Chinas Emerging TV Advertising Network
January 2009
Filed by China Networks International Holdings Ltd.
Pursuant to Rule 425 under the Securities Act of 1933
and Deemed Filed Pursuant to Rule 14a-12 under the
Securities Act of 1934
Subject Company: Alyst Acquisition Corp.
SEC File No. 001-33563
2
The information contained in this presentation is intended solely
for the benefit of investors interested in the
proposed acquisition of China Networks Media Ltd. (China Networks) by Alyst Acquisition Corp. (Alyst).
Except where otherwise indicated, the information in this presentation has been provided
solely by China
Networks and Chardan Capital Markets.
Alyst, China Networks and China Networks International Holdings (CN International), and their respective directors
and executive
officers, and Chardan Capital Markets and its partners and directors may be deemed to be participants
in the solicitation of
proxies for the special meeting of Alyst stockholders to be held to approve, among other things, the proposed business
combination with China Networks. In connection with the pending transaction, CN International will
also file with the SEC a
Registration Statement on Form S-4. The stockholders of Alyst are urged to read the Registration Statement and the preliminary
proxy statement/prospectus, and the definitive proxy statement/prospectus when they are available,
as well as all other relevant
documents filed or to be filed with the SEC, because they will contain important information about China Networks, Alyst, and the
proposed transaction. The final proxy statement/prospectus will be mailed to stockholders
of Alyst after the Registration
Statement is declared effective by the SEC. Stockholders will be able to obtain a copy of the definitive proxy
statement/prospectus and any other relevant filed documents at no charge from the U.S. Securities and
Exchange Commissions
website (www.sec.gov). These documents will also be available from Alyst at no charge, once filed with the SEC, by directing a
request to 233 East 69th Street,
#6J, New York, NY 10021.
This presentation contains forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are based on current expectations or beliefs, including, but not limited to, statements
concerning the company's operations and financial performance
and condition. For this purpose, statements that are not
statements of historical fact may be deemed to be forward-looking statements. The company cautions that these statements by
their nature involve risks and uncertainties, and actual results may
differ materially depending on a variety of important factors
beyond the control of Alyst and China Networks.
Important Notice
3
Who We Are
China Networks is a fast-growing TV
advertising network in China
China Networks operates as the
exclusive advertising arm for TV
stations within its network
4
The Company
China Networks
Founded in October 2007
112 employees
Consolidated stations as of November 2008:
I.
50% of Yellow River TV Station
II.
50% of Kunming TV Station
Audited 2007
Revenue
(100%
consolidation)
Net Income
(50%
consolidation)
Audience
Coverage
(population)
Number of
TV Channels
Programming
Hours per Day
ARPA*
Yellow River
$5.3mm
$1.7 mm
30 mm
1
20
$0.18
Kunming
$15.4mm
$4.5 mm
6.2 mm
6
130
$2.48
TOTAL
$20.7 mm
$6.2 mm
36.2 mm
7
150
NA
Source: Yellow River and Kunming Stations
* Average revenue per audience coverage
5
The Company
Current Network:
Kunming TV
Yellow River
ARPA: $2.48
Channels: 6 TV
Coverage: 6.2 mm
2007 Revenue: $15.4 mm*
2007 Net Income: $4.5 mm*
Near-term Potential Add-on Acquisitions:
ARPA range: $0.53 to $9.5 each
Coverage range: 2 mm 10 mm each
Revenue range: $5 mm - $17 mm each*
Net Income range: $2 mm - $7 mm each*
ARPA: $0.18
Channels: 1 TV, 1 Radio
Coverage: 30 mm
2007 Revenue: $5.3 mm*
2007 Net Income: $1.7 mm*
* Under US GAAP, China Networks consolidates 100% of all income
statement items less 50% minority interest which reduces net income
by that amount and does not impact the revenue line.
