Phoenix New Media (ifeng)

Prospectus Summary

PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements and related notes appearing elsewhere in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully, especially the risks of investing in our ADSs discussed under "Risk Factors" before deciding whether to buy our ADSs.

Phoenix New Media Limited

Our Business

We are the leading new media company providing premium content on an integrated platform across Internet, mobile and TV channels in China. Having originated from a leading global Chinese language TV network based in Hong Kong, Phoenix Satellite Television Holdings Limited, or Phoenix TV, we enable consumers to access professional news and other quality content and share user-generated content, or UGC, on the Internet and through their mobile devices. We also transmit our UGC and in-house produced content to TV viewers primarily through Phoenix TV. Our ifeng.com website ranked number one in terms of page views, or PV, among the world's leading TV companies' websites, including CNN.com, BCC.co.uk and CNTV.cn, in March 2011 according to Alexa.com, a third-party web information company, and ranked 8^th among all Chinese websites in terms of PV in December 2010, according to Google Ad Planner. We had 222 million online monthly unique visitors in March 2011, and according to a report we commissioned from Shanghai iResearch Co., Ltd., a third-party PRC consulting and market research firm focused on Internet media markets, or the iResearch Report, our online users' average monthly income was over four times that of the average Internet user in China in November 2010. Leveraging our coveted user demographic and influential brand, we have established a high-growth and profitable business model with diversified revenue streams from both advertising and paid services.

We provide journalism with balanced perspectives, global news coverage, investigative reports and in-depth analysis of events in compelling presentation formats. Our news vertical has been ranked number one in terms of PV compared to news verticals of Chinese Internet portals since July 2010 by Alexa.com. We possess strong capabilities in sourcing and editing content, as well as in original production. Our content library is enriched by our exclusive license to use Phoenix TV's copyrighted content and is enhanced by the interactive contribution from our users through UGC. We believe the high quality of our content distinguishes us within the new media industry in China. Our quality content has served to attract a large user base, as evidenced by the 311 million average daily online PV and 88 million average daily mobile PV that our platform received in March 2011. We believe the premium nature of our content is further demonstrated by ifeng.com's high number of page views per visitor, or PV/UV, which was higher than the PV/UV of any major Chinese Internet portal in November 2010 according to the iResearch Report, and its high level of daily time on site per user, which was significantly greater than that of the leading Chinese online video websites in March 2011, according to Alexa.com.

Our brand, "ifeng.com" ( ), has achieved prominence among Chinese Internet users. We were recognized as the "Most Valuable Chinese Internet Brand" at the Chinese Internet Advertisers Annual Convention in October 2010. The appeal of our brand is enhanced by its affiliation with the "Phoenix" ( ) brand of Phoenix TV. In Chinese culture, the Chinese Phoenix is an auspicious mythical bird that symbolizes unrivaled excellence. Benefiting from China's "open and reform" policy, Phoenix TV has been a driving force in China's media reform and its programs are highly popular in China, as evidenced by the Phoenix Chinese Channel's thirteenth consecutive semi-annual first place ranking for audience appreciation since 2004 by CTR Market Research, a joint venture between China International TV Corporation and TNS Global Market Research. Our and Phoenix TV's active promotion of one another's brands on our respective Internet-enabled and TV platforms helps to grow our combined audience synergistically.

Our distinguished content, attractive user base and diverse product lines provide us with multiple opportunities for monetization in both advertising and paid services. We derived 38.7% and 61.3% of our total revenues from advertising and paid services, respectively, in 2010. We recognize our advertising revenues on a net basis and generate them by providing advertising services through our online and video channels primarily and, to a small extent at present, through our mobile channel. Driven by the growing number of premium brand advertisers that we have attracted across a wide range of industries, our net advertising revenues grew at rates of 102.8% from 2008 to 2009, and 150.4% from 2009 to 2010. We offer a variety of paid services across all of our channels, including (i) mobile Internet and value-added services, or MIVAS, which includes our digital reading services, mobile game services and wireless value-added services, or WVAS, such as messaging-based services (SMS and MMS); (ii) video value-added services, or video VAS, which consists of our online subscription and pay-per-view video services, our mobile subscription and pay-per-view video services, and video content sales; and (iii) Internet value-added services, or Internet VAS. We primarily generate our paid service revenues from our WVAS, digital reading services and mobile video subscription and pay-per-view services by providing content to mobile device users and collecting revenue shares or fixed fees for our content services from the relevant mobile operator. We also earn a significant amount of paid service revenues in the form of fixed fees from China Mobile Communications Corporation, or China Mobile, for our digital reading services. These offerings have driven the growth of our paid service users from 6.4 million users as of March 31, 2010, to 10.1 million users as of March 31, 2011, representing a growth rate of 57.0%.

