According to powerapple.com, Baidu’s chief financial officer (CFO), Jennifer Li 李昕晢, recently divulged the inside story on Baidu’s presence in this year’s CCTV’s Spring Festival Evening (春节联欢晚会) in Baidu’s “Q1 2009 Earning Call.” Li affirmed Baidu’s 40 million RMB sponsorship spent on CCTV.
James Mitchell – Goldman Sachs
Thanks very much. I think that last quarter you disclosed you spent about 40 million renminbi on the CCTV sponsorship in the first quarter, which I guess you took through your SG&A [Selling, General and Administrative Expenses] line. Is it sensible at all to look at SG&A ex that 40 million or should I assume that if you didn’t spend the 40 million spent, you would have to 10 or 20 or 30 on something else? […]
JAMES, it is Jennifer. I will answer your first question. Last quarter we provided guidance that sequential –sequentially we anticipate a 40 million incremental marketing related expense. Yes, CCTV, the majority of that incremental expenditures, we typically also have other annual kind of events that happens in Q1. So Q1, I think if you’re guess is right, if I take out the 40 million related to marketing, the rest of that will be kind of the other, the main SG&A expenses primarily related to work force and the normal activity.
Background: In Nov. 2008, CCTV exposed a series of reports on Baidu’s ranking bid scandal. Baidu’s share price dropped significantly afterward, and the company has become a target of heavy moral criticism since then. However, it seems that Baidu soon after started to try to please CCTV. Its CEO, Robin Li, appeared frequently on CCTV’s Spring Festival Evening broadcast. Its soft advertisements also appeared throughout the program.
As some counted, Robin Li appeared 8 times in the broadcast. Each appearance probably cost 5 million.