6
Growth Strategy
1. Improve core profitability Organic Growth
Increase revenue ~20+% per annum through: ad sales effectiveness, network leveraged pricing, assisting the TV
stations on improving their programming
acquisition strategy
Reduce costs of ad delivery through storage/transmission technologies and economies of scale, holding net
margins at 68 70%
2. Extend offering in network Organic Growth
Expand full-service offering to include media planning and creative services
Leverage buying power by advising network stations on their programming acquisition
Develop new channel offerings in partnership with partners, e.g. Home Shopping
3. Expand network M&A Growth
Acquire additional TV advertising network stakes: pipeline of >10 deals already prioritized from field of >350
potential broadcaster partners
Opportunity to build affiliate network with agency deals to sell partial ad inventory
Revenue
100%
consolidation
EBITDA
50%
consolidation
Net Income
50%
consolidation
ARPA
Audience
coverage
(population)
No. of
Channels
Company A
$7.5 mm
$3.0 mm
$3.0 mm
$0.53
10 mm
4
Profile of Typical Add-on Acquisition
7
Business Opportunity
Chinese TV industry is decentralized and highly fragmented
296 broadcasters operating over
2,983 channels, reaching 96% of the population through terrestrial
and cable
1
National and Provincial SARFT2 who own all assets
currently are keen to see performance and
monetization
Huge growth in advertising spending
Advertising growth set to continue at 17.33% per annum3
China will become the 4th largest advertising economy in the world in 2010 worth $24bn4
TV advertising is largest (~40%) and fastest growing medium in the market 4
Deregulation just beginning
Industry has been highly regulated which has limited private investment and virtually precluded
foreign investment to date
Deregulation (in advertising initially) creates significant opportunities for companies that can improve
the profitability and efficiency
of broadcasters
China Networks model builds and innovates on tested JV models
1 National Statistics Bureau 2006
2 Chinas media regulator: State Administration for Radio Film & Television
3 China Advertising Industry Forecast Report, 2007-2010
4 Advertising Expenditure Forecasts, ZenithOptimedia, March 2008
8
China Advertising Growth
China Total Annual Advertising Revenue
Highlights
China is currently the 5th largest market in the world in 2008,
projected to become the 4
th by 2010
Greatest growth rates projected in second and third-tier cities from
2005
Source: Advertising Expenditure Forecasts,
ZenithOptimedia, March 2008
Spend per Capita US$
Spend per GDP %
2007 China Annual Advertising Spending
Despite rapid growth, Chinese advertising market is still small by
international standards relative to the size of the economy
Chinas per capita advertising expenditure was $11.30 compared to
$589.60 in US in 2007
Chinas advertising expenditure only represented 0.2% of GDP
compared to 1.3% in US in 2007
8,114
9,063
10,586
12,694
15,023
18,867
21,186
24,266
0
5,000
10,000
15,000
20,000
25,000
30,000
2003
2004
2005
2006
2007
2008E
2009E
2010E
(US$ million)
11.3
50.5
198.0
327.0
382.3
589.6
1.3%
1.1%
0.2%
0.5%
0.8%
1.0%
0
250
500
750
1,000
China
Brazil
South Korea
Japan
United
Kingdom
United States
0.0%
0.4%
0.8%
1.2%
1.6%
9
China Advertising Growth
China Annual Advertising Spending
US$ Million
Highlights
TV advertising is the fastest
growing advertising category
Despite rapid growth, the
Chinese advertising market
is still small by international
standards
TV Advertising accounts for
over 39.3% of total market
share of advertising in 2007
2nd and 3rd tier market
shows large growth
potential
Target regions ratio of TV
and radio ad income to total
GDP is lower than the
national average
Source: ZenithOptimedia Advertising Expenditure Forecasts, March 2008
10
Mr. Li Shuangqing: Chairman and CEO
2007 to present, Chairman and CEO of China Networks Media Limited
2006 to 2007, Chairman of Shandong Huashi Media & Technology, a leading Electronic Program Guide provider in China
2001 to 2006, General Manager of Huicong Advertising, a leading Chinese internet and TV advertising company
1997 to 2001, Director of Advertising Department of Qilu TV Station
1980 to 1997, management and TV production roles with Shandong and Qilu TV Stations
Graduated from Guanghua School of Management, Peking University, Executive MBA program
Mr. Michael E. Weksel: CFO
2009 to present, CFO of China Networks Media Limited
2006 to present, COO and CFO of Alyst Acquisition Corp.
