Sina Makes Advertising Buy For Over $1 Billion

Sina.com is China’s largest Web portal, and today, the company behind it got even bigger.  Sina Corp. acquired parts of Focus Media Holding, which works in advertising, for over $1 billion in stock.

The size of the deal is stunning, of course, given the worldwide recession; a full 47 million Sina shares will change hands.  Also impressive is that Focus Media will be left standing when the transaction’s complete, and it’s when you look at the details of what was and wasn’t sold that things get interesting.

 Sina isn’t expanding at all in the realm of online advertising.  Instead, according to a press release, it’s gone after "all of the assets of Focus Media’s digital out-of-home advertising networks, including LCD display network, poster frame network and in-store network."  Focus Media will then retain its Internet advertising division and a few other things.

So is the billion-dollar deal an "everybody out" call for online advertisers in China – or the world?  Or is it just an exercise in diversification for a giant that already dominates its home market?

Charles Chao, Sina’s president and CEO, guided onlookers towards the most comforting alternative, stating, "The transaction is intended to combine the forces of the two of the most powerful new media advertising platforms in China to provide more effective and integrated marketing solutions to our customers.  We believe that this business combination will significantly extend our media reach and influence, reinforcing our position as a partner of choice in new-media advertising in China."