In 2008, 2009 and 2010, we generated total revenues of RMB222.6 million, RMB262.3 million and RMB528.7 million (US$80.1 million), respectively, representing a compound annual growth rate, or CAGR, of 54.1%. Our net advertising revenues were RMB40.3 million, RMB81.6 million and RMB204.4 million (US$31.0 million) in 2008, 2009 and 2010, respectively, representing a CAGR of 125.3%, and our paid service revenues were RMB182.4 million, RMB180.7 million and RMB324.3 million (US$49.1 million) in 2008, 2009 and 2010, respectively, representing a CAGR of 33.4%. We incurred a net loss attributable to Phoenix New Media Limited of RMB28.2 million in 2008. We achieved a net income attributable to Phoenix New Media Limited of RMB0.3 million and RMB74.1 million (US$11.2 million) in 2009 and 2010, respectively. Adjusted net income attributable to Phoenix New Media Limited, a non-GAAP financial measure which excludes share-based compensation expenses, was RMB1.8 million, RMB10.5 million and RMB90.6 million (US$13.7 million) in 2008, 2009 and 2010, respectively. See "Our Summary Consolidated Financial Data" for the non-GAAP adjusted net income definition and reconciliations.

While we attribute our success largely to the strength of our company, we also benefit from our relationship with Phoenix TV. In November 2009, our PRC subsidiary, Fenghuang On-line, entered into a cooperation agreement with Phoenix TV, or the Phoenix TV Cooperation Agreement, pursuant to which each of our affiliated consolidated entities entered into a program content license agreement, or Content License Agreement, with Phoenix Satellite Television Company Limited and a trademark license agreement, or Trademark License Agreement, with Phoenix Satellite Television Trademark Limited. Each of these agreements will expire in March 2016 unless both of the relevant parties agree to extend their respective terms. Under certain conditions, these agreements may be terminated early. The exclusive content licenses granted to our affiliated consolidated entities help to distinguish our content offerings from those of other Internet and new media companies in China and make a material contribution to our business, in particular, to our video VAS business, which accounted for 5.0% of our total revenues in 2010, and, indirectly, to our video advertising business. Our most valuable intellectual property asset is our domain name, ifeng.com, which we own. In addition, our affiliated consolidated entities license certain of Phoenix TV's logos. These logos help to affiliate our brand with that of Phoenix TV and vice versa, which helps to enhance our respective brand names. For more information about the potential consequences to our business if we are unable to receive the same level of support from Phoenix TV in the future, see "Risk Factors—Risks Relating to Our Business and Industry—We may not be able to receive the same level of support from Phoenix TV in the future. We could lose our exclusive license to Phoenix TV's content, which would have a material adverse affect on our video VAS business, which accounted for 5.0% of our total revenues in 2010, and would also negatively affect our video advertising business. Together, these impacts could have a material adverse affect on our business, result of operation and financial condition."