2000 to 2006, Principal of Industrial Acquisitions Management, LLC
1994 to 1999, Co-founder of LogistiCare, CFO and VP of LogisiCare
1992 to 1994, Managing Director of Weksel, Davies & Co. Inc
1989 to 1992, Associate at the merchant banking firm of Joseph Littlejohn & Levy Inc.
Graduated from State University of New York, M.B.A from Columbia University
Ms. Wu Ying: COO
2008 to present, COO of China Networks Media Limited
2007-2008, CEO of Globereel.com , a leading video-website for world travel in China
1993-2007, Executive Director and COO of HC International, Inc, a leading cross-media business information provider in
China, listed on
HK GEM in 2003 (HK8292)
Graduated from Guanghua School of Management in 2000, Peking University, Executive MBA program
CN Management Team
11
Mr. Zhou Chuansheng: VP Sales/Marketing
2007 to present, VP Sales/Marketing of China Networks Media Limited
2006 to 2007, General Manager of Shandong Huashi Media & Technology, a leading Electronic Program Guide provider in China
2003 to 2006, General Manager of Jinan Huamei Media Advertising
2001 to 2003, General Manager of Zhengzhou Branch of Huamei Media Advertising
Ms. Guan Yong: VP Business Development
2007 to present, VP Business Development of China Networks Media Limited
2006 to 2007, Director of Greater China Sales Department, Zhuhai Cosmedia, branch of Hongkong Cosmedia Holding Ltd., a London
AIM listed company, focusing on developing and implementing a multi-platform
advertising and distribution network in mainland China
and Hong Kong
2004 to 2006, Director of Advertising Department of Economy & Life Channel in Henan TV Station
2000 to 2004, Key Account Manager, Huicong Advertising
1995 to 2000, Manager of East China region of Shandong Qilu TV Station Advertising Department
Mr. Liu Rui: Head of Media Planning
2007 to present, Head of Media Planning of China Networks Media Limited
2006 to present, Director of Strategy, at Daqi (www.daqi.com) web 2.0 site
2002 to 2006, Vice President of Huamei Meidia, subsidiary of Huicong Advertising, specializing in advertising sales and planning
1998 to 2002, Sichuan Gaoyang Advertising, media buying and data analysis for SCTV, CDTV & CQTV
1996 to 1998, Institute of Classics, Sichuan University, engaged in editing classical literature
CN Management Team
12
Capitalization Tables
Primary Share Basis Pre Business Combination
Fully Diluted Post Business Combination
¹ Includes as-converted preferred shareholders
² Upon cash conversion of all outstanding warrants less $24,922,100 to be paid to holders of pre-
business combination
China Networks capital stock
13
Equity Earn-out Targets
Owners of China Networks, on an all-or-none basis each year, will be issued
shares of common stock upon achieving net income¹ in the following
amounts
for each year from 2009 to 2011:²
¹Net Income means the net income of the China Networks Surviving Corporation and its subsidiaries
as determined in
accordance with U.S. generally accepted accounting principles (GAAP), excluding equity-based compensation charges,
extraordinary one-time charges and charges related to the Business Combination or impairment
of goodwill.
²Owners of China Networks will also receive additional cash consideration of $3 million per annum for achieving net income
targets of $15 million
and $25 million in years 2009 and 2010, respectively.
14
Takeaway Points
Chinas First TV Advertising Network
Profitable established business with significant scale
China Networks initial acquisitions provide a historically stable profit base with a large platform of
established
audiences in each market.
