372



201,377Advertising agency right


748,200



1,496,400Backlog order


270,000



327,249Noncompete agreements


489,609



1,410,317Exclusive advertising agreement


54,273



390,549Distribution network






308,556Publishing title


17,170



35,508Others


12,703



93,251Total accumulated amortization


2,802,771



10,667,305Other intangible assets, net

$
11,575,779


$
63,129,741       12.
    Goodwill    MediaProduction

Print

Advertising

Research

Broadcasting

TotalBalance as of December 31, 2006

$
11,192,702


$
6,566,376


$
54,534,384


$
4,102,074


$
7,274,474


$
83,670,010Goodwill acquired during the year


7,404,651







76,895,108







12,155,719



96,455,478Balance as of December 31, 2007

$
18,597,353


$
6,566,376


$
131,429,492


$
4,102,074


$
19,430,193


$
180,125,488    F-47




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
  13.
    Principal
    protected note      14.
    Accrued
    expenses and other payables    At December 31,2006


At December 31,2007Accrued salary and welfare

$
858,961


$
2,378,594Other taxes payable


1,523,730



4,201,560Consideration payables






2,607,715Receipt in advance






3,342,152Deferred revenue


919,592



824,990Audit and audit related fees


600,000



1,045,423Accrued offering expenses


245,189



Dividend payable for convertible preferred shares


1,686,667



Other


2,065,071



4,800,760Total

$
7,899,210


$
19,201,194     15.
    Long term
    payables  At December 31, 2006


At December 31, 2007Long term payables, current portion

$
8,900,988


$
4,564,177Long term payables, non-current portion


64,937,958



65,066,299Total

$
73,838,946


$
69,630,476    F-48




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
      2008

$
4,564,1772009


6,829,9252010


7,914,5062011


5,260,5482012


3,372,187After 2012


41,689,133Total

$
69,630,476Less: Current portion


4,564,177Non-current portion

$
65,066,299   16.
    Capital
    lease obligations      2008

$
210,4322009


9,905Total minimum lease payments


220,337Less: Amount representing interest


22,872Present value of minimum lease payments


197,465Less: Current maturities of capital lease obligations


188,590Long-term capital lease obligations

$
8,875   17.
    Bank
    borrowings     F-49




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
    2008

$
33,780,1882009


26,7892010


18,5572011


19,7502012


10,340Total

$
33,855,624Less: Current portion


33,780,188Non-current portion

$
75,436   18.
    Convertible
    securities  (a)  Redeemable
    convertible preferred shares
    The key terms of the Preferred Shares are as follows:
  Dividends.
  Conversion.
    Voting rights.
  Redemption.
 F-50




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
    Liquidation preference.
          Conversion.
  Voting rights.
  Dividends.
  Liquidation preference.
         F-51




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
  (b)  Convertible
    loan
          19.
    Non-vested
    Shares  5-year
    Number of Non-vested


Fair value ofGrant date

Shares issued


common sharesJune 13, 2006


11,050,000


$
0.6
*     *
    
    The fair value was determined based on a valuation made by an
    independent appraiser.          F-52




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
           winding-up
    Number of Non-vested Shares2006

2007Outstanding as of January 1






11,050,000Granted during the year


11,050,000



Vested during the year






(1,500,000
)Outstanding as of December 31


11,050,000



9,550,000     20.
    Warrants  5-year lock-up
    Warrant to Sino

Warrant toInvestment

consultantExpected price volatility range


45%


44%Risk-free interest rate


5.11%


4.91%Contractual life of the warrant


5 years


5 yearsExpected dividends


0%


0%  F-53




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
        Exercise price

$
5.00Expected price volatility


44%Risk-free interest rate


5.06%Contractual life of the warrant


1 yearExpected dividends


0%         Number of warrants2006


2007Outstanding as of January 1






4,729,968Granted during the year


4,729,968



221,280Outstanding as of December 31


4,729,968



4,951,248   winding-up
  21.
    Capital
    Structure     F-54




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
        winding-up
               F-55




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
                    22.
    Share
    options    The
    key terms of the share options granted to employees on
    July 11, 2006 are as follows:
           F-56




