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  "documentTitle": "Focus Media Holding Ltd. (FMCN)",
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  "authorName": "Muddy Waters",
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  "presentationDate": "2012-02-09 00:00:00",
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  "notes": "This is a research note page focusing on forensic accounting and skepticism of management disclosures.",
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      "text": "Why would FMCN lie about the inputs to the numbers without also lying about the outputs?",
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      "text": "In the course of our research, we determined that the minimum discount offered to customers for Tier 1 advertisements is approximately 65% off the rate card. We believe that there are customers that receive Tier 1 ad discounts of more than 90% off the rate card. Further, we found that the discounts on Tier 2 ads are greater than those of Tier 1. We also found that most Tier 3 and 4 ads are usually free.",
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      "text": "Our concern about whether FMCN’s core business numbers are accurate is most acute because FMCN’s LCD and cardboard display network business is opaque in the two areas that matter most – advertisement ASPs and location lease costs.",
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      "text": "In our research of location costs in Shanghai Class A office buildings, we found that FMCN pays anywhere from approximately $50 (RMB 300) per screen per month to $1,500 (RMB 10,000) per screen per month.",
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      "text": "Since our initial report, we’ve heard some investors and analysts downplay the significance of these lies, and instead dissemble by focusing on the great numbers FMCN is reporting. However, because the lies about the number of LCD televisions and movie theaters in the network were used to support growth in reported revenues and profits, one has to wonder whether reported numbers are real.",
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      "text": "We heard one second hand account of a conversation between an investor and an analyst with a major bank. We were told that during the conversation, the analyst claimed to have previously noted that the theater count was implausible, yet the analyst never became concerned about FMCN as a result. — Footnote 21",
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      "text": "What These Lies Mean for Investors' Money",
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