Rapidly growing market
Chinas advertising market was already large ($15bn) in 2007 and growing rapidly (17.33% CAGR)
and will
become the 4th largest in the world in 2010, with TV advertising consisting of 40% share.1
Unique and advantageous structural position
By securing exclusive contracts to provide advertising in multiple territories in partnership with
SARFT, China Network enters the market with a unique and sustainable competitive
advantage, and
a highly scalable business model.
Strong growth prospects
In addition to expanding the core ad-sales business through operational improvements and market
development, and growing the network through acquiring stakes in additional territories,
China
Network has a rich set of growth options including building an affiliate network of partner-channels
and additional content provision.
Seasoned management team
China Network has attracted a highly-experienced team with solid experience and proven track
record in the TV and advertising industry in China and internationally, as well as established
relationships with national and local governments.
1 Advertising Expenditure Forecasts, ZenithOptimedia, March 2008
15
Appendix
16
December 31,
2007
December 31,
2006
December 31,
2005
USD
USD
USD
Assets
Current Assets: -
Cash
$ 116,055
$ 450,501
$ 493,544
Accounts Receivables, Net
1,677,703
1,978,314
1,788,481
Receivables from Television Stations
1,858,956
-
-
Other Receivables
17,684
-
-
Total Current Assets
3,670,398
2,428,815
2,282,025
TOTAL ASSETS
$3,670,398
$2,428,815
$2,282,025
Liabilities and Invested
Equities
Current Liabilities: -
Accounts Payables
$ -
$ 24,257
$ 23,691
Accrued Expenses
410,376
54,147
60,524
Due to Television Station
-
27,089
1,165,403
Customer Deposits
2,584,941
2,071,783
892,332
Total Liabilities
2,995,317
2,177,276
2,141,950
Total Equity
675,081
251,539
140,075
TOTAL LIABILITIES AND EQUITY
$3,670,398
$ 2,428,815
$2,282,025
KUNMING AND YELLOW RIVER: COMBINED BALANCE SHEETS
FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
Audited Financials
Balance Sheet
17
Audited Financials
Income Statement
Year ended
December 31, 2007
Year ended
December 31, 2006
Year ended
December 31, 2005
USD
USD
USD
Revenue
$ 20,684,055
$ 16,350,638
$15,528,457
Sales Tax
(1,696,906)
( 1,199,132)
( 1,122,206)
Cost of Revenue
(4,844,541)
( 3,757,422)
(1,925,034)
Gross Profit
14,142,608
11,394,084
12,481,217
Other Income
28,802
102,261
10,337
Sales, General and
Administrative Expenses
( 1,712,931)
( 1,607,264)
(1 ,376,299)
Income before Taxes
12,458,479
9,889,081
11 ,115,255
Income Taxes
-
-
-
Net Income
$ 12,458,479
$ 9,889,081
$ 11,115,25 5
KUNMING AND YELLOW RIVER: COMBINED STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
18
Dec 31st 2007
USD
Dec 31st 2006
USD
Dec 31st 2005
USD
Cash flows from operating activities:
Net income
$ 12,458,479
$ 9,889,081
$ 11,115,255
Changes in assets and liabilities:
Accounts receivables, Net
300,611
(189,833)
(1,743,722)
Receivable from Television Station
(1,858,956)
-
-
Other Receivables
(17,684)
-
-
Accounts payables
(24,257)
566
690,459
Accrued expenses
356,229
(6,377)
59,883
Due to Television Station
(27,089)
(1,138,314)
751,765
Customer Deposits
513,158
1,179,451
542,571
Net cash provided by operating
activities
11,700,491
9,734,574
11,416,211
Cash flows from financing activities:
Distribution to Television Stations
(12,458,479)
(9,889,081)
(11,115,255)
Net cash used in financing activities
(12,458,479)
(9,889,081)
(11,115,255)
Effect of foreign exchange rate
changes
423,542
111,464
140,075
Net (decrease) / increase in cash
(334,446)
(43,043)
44 1,031
Cash, beginning of period
450,501
493,544
52,513
Cash, end of period
$ 116,055
$ 450,501
$ 493,544
Audited Financials
Statement of Cash Flows
KUNMING AND YELLOW RIVER: COMBINED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
19
Kunming TV Station
Founded March 1985
Coverage: 6.2 million population in 5 areas, 8 counties and Kunming itself
Kunming City TV General Channel ranked in the Top 3 audience rating stations in Kunming city in 2006
6 TV channels:
Terrestrial and Cable: General Channel, Movies Channel
Cable Only: Entertainment Channel, Living Channel, Economic Channel and News Channel
More than 130 hours/day of programming including drama, documentary, news, and entertainment of which 7 hours/day
produced in-house
KMTV studio facilities include office space of more than 33,000 square meters, including one large broadcast studio of
1,000 square meters and 9 mid- and small-sized studios
Advertisers include:
Proctor & Gamble
Samsung
McDonalds Corp.