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
    Exercise price

$
0.78Expected life


3.61 yearsAssumed volatility


38.3%Risk-free interest rate


5.68%Expected dividends


0%                            F-57




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
              Date of grant


April 25, 2007



September 26, 2007Exercise price

$
6.5


$
4.39Expected price volatility range


44%



44%Expected life


6.4 - 7.3 years



5.6 - 6.9 yearsContractual life


10 years



10 yearsRisk-free interest rate


4.66%



4.63%Expected dividends


0%



0%Trigger price multiple


1.5 times



1.5 times       Weighted-averageNumber of


Weighted-average


grant-date fairshare option


exercise price


valueOutstanding as of January 1, 2007


10,698,141


$
0.78


$
0.14Granted during the year


210,000


$
5.29


$
1.85Lapsed during the year


(351,480
)

$
0.78


$
0.14Exercised during the year


(2,877,934
)

$
0.78


$
0.14Outstanding as of December 31, 2007


7,678,727


$
0.90


$
0.19Exercisable as of December 31, 2007


2,467,556


$
0.78


$
0.14  F-58




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
    Options outstanding


Options exercisableWeighted-











Weighted-Weighted-


average


Weighted-





Weighted-


average


Weighted-average


remaining


average





average


remaining


averageNumber of


exercise


contractual


intrinsic


Number of


exercise


contractual


intrinsicoutstanding


price


life


value


exercisable


price


life


valueDate of grant:July 11, 2006


7,468,727


$
0.78



3.5


$




2,467,556


$
0.78



3.5


$
April 25, 2007


90,000


$
6.50



9.3


$







$







$
September 26, 2007


120,000


$
4.39



9.7


$







$







$
7,678,727


$
0.90



3.7


$
2.10



2,467,556


$
0.78



3.5


$
2.22     23.
    Provision
    for income taxes           F-59




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
        and/or
    For the period fromMay 26, 2005(Date XFL acquiredEconWorld Media,the predecessor to XFM)


For the year ended


For the year endedto December 31, 2005


December 31, 2006


December 31, 2007Current tax

$
840,540


$
1,770,278


$
3,292,456Deferred tax


88,094



(700,741
)


(15,518,106
)Total

$
928,634


$
1,069,537


$
(12,225,650
)  F-60




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
    For the period fromMay 26, 2005(Date XFL acquiredEconWorld Media,the predecessor to XFM)


For the year ended


For the year endedto December 31, 2005


December 31, 2006


December 31, 2007Net income before provision for income taxes

$
2,408,305


$
6,170,326


$
17,115,989PRC statutory tax rate


33
%


33
%


33
%Income tax at statutory tax rate


794,741



2,036,208



5,648,276Expenses not deductible for tax purposes:Entertainment


5,194



87,524



132,158Salaries and employees benefits


58,462



468,998



1,096,777Allowance for inter-company balance






163,481



Other


101,071



75,830



203,999Non-taxable income










(471,094
)Effect of income tax rate differences in other jurisdictions


(42,185
)


2,319,620



1,130,641Changes in valuation allowances


79,143



705,553



131,802Foreign income taxes


65,640



183,797



28,932Effect of tax exemptions


(136,174
)


(4,997,098
)


(8,398,360
)Effect of change in tax rate










(11,263,434
)Overprovision in prior years










(395,474
)Other


2,742



25,624



(69,873
)Provision for income taxes

$
928,634


$
1,069,537


$
(12,225,650
)    F-61




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
    At December 31, 2006


At December 31, 2007Deferred tax assets:Capitalized content production cost

$
32,437


$
22,634Net operating losses


3,423,559



3,569,824Others


14,463



94,598Total


3,470,459



3,687,056Less: valuation allowance


(3,438,022
)


(3,569,824
)Deferred tax assets, net


32,437



117,232Deferred tax liability:Intangible assets

$
41,168,035


$
37,741,579Total

$
(41,135,598
)

$
(37,624,347
)Reported as:Current deferred tax assets

$
32,437


$
22,634Non-current deferred tax assets

$



$
94,598Non-current deferred tax liabilities

$
(41,168,035
)