Upon completion of this offering, Phoenix TV, through its wholly owned subsidiary, Phoenix Satellite Television (B.V.I) Holding Limited, or Phoenix TV (BVI), will continue to be our controlling shareholder, with beneficial ownership and voting power of % and %, respectively, of our outstanding ordinary shares, assuming the underwriters do not exercise their over-allotment option and the entire assured entitlement distribution to Phoenix TV's shareholders is made in ADSs. Although we believe that our interests and those of Phoenix TV are mostly aligned because Phoenix TV will continue to consolidate our financial results as long as Phoenix TV maintains a majority voting interest in our company, there may be conflicts of interest between our company and Phoenix TV from time to time. We may not be able to resolve any potential conflicts, and even if we do, the resolution may be less favorable to us than if we were dealing with a non-controlling shareholder. See "Risk Factors—Risks Relating to Our Corporate Structure—We may have conflicts of interest with Phoenix TV and, because of Phoenix TV's controlling beneficial ownership in our company, may not be able to resolve such conflicts on terms favorable for us." For more information about our relationship with Phoenix TV, see "—Our Relationship with Phoenix TV."

Our Industry

Media convergence is characterized by the evolution of content formats and communications infrastructure toward providing consumers with ubiquitous access to content through multiple channels. This evolution has removed boundaries between traditional and new media channels and allows consumers to choose what content they wish to consume and when and where they wish to do so.

New media channels, including the Internet and mobile, have gained and continue to gain popularity in China relative to traditional TV and print media. According to a study by DCCI, a third-party research firm, published in August 2010, television viewers in China are projected to grow at a modest CAGR of 0.8% between 2009 and 2015, while, over the same period, the number of Chinese Internet users and mobile Internet users are expected to grow at significantly faster CAGRs of 15.0% and 28.7%, respectively.

By enabling on-demand access to information, media convergence is driving the proliferation of new media content in China. Despite this proliferation, however, the content provided by most new media companies in China is largely homogenous, as it is primarily derived from a limited number of sources. In addition, new media companies in China tend to be technology-driven Internet companies with young brands, lacking the capability and expertise for securing and producing high-quality content. Moreover, established Chinese Internet portals tend to focus on aggregating content that caters to young mass-market audiences. Therefore, a market opportunity exists for providing relatively affluent and educated Internet and mobile device users in China with professional news and distinguished interest-driven media content that has been produced and edited to meet high standards.

Media convergence trends have provided significant revenue opportunities, as evidenced by the increasing advertising spending in recent years through traditional and new media formats. According to GroupM, China had the third largest advertising market in the world in 2009, with a market size of approximately US$40.0 billion. Internet advertising expenditures in China grew from US$60 million in 2001 to US$3.1 billion in 2009. In addition to advertising growth, media convergence in China has supported the emergence of paid content services. With the growing spending power of the Chinese population, affluent consumers are increasingly willing to pay for consistent access to high quality media content.

Our Competitive Strengths

We believe that the following strengths give us a competitive advantage and set us apart from our competitors:

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integrated delivery platform capitalizing on media convergence;


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premium, differentiated and diverse professional content;


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leading and influential brand;


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highly educated, affluent and engaged user base;


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unique value proposition for blue chip advertisers;


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robust and scalable integrated technology systems; and


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strong management team with extensive media and Internet expertise.

Our Strategies

Our mission is to be the premier new media company in China empowering our users with premium content and services through all Internet-enabled devices. We plan to achieve this mission by pursuing the following strategies:

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expand and enrich our content offerings;


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increase our marketing activities to continue to capture a greater audience;


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further monetize our service offerings;


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enhance our product offerings and technology platform; and


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pursue strategic partnerships and acquisitions.

Our Challenges

We face risks and uncertainties related to:

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our limited operating history;


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our ability to retain existing and attract new advertisers and advertising agencies;


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our ability to anticipate user preferences and keep pace with rapid technological changes to provide high quality content and services that retain and attract new customers;


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our ability to successfully expand our MIVAS business;


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our ability to continue to receive the same level of support from Phoenix TV, including our exclusive license to use Phoenix TV's content;


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our ability to maintain contractual relationships with third-party content providers;


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our ability to successfully compete in the highly competitive markets in which we operate;


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our lack of an Internet audio-visual program transmission license and Internet news license, which render uncertain our ability to transmit video content through our Internet and mobile channels and to distribute news on our website, and may expose us to administrative sanctions;

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Our noncompliance with a notice issued by the PRC Ministry of Industry and Information Technology, or the MIIT, requiring a holder of a value-added telecommunications business operating license, or ICP License, or its shareholders to own the trademarks used in their value-added telecommunications businesses, which, if not remedied after enforcement by the MIIT, could result in the revocation of the ICP Licenses that enable us to operate our value-added telecommunications business;


