A most interesting series of entries by "fmcnwatchdog".  However, let
me challenge you and the community to some common sense thinking.
Starting with the sequence of how "fmcnwatchdog" lays out his
scenario.

I think it is very interesting that US GAAP could be manipulated so
easily.  Also since FMCN is a Chinese company, they also need to file
Chinese financials which are based on International Accounting
Standards (IAS).  These all have to be audited and signed off by the
auditors.

How do you show that these people "actually" helped FMCN with their
financial engineering other than their good word?  I am sure there are
many people who will claim they are either one of the founders or are
instrumental in the success of FMCN that have never anything to do
with the company.

To ask a few simple questions.

A.  Instead of diversifying companies, FMCN has been on an acquisition
mode, with Target Media and Allyes being just two that have been in
the news.  Which companies have FMCN been diversifying?

B.  Other than your "sources" do you have any substantiation on the
falsifying the huge number of contracts, which would have to get
bigger and more sophisticated as FMCN is putting up big growth every
Q?

C.  Accounts receivable is actually pretty good for FMCN compared to
many other Chinese companies.  Also accounts receivable should be
looked at as a percentage of overall sales.

Question 1 - How would you sell 2-3% of an illiquid non-public company
year after year?  Do you have any idea of the complexities of the
transactions to do this in China?  It is not just going onto E-bay.
How deeply do you understand the legal, fiscal, and financial
regulations and complexities are in China?

Question 2 - Assuming that the founder has the ability to recycle the
money into the company as you claim, it would have to be contingent on
one key factor - the market has to be going up for his stock.  If
there is a huge sell off, then where is he going to get the money?

Question 3 - Ah the incompetence of the auditors.  Advertising
contracts are not that sophisticated as some of the complex financial
instruments used on Wall Street and other financial centers.  Is it
really plausible that a big four accounting firm would not have any
expertise in this area?  I can tell you I have close friends who are
senior partners in the big four accounting firms in China and they are
very aware of each of the sectors they are in and are super cautious
on doing good audits.  Another question assuming your scenario is
correct is what happens when it all implodes as far as the auditors
and their firms are concerned?  Do you know that public accounting
firms get banned for doing business in China if they are party to
fraud whether knowingly or due to incompetence?  Do you know partners
are also banned from signing audit reports for the same?  I know of
several instances where audits went bad and big four auditors and
partners have been banned to do business in China.  If you were
running these public accounting firms risk their firms' businesses and
their high paying jobs and possible jail time?

Question 4 - These contracts are in Chinese.  Have you read and
reviewed any of the contracts?  Do you read Chinese fluently and do
you know enough about Chinese legal and regulatory issues to know
whether the contract is valid or not?

D.  It has been indicated in your posts that the VCs also have
participated in this, including big name ones.

Question 1 - FMCN has been invested by Softbank, IDG, Goldman Sachs
just to name a few.  Check the SEC filings.  Is it plausible that
these folks would have a board seat and knowingly participate in a
fraud of such grandiose scale and risk jail time in China and or the
US as well as the consequences of getting shut out of the China market
by the Chinese government?

E.  Jason's percentage of holdings.  This is not just a simple case of
Jason selling off his shares to get to certain percentage.  There is
dilution involved and this is a key factor in the percentage share of
FMCN as there has been quite a number of acquisitions.  Your blanket
statement is misleading.

F.  Jason's investments in other companies are only material based on
the US and Chinese GAAP reporting requirements.  Please document how
these do not comply rather than simply stating that they are.

Other comments.