$
(37,741,579
)Total

$
(41,135,598
)

$
(37,624,347
)         24.
    Related
    party transactions   F-62




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
    At December 31, 2006


At December 31, 2007Due from related parties:Due from affiliates(a)

$
4,868,335


$
2,499,907Due from directors(b)


205,000



210,868Due from related companies(c)


3,713,806



4,678,436Total

$
8,787,141


$
7,389,211Due to related parties:Due to affiliates(d)


2,035,506



376,838Due to directors(b)


109,124



72,465Due to minority shareholders(e)


222,533



153,395Total

$
2,367,163


$
602,698Due to Parent and its affiliates(f)

$
138,694,299


$
5,251,224Interest receivable on promissory note receivable 
    current

$



$
722,038Promissory note receivable  current

$
7,900,000


$
Promissory note receivable  non-current

$



$
7,900,000     (a)
    
    Amounts due from affiliates as of December 31, 2006
    principally represented advance to investees and a former
    shareholder of a subsidiary and are non-interest bearing and
    repayable on demand. In 2007, additional amount of $1,200,000
    was advanced to this former shareholder and a fixed interest of
    $450,000 was mutually agreed to be charged on the outstanding
    balance. All the outstanding balance and the interest were fully
    settled in 2007.Amounts due from affiliates as of December 31, 2007
    principally represented advance to investees and former
    shareholders of subsidiaries and are non-interest bearing and
    repayable on demand.(b)
    
    Amounts due from and to directors represented advance from and
    to directors of subsidiaries and are non-interest bearing and
    repayable on demand.(c)
    
    Amount due from a related company as of December 31, 2006
    represented advances to a company owned by one of the
    Companys shareholders which is non-interest bearing and
    repayable within one year. Out of the total amount, $2,000,000
    was secured by the registered capital of the borrower and such
    amount was repaid in 2007. The remaining amount of $1,713,806
    was renewed in 2007. During the year ended December 31,
    2007, the Company sold television program to this related
    company amounting to $1,863,318, of which $900,943 was included
    in amounts due from related companies as of December 31,
    2007.The balance as of December 31, 2007 also included an
    entrusted loan of $2,063,687 provided to a shareholder through a
    bank. The entrusted loan is unsecured, non-interest-bearing and
    repayable within one year.(d)
    
    The balance as of December 31, 2006 included a $1,500,000
    loan from the then shareholder and this loan was waived by the
    former shareholder during the year ended December 31, 2007.
    The amount waived was recorded as a shareholders
    contribution and included in additional paid-in capital within
    the shareholders equity section.Amounts due to affiliates as of December 31, 2007
    principally represented advance from former shareholders of
    subsidiaries and are non-interest bearing and repayable on
    demand.(e)
    
    Amounts due to minority shareholders as of December 31,
    2006 were non-interest bearing and fully settled in 2007. Amount
    due to a minority shareholder as of December 31, 2007 was
    non-interest bearing and due on demand. F-63




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
   (f)
    