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our ability to establish and maintain effective control over financial reporting in order to remediate control deficiencies identified during the course of the audit of our financial statements, the failure of which could materially and adversely affect our ability to accurately and timely report our financial results in accordance with U.S. GAAP and may negatively affect investor confidence in our company and the price of our ADSs;


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our dependence on revenues from China Mobile and other PRC mobile telecommunications operators for the majority of our MIVAS and our mobile subscription and pay-per-view video services;


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our ability to legally transmit on our platform the foreign television program content that we license from a wholly owned subsidiary of Phoenix TV;


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our reliance on contractual arrangements with our affiliated consolidated entities for operating our business in China, including:


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if the PRC government finds that the contractual arrangements do not comply with PRC laws and regulations, we would be subject to severe penalties or be forced to relinquish our interests in those operations; and


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the contractual arrangements on which we rely may not be as effective in providing operational control or enabling us to derive economic benefits as through ownership of controlling equity interest, and the shareholders of our affiliated consolidated entities may have potential conflicts of interest with us; and


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potential conflicts of interests between Phoenix TV, on the one hand, and our company and other shareholders, on the other hand, because Phoenix TV will beneficially own our Class B ordinary shares with 1.3 votes per share immediately prior to the completion of this offering, allowing it to exercise significant influence over matters subject to shareholder approval.

Please see "Risk Factors" and other information included in this prospectus for a detailed discussion of these risks and uncertainties.

Corporate History and Structure

Phoenix TV registered the domain name phoenixtv.com for its corporate website in 1998. Beijing Tianying Jiuzhou Network Technology Co., Ltd., or Tianying Jiuzhou, began operating this website after its establishment in April 2000. Before Phoenix TV undertook its initial public offering in Hong Kong in 2000, Tianying Jiuzhou maintained this website with a small team of employees.

In November 2005, Mr. Shuang Liu, a vice president of Phoenix TV, was appointed to lead Phoenix TV's new media business. Yifeng Lianhe (Beijing) Technology Co., Ltd., or Yifeng Lianhe, was established in June 2006 to provide new media mobile services in China. In July 2007, Tianying Jiuzhou registered the domain name ifeng.com and redirected the traffic of phoenixtv.com and phoenixtv.com.cn to ifeng.com.

On November 22, 2007, Phoenix New Media Limited was incorporated in the Cayman Islands as a subsidiary of Phoenix TV to be the holding company for its new media business. In May 2008, Phoenix TV (BVI) transferred the sole outstanding share of Phoenix Satellite Television Information Limited to us in exchange for 319,999,999 ordinary shares of our company. In November 2009, we entered into a share purchase agreement with Morningside China TMT Fund I, L.P., or Morningside, Intel Capital Corporation, or Intel Capital, and Bertelsmann Asia Investments AG, or Bertelsmann Asia, pursuant to which these investors purchased an aggregate of 130,000,000 Series A convertible redeemable preferred shares of our company.

The following diagram illustrates our corporate structure as of the date of this prospectus. See "Our History and Corporate Structure" for more information.

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(1)

All percentage equity interests in the diagram above are on an as-converted basis.

(2)

Upon completion of the offering, our current directors and executive officers as of the date of this prospectus, Keung Chui, Shuang Liu, Ya Li, Daguang He, Qin Liu, Qianli Liu and Yulin Wang, will collectively beneficially own % of our ordinary shares, which will consist of Class A ordinary shares.

Currently, we conduct all of our operations in China through Fenghuang On-line (Beijing) Information Technology Co., Ltd., or Fenghuang On-line, our PRC subsidiary, as well as through a series of contractual arrangements with each of our affiliated consolidated entities, Tianying Jiuzhou and Yifeng Lianhe, and their respective shareholders. We entered into these contractual arrangements on December 31, 2009, at which time we became operational in our current corporate structure. Our contractual arrangements with Tianying Jiuzhou and Yifeng Lianhe and their respective shareholders enable us to: