Wide-Open Chinese Market Lures Fledgling Media Firm
By CHRISTOPHER KEOUGH
Alie Chang looks at Martha Stewart and sees green.
Not the envious kind the money kind.
Emulating the doyenne of American lifestyle media, Chang is cracking open the door to a Chinese market that will see 57 billion square feet of residential construction in the next three years.
An architect and interior designer, she has leveraged her work on multimillion-dollar homes in Southern California into a thrice-weekly program aired on Chinese state television (the most allowed) called “The Art of Living,” produced by her Santa Monica company, EarthNetMedia Inc.
The show, which started in 1997 as a 13-episode series about American celebrities and their opulent homes, will be expanded to a 52-show series of home improvement tips and product pitches, touting Chang’s branded products and those of other U.S. manufacturers.
“Right now there’s no pattern of buying,” Chang said. “We can shape that. Our show helps you determine what you want, what you need and what will work.”
Chang, along with Felizian Paul, her husband and partner in EarthNetMedia, also is rolling out “Embracing the Future,” a 30-minute infomercial. Much like time-buy deals in American television, EarthNetMedia acquired a 30-minute block of weekly airtime during which it will sell ads. It will choose which companies to feature and will produce infomercials for them. The featured companies will not pay for the airtime.
“The market is so wide open and so explosive,” Chang said. “The government can’t keep up with the need to educate the public on how to do home improvement.”
To finance their Chinese venture, Chang and Paul took the unusual and not entirely satisfactory step of underwriting their own public offering.
EarthNetMedia trades at $1.30, down from its high of $2.75 since trading opened earlier this year. Chang and Paul own about 86.5 percent of the outstanding shares, according to company filings.
They recently hired Ladenburg Thalmann & Co., a New York financial advisory firm, to leverage the company’s shares to raise $7.5 million. In another year or 18 months, Paul said, EarthNetMedia plans a secondary offering to raise $25 million.
The capital would be used to produce television programs and acquire media companies to cross promote products. Paul said he also is negotiating the purchase of a Chinese magazine.
To date, the company has been losing money. According to its most recent filing with the Securities and Exchange Commission, the company posted a net loss of $1 million from its April 2000 inception to Dec. 31, 2001. It did not report any revenues for that period.
The new funding would be key to the company’s survival. It had about $67,000 in cash at the end of 2001, and in the SEC filing said, “without the realization of additional capital, or creation of operating revenues, it would be unlikely for the company to continue as a going concern.”
Cost of entry
A Taiwanese native, Chang moved to the United States in 1963 and enrolled at UCLA, where she earned a bachelor of arts in design and a master of arts in environmental design.
She was working at William Pereira and Associates, the Los Angeles architecture firm that designed Fox Plaza and the Transamerica pyramid in San Francisco, in the early 1980s when record tycoon Lou Adler asked her to design an addition to his Malibu home.
She ended up suggesting a complete overhaul of the house, which Adler loved. Chang took that success and struck out on her own, forming Alie Design Inc.
Chang trained her focus on the rich and famous, designing homes for Rod Stewart, Larry Hagman, Ronald Reagan and Hugh Hefner. It’s that client roster that fueled her television career.
In 1995, Asian entertainment company North American TV Corp. recruited Chang to redesign its Rosemead studio. When officials saw her client list, they asked her to create a show featuring tours of celebrity houses.
“I thought, ‘Do I want to just keep designing one home after another?'” Chang said. “Maybe I can teach some people and inspire them to do creative things.”
It took two years to get all the rights and complete the programs. Once they were done, Chang took the project international, approaching Chinese television. In 2000, “The Art of Living” premiered on Beijing TV.
Paul said the show will take advantage of a Chinese home improvement market that has grown from $400 million in 1990 to $16 billion in 1999, the most recent information available. He said Chinese officials anticipate that will double in the next few years.
Carole Barnum, partner in brand development company Hiwave Media, said Chang and EarthNetMedia hit China at a golden moment when television was privatized and people were encouraged to buy their own homes. “I think she’s becoming really a media tycoon,” Barnum said.