    Amounts due to Parent and its affiliates represented amounts
    borrowed from XFL and subsidiaries of XFL which are not members
    of the Company and are due on demand. As of December 31,
    2007, the balance mainly represented 2007 earn-out consideration
    of $4,947,039 for acquisition of Economic Observer Advertising
    in June 2006.The balance as of December 31, 2006 included two promissory
    notes amounting to $106,751,685, which includes the initial
    consideration of $3,000,000 paid for the acquisition of Beijing
    Century Media, additional consideration and transaction cost of
    $8,728,570 in respect of the acquisition of Beijing Century
    Media, contingent consideration of $7,862,500 to be paid based
    on the net income of 2006 and 2007, estimated employee bonus
    paid or payable of $1,081,250 in relation to acquisition of
    Beijing Century Media; and, of contingent consideration of
    $47,860,102 for the acquisition of XFA paid or payable based on
    the net income of 2005 and 2006; consideration of $440,000 paid
    for the acquisition of Accord Group, $5,131,517 deposit paid for
    the proposed acquisition of 19% equity interest in Upper Step,
    initial consideration of $29,000,000 paid for the acquisition of
    XFA and contingent consideration of $3,647,746 paid for the
    acquisition of XFA. Both notes are due on demand and the
    interest rates are not specified. XFM issued the promissory
    notes to borrow money from XFL and XFN to pay for the costs
    related to XFMs acquisition of XFA, Upper Step, and Accord
    Group and the contractual control of Beijing Century Media. The
    transaction agreements for some of these acquisitions contain
    earn-out provisions that would require payment of additional
    consideration based on the financial performance of the acquired
    companies. These earn-out considerations are the obligations of
    XFL. While not specified in the contract XFL may request that
    the Company pay any difference between those payments and
    amounts due under the promissory notes.During the year ended December 31, 2007, additional
    earn-out of XFA and CM amounted to $25,044,660 and $7,404,651,
    respectively, and related transaction cost of 161,767 were paid
    by XFL on behalf of XFM, $50 million was repaid to XFL and
    the remaining balance of $113,507,785 were waived by XFL. The
    amount waived was then recorded as a shareholders
    contribution and included in additional paid-in capital within
    the shareholders equity section.During the year ended December 31, 2006, the Company issued
    common shares to settle the aforesaid share subscription in
    EconWorld Media, earn-out considerations for the acquisition and
    other transaction costs and repaid the two promising notes of
    $500,000 in total.         F-64




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
          25.
    Dividends       F-65




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
  26.
    Commitments
    and contingencies  (a)  Purchase
    of program rights
    (b)  Operating
    leases
      2008

$
2,702,1612009


1,551,8092010


471,8702011


333,173Total

$
5,059,013     (c)  Other
          (d)  Contingencies
   F-66




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
    27.
    Segment
    information      MediaProduction


Print


XFM Corporate


TotalNet revenues:Media production

$
3,640,792


$



$



$
3,640,792Advertising sales






386,668







386,668Advertising services






580,133







580,133Publishing services






787,451







787,451Total net revenues

$
3,640,792


$
1,754,252


$



$
5,395,044Depreciation and amortization


461,352



115,971







577,323Cost of revenues and operating expenses excluding depreciation
    and amortization


459,460



1,626,711



301,117



2,387,288Operating income (loss)


2,719,980



11,570



(301,117
)


2,430,433Other expense, net














22,128Income before provision for income taxes and minority interest














2,408,305Provision for income taxes














928,634Net income before minority interest














1,479,671Minority interest


128,773











128,773Net income













$
1,350,898Total assets, excluding goodwill

$
3,797,453


$
2,438,893


$



$
6,236,346Goodwill

$
2,457,550


$
1,612,653


$



$
4,070,203Capital expenditure

$
60,470


$
27,593


$



$
88,063  F-67




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
    Media














XFMProduction


Print


Advertising


Research


Broadcasting


Corporate


TotalNet revenues:Media production

$
6,545,148


$



$



$



$



$



$
6,545,148Advertising sales






6,303,646











387,897







6,691,543Advertising services






6,418,279



35,628,274



1,802,660



1,012,739







44,861,952Publishing services






867,789



















867,789Total net revenues

$
6,545,148


$
13,589,714


$
35,628,274


$
1,802,660


$
1,400,636


$



$
58,966,432Depreciation and amortization


1,263,793



795,398



2,489,034



110,097



570,899



6,631



5,235,852Cost of revenues and operating expenses excluding depreciation
    and amortization


2,538,522



7,111,971



26,177,829



1,078,565



1,988,200



7,767,516



46,662,603Operating income (loss)


2,742,833



5,682,345



6,961,411



613,998



(1,158,463
)


(7,774,147
)


7,067,977Other expenses, net


























897,651Income before provision for income taxes and minority interest


























6,170,326Provision for income taxes


























1,069,537Net income before minority interest


























5,100,789Minority interest


32,417



1,495,008



703,332



66,129



(592,599
)