I am not saying that described scenario is impossible, but it has to a
truly perfect storm with ALL the following things happening
simultaneously:

- The market is hot for this company so the stock can rise with good
earnings report and;
- US GAAP and IAS is so full of holes it is so easy to manipulate AND
- Founders are able to sell non-publicly traded stock very easily on
the scale of FMCN.  I can tell you that this is simply not the case in
China AND
- The board of directors of FMCN is blind, incompetent, stupid, or are
all party to this fraud and would risk their reputations and jail time
AND
- The big four audit team is blind, incompetent, stupid, or are all
party to this fraud and would risk their firms business and fines and
jail time AND
- The officers of the firm, including the CEO, COO, CFO, legal
counsel, etc are blind, incompetent, stupid, or are all party to this
fraud and would risk their fines and jail time AND
- The analysts of the major investment houses are blind, incompetent,
stupid or are all party to this fraud and would risk their jobs and
possible fines and jail time.  The investment houses include the likes
of Goldman Sachs, Citibank, etc. AND
- Jason would go through the trouble of putting up all these screens
throughout China in building after building in some of the best and
most expensive real estate in the world just so he create a fiction
than actually sell a service AND
- Jason would waste valuable time and resources in making a huge
acquisition in Target Media instead of just staying home and cooking
the books AND
- Jason would waste valuable time and resources in making a big
acquisition Allyes and tell everyone it is going to take time before
it can really add to FMCN's margins instead of just staying home and
cooking the books AND
- All these ads for BMW and others are not real and are just funneled
through companies Jason owns AND
- Multiple Chinese firms are doing the same with each of those firms
above entities risking the same as above.

The above likely?  In my opinion, NO.

However. It is most amazing that a blogging reporter based in the US
who has done fly in time to China knows everything about how FMCN and
multiple similar TMT companies has managed to pull this great
complicated scheme off over and over again and all those board of
directors, big investment banking houses, regulators, big four
auditors, venture capitalists, investors here in Greater China and the
rest of the world has missed it.  Equally amazing is that this
reporter has such strong and reliable network of sources that he has
been able to put together based on the basis of fly in time.  I am
concern that these Chinese colleagues of his "may disclose" the
findings in the future.  I think this "fmcnwatchdog" should not be
wasting his time blog reporting and should give Rupert Murdoch a call
right away.  I think Rupert would put him in charge of the Wall Street
Journal after the sale closes of course.  This would be the king of
the scoop machines, fmcnwatchdog as head of the Wall Street Journal.
Any reporter who is thinking Pulizter should just forget about it as
the Pulizter Prize for business reporting will be locked up year after
year until fmcnwatchdog retires.  If fmcnwatchdog does not speak and
write Chinese, then this is truly a walk on water happening.

Well, I love to see how Fmcnwatchdog answer this post..

This stock was hit the last few days as it maybe due to the expiry
week (or institute selling).

The volume around 1pm to 2pm were higher than the last few days (same
period) at the intraday lows. And it bounce back strong to 44
resistance. This rally of today it is similar to the one at the early
July. It may bounce back a few points from here.

Everease was considered related party to FMCN cos either Jason or his
father made loans to the Company before. Starting from 07, Jason has
smartly started to acquire those ad. agency companies to safely divest
them from the list of related parties and convert them into clients.
He used every means to acquire those companies (without disclosure),
even with threats because he knows he has to move very fast before
anyone in the market figures out his strategy. He has personally
acquired over 11 big ad. agencies in the past 3 months excluding those
received investment from WPP, Omnicom or other foreign companies. We
have the list.

It is strange though very typical that Chinese founders always ask for
small percentage of cashout when they start Seris B financing. Some
big guys who are considered successful in the market will aslo jump
out at the moment and willing to buy shares from the founders at pre-
money valuation. By employing this approach, the founder will for sure
get cash and do the recycling. Although we know the company names,
however since they are private, it would be extremely difficult for us
to collect info.

Jason' father was an experienced accountant and I believe he knows all
the rules better than any of us here. We simply don't trust Deloitte
cos it has been involved in so many accounting scandals both in HK and
mainland China. I trust they won't mind adding one more on their
'clients list'. Pls google some facts for yourself:)

I don't read or speak Chinese fluently, however I know both
advertising and advertising contracts are easily manipulated in China.
It won't be easy to check whether you really played the ad. or
provided services before. Even when we spent several days standing
before its LCD screens, we still cannot figure out which one is
advertised, for how many minutes, for how many times per day, how many
days per week, whether it is in compliance with the signed contracts
and etc.

I will start traveling in the weekend and won't be able to chat with
your guys till early next week. We've been working on the issue for
the past two months and won't hesitate to spend more time although we
know we are not welcomed by some long investors here. We know it is
difficult to uncover big stories from big guys, however we have the
rights to challenge and have the guts to push it forward.