KFC
Audi
Chery Automotive
Company Details
Kunming
20
Top 10 TV Channels by Average Rating in Kunming (4+, whole day, 2006)
Ranking
Channel
Rating(%
Share(%
1
CCTV General Channel
2.2
14.9
2
Yunnan TV City Channel(TV2)
1.8
12.2
3
Kunming TV General Channel
1.5
9.8
4
Kunming TV Movies Channel
0.8
5.6
5
CCTV-6
0.8
5.1
6
Yunnan TV Movies Channel(TV5)
0.8
5.0
7
CCTV-5
0.6
4.1
8
CCTV-3
0.6
4.0
9
CCTV-8
0.6
4.0
10
Yunnan TV Satellite Channel(TV1)
0.4
2.8
Data Source: CSM Media Research 2007, China TV Rating Yearbook 2007
Kunming TV Station
Company Details
Kunming Station Ratings
21
China Yellow River TV Station
Founded in July 1991, and has been broadcasting both domestically and internationally for 16
years
1 Domestic TV channel: Yellow River Minsheng Channel
Coverage: Shanxi Province, 30 million population
Broadcasting Time: 20 hours per day, including 2.5 hours self-produced programs, 17.5 hours
purchased programs
1 Radio Station: Art & Entertainment Radio
Coverage: Shanxi Province, 20 million population
2 International Channels: (not for profit)
SCOLA Channel: Satellite TV, 24 hour broadcasting 3 channels
International Channel: cooperation with ECHO Star, Chinese language and culture learning channel,
50,000 subscribers
Advertisers include:
China Mobile
HPGC
Arche
Company Detail
Yellow River
22
Chinese 4 level TV System
Source: Chinese Media University Publishing
House, Report on the development of Chinese City
TV station, 2007; Skillnet MI, 2008
23
TV Station Revenue Structure
In USD bn
Ad Revenue
CATV Subscription
Fee
Other Operating
Revenue*
Total Operating
Revenue
Central Level
1.63 (21.8%)
0.43
0.09
2.15
Provincial Level
3.56 (47.6%)
0.65
1.74
5.95
City Level
1.77 (23.7%)
0.49
1.02
3.28
Country Level
0.52 (6.95%)
0.97
0.36
1.85
Total
7.48
2.54
3.2
13.22
*Other operating revenue:
such as events sponsoring
Source: SARFT statistic 2007, Skillnet MI, 2008
24
Contact
Alyst Acquisition Corp.
Chardan Capital Markets, LLC
Address: 233 East 69 th Street
#6J
New York, NY 10021
Contact Person: Michael E. Weksel
Tel: 1 646 290 6104
Fax: 1 212 918 1598
E-mail: mweksel@alyst.net
Address: 17 State Street - Suite 1600
New York, NY 10004
Contact Person: George Kaufman
Tel: 1 646 465 9015
Fax: 1 646 465 9039
E-mail: gkaufman@chardancapitalmarkets.com