1,704,287Equity in loss of an investment


















52,211







52,211Net income

























$
3,344,291Total assets, excluding goodwill

$
5,253,462


$
71,892,068


$
26,904,500


$
2,865,901


$
123,771,680


$
85,092,679


$
315,780,290Goodwill

$
11,192,702


$
6,566,376


$
54,534,384


$
4,102,074


$
7,274,474


$



$
83,670,010Capital expenditure

$
1,093,472


$
1,963,144


$
430,415


$
47,111


$
2,707,830


$
81,879


$
6,323,851     Media














XFMProduction


Print


Advertising


Research


Broadcasting


Corporate


TotalNet revenues:Media production

$
7,680,580


$



$



$



$



$



$
7,680,580Advertising sales






12,866,941



8,140,717







18,273,882







39,281,540Advertising services






5,694,620



66,000,707



5,046,006



9,939,810







86,681,143Publishing services






1,195,427



















1,195,427Total net revenues

$
7,680,580


$
19,756,988


$
74,141,424


$
5,046,006


$
28,213,692


$



$
134,838,690Depreciation and amortization


2,128,178



1,831,138



3,683,868



299,622



12,104,872



138,186



20,185,864Cost of revenues and operating expenses excluding depreciation
    and amortization


2,923,559



8,785,767



57,154,103



3,891,881



13,720,827



14,662,599



101,138,736 F-68




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
  Media














XFMProduction


Print


Advertising


Research


Broadcasting


Corporate


TotalOther operating income






















2,261,788



2,261,788Operating income (loss)


2,628,843



9,140,083



13,303,453



854,503



2,387,993



(12,538,997
)


15,775,878Other income, net


























1,340,111Income before provision for income taxes and minority interest


























17,115,989Tax benefit


























(12,225,650
)Net income before minority interest


























29,341,639Minority interest


29,460







919,957







353,217







1,302,634Net income

























$
28,039,005Total assets, excluding goodwill

$
10,692,976


$
87,188,203


$
92,280,143


$
3,312,123


$
149,498,573


$
127,704,707


$
470,676,725Goodwill

$
18,597,353


$
6,566,376


$
131,429,492


$
4,102,074


$
19,430,193


$



$
180,125,488Capital expenditure

$
729,322


$
391,137


$
2,431,656


$
42,512


$
776,010


$
839,075


$
5,209,712       28.
    Net
    income (loss) per share    For the Period fromMay 26, 2005(Date XFL AcquiredEconWorld Media,the Predecessor to XFM)


For the Year Ended


For the Year Endedto December 31, 2005


December 31, 2006


December 31,  2007Numerator:Net income (loss)

$
1,350,898


$
(4,148,010
)

$
26,700,672Adjustment to net income (loss)Dividend declared to redeemable convertible preferred shares










1,338,333Interest expenses for convertible loan










267,464Numerator used for diluted net income (loss) per Class A
    and Class B common shares

$
1,350,898


$
(4,148,010
)

$
28,306,469Denominator:Weighted average of issued shares outstanding


42,613,000



49,777,632



116,220,383 F-69




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
  For the Period fromMay 26, 2005(Date XFL AcquiredEconWorld Media,the Predecessor to XFM)


For the Year Ended


For the Year Endedto December 31, 2005


December 31, 2006


December 31,  2007Effect of dilutive securities:Employee share options










7,290,608Non-vested Shares










8,748,080Warrants










282,390Convertible loan










710,880Redeemable convertible preferred shares










3,117,051Total effect of dilutive securities










20,149,009Denominator used for diluted net income (loss) per Class A
    and Class B common shares


42,613,000



49,777,632



136,369,392Basic net income (loss) per Class A common shares

$



$
(0.08
)

$
0.23Basic net income (loss) per Class B common shares

$
0.03


$
(0.08
)

$
0.23Diluted net income (loss) per Class A common share

$



$
(0.08
)

$
0.21Diluted net income (loss) per Class B common share

$
0.03


$
(0.08
)

$
0.21     29.
    Employee
    benefit plans       F-70




---



##### Table of Contents



Xinhua
    Finance Media Limited
  Notes to consolidated financial
    statements  (Continued)
    30.
    Statutory
    reserves    31.
    Subsequent
    events      lock-up
   F-71