The stock was hit badly in recent days and I don't consider it common.
I sold my position in FMCN and wait to see whether it will drop
further to below $40.

What Fmcnwatchdog stated was a rumor without much hard evidences,
which has been circulated since 2006. Rumors exists all the time for
any high flying stocks.

Let's focus on facts:

1. Jason founded Everease Communications Co. in July 1994 while he was
still in college after working interm for another advertisement
company. Some money came from his father, but majority holder is from
HK.

2. He saw the opportunity of out-of-home advertising network in 2002.
By Jan. 2003, Everease has installed 300 LCDs in office buildings in
SH. Then Everease operated two types of businesses: previous ad agency
and new OOH network. With DSO norm of 75-90 days in China, Jason and
Everease were strained in cash flow.

3. With help from Jimmy Yu of Softbank, Focus Media Holding Company,
was established in April 2003 with initial investment from two VCs,
China Alliance and Softbank of Japan.

4. Focus Media (FMCN) bought the OOH business from Everease.

5. Initially FMCN focused on OOH expansin and relied on many Ad agency
to bring in business, which includes Everease.

6. Jimmy left Softbank and started UCI. He invested in many new start-
ups including FMCN. Most of those companies bought Ads slots from FMCN
to promote their own businesses.

7. These related transactions were well documented in 2005 annual
reports.

8. Loan to Jason is a norm process. FMCN(Cayman Islands) made loans to
founders/mgt without interests to establish Biz in China. Check the
annual reports on Baidu, and other ADRs. This is how it works for
China Cos preparing for future IPO in US. Remember China has laws
prohibiting foreign ownership.

9. RMB loan from Jason's father is not an issue at all. It is just a
temporary solution before IPO US funding was exchanged back to RMB.

Wise will not spread rumors, but providing more facts to help with
trust.

Whow are "we"? and why you have invested a 2month precious time to
investigate an overseas company? You have not told us why you became
intersted in uncovering the story of FMCN. What's your gain on this? I
don;t suppose you, as a blogger, are doing this just for the sake of
telling the story.

Your bashing is not convicing becuase you haven't disclosed your
intention.

Fellow investors, I am telling fmcnwatchdog walks on water.  Think
about this, this person barely speaks Chinese, may recognize at best 1
out of 10 characters in a Chinese contract, doesn't live in China,
just flies on a few occasions and in a few days investigate and get to
bottom of what allegedly is to be this massively complicated scheme
where every check and balance must fail.  Fmcnwatchdog is also able,
just by standing in front of one of the 50 or 60 thousand FMCN screens
for a day or so, and know that there is massive fraud.  Fmcnwatchdog
also knows all the employees at Deloitte and know that they are either
incompetent or corrupt and that Deloitte cannot be trusted to do any
audit.

Fmcnwatchdog also knows Jason's father, members of the board and the
exact documents they are willing or not willing to sign and other very
private information that is not so obviously not public.  Also knows
how Jason's cash flows.

I would so much appreciate if fmcnwatchdog would come to China and
open up a public accounting firm.  I think all the shareholders of
FMCN would clamor for this firm to do the audit for FMCN.  Oh no!!!
fmcnwatchdog barely speaks, reads Chinese not to mention writing, how
would fmcnwatchdog pass his Chinese CPA exam which is a requirement
for a qualified auditor to do public accounting here in China?!?!  Why
would they have this requirement?  Maybe so they can read the Chinese
documents, know the laws, accounting rules and actually have evidence
whether there is an audit issue??.  Not to worry, fmcnwatchdog will
have be able to handle this very minor issue.

I am not as smart as fmcnwatchdog and would like to ask fmcnwatchdog's
help to just answer the questions, no matter how simple they may be,
of my first post above.  Really would appreciate the help.

Can fmcnwatchdog to help to see if every one of the click claims that
Google charges their clients are valid?  I am guessing that just a day
on the internet going through a few Google screens should be able to
tell fmcnwatchdog whether there is click fraud since fmcnwatchdog is
so talented at determining that is ad fraud just by looking at one of
FMCN's screens for a day.  Plus I am guessing it would so much easier
as most of those contracts are in English and for those contracts that
are not, that doesn't seem to present fmcnwatchdog with any problems
since not being able to functionally read Chinese has not presented
any problems.

Looking forward to fmcnwatchdog's help.  You are amazing!  If it
weren't fmcnwatchdog posting this information, I'd be inclined to
think that this is an orchestrated short seller campaign.

Just a totally unrelated thought.

I have been really thinking about Andy Yan's statement on Chinese TV
just recently.  For those who don't know Andy Yan is the managing
partner of SAFE one of the largest venture funds in China.  Andy says
not to spend too much time dealing with really stupid people.

FMCNWATCHDOG,

Don't be just a dog, be a brave man. You have got the insider tracks,
why not short the stock?

Tell us what amount you put into the short position. Then we can judge
you are intelligent or just a clown.

Otherwise, spreading rumors without evidences is violation of SEC
codes, especially you claim with insider tracks.

Fmcnwatchdog：

I am a Chinese correspondent of 21st Century Business Herald. My name
is Liu Zhengzheng. 21st Century Business Herald is a national economic
newspaper, similar to the The Wall Street Journal.
Recently I read some your articles about Focus Media Holding Limited
on the Internet. I know you are a correspondent too, and you've
investigated the scandal about FMCN in the past two months. I also
always are paying attention to the company, because it announces delay
in Filing 2006 Annual Report, so there must be some problems.
I felt responsible for reporting facts to the public, so I wish your
help.

1. You said: The reason why FMCN is delaying FY06 financial reports is
that Charles Chao, the Company's auditing committee,keeps rejecting to
sign on its FY06 audited reports and he is still hesitating.
How did you learn of the news? Could you tell me your news source?
What evidence?

2. In your article, you said: My China colleagues are working on
special reports on the Issue and they may disclose concrete evidence
soon after several months of investigation.
Would you like provide your friend's contacts for me? I wish
communicate with them directly and get abundant evidence to reveal the
truth in my report at last.

3.  You said: Jason Jiang has personally acquired over 11 big ad.
agencies in the past 3 months excluding those received investment from
WPP, Omnicom or other foreign companies. We have the list.
Will you provide the list for me? I wish investigation.

4.  You said: I also checked its unaudited financial statements for
1Q07。
Could you provide the unaudited financial statements for 1Q07 for me？

Contact: E-mail:news1...@126.com
Mobile phone : 86 13524751611
Phone: 86 21-64265503  Fax: 86 21-64265502

Fmcnwatchdog：

I am a Chinese correspondent of 21st Century Business Herald. My name
is Liu Zhengzheng. 21st Century Business Herald is a national economic
newspaper, similar to the The Wall Street Journal.
Recently I read some your articles about Focus Media Holding Limited
on the Internet. I know you are a correspondent too, and you've
investigated the scandal about FMCN in the past two months. I also
always are paying attention to the company, because it announces delay
in Filing 2006 Annual Report, so there must be some problems.
I felt responsible for reporting facts to the public, so I wish your
help.

1. You said: The reason why FMCN is delaying FY06 financial reports is
that Charles Chao, the Company's auditing committee,keeps rejecting to
sign on its FY06 audited reports and he is still hesitating.
How did you learn of the news? Could you tell me your news source?
What evidence?

2. In your article, you said: My China colleagues are working on
special reports on the Issue and they may disclose concrete evidence
soon after several months of investigation.
Would you like provide your friend's contacts for me? I wish
communicate with them directly and get abundant evidence to reveal the
truth in my report at last.

3.  You said: Jason Jiang has personally acquired over 11 big ad.
agencies in the past 3 months excluding those received investment from
WPP, Omnicom or other foreign companies. We have the list.
Will you provide the list for me? I wish investigation.

4.  You said: I also checked its unaudited financial statements for
1Q07。
Could you provide the unaudited financial statements for 1Q07 for me？

Contact: E-mail:news1...@126.com
Mobile phone : 86 13524751611
Phone: 86 21-64265503  Fax: 86 21-64265502