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TABLE OF CONTENTS
Phoenix New Media Limited INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Table of Contents

As filed with the Securities and Exchange Commission on April 27, 2011

Registration No. 333-173666

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



Amendment No. 1
to
Form F-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933



Phoenix New Media Limited
(Exact name of Registrant as specified in its charter)

Not Applicable
(Translation of Registrant's name into English)

Cayman Islands
(State or other jurisdiction of
incorporation or organization)
  7389
(Primary Standard Industrial
Classification Code Number)
  Not Applicable
(I.R.S. Employer
Identification Number)

Fusheng Building Tower 2, 16th Floor
4 Hui Xin Dong Jie, Chaoyang District
Beijing 100029
People's Republic of China
(86) 10 8445 8000
(Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices)



Law Debenture Corporate Services Inc.
400 Madison Avenue, 4th Floor
New York, New York 10017
(212) 750-6474
(Name, address, including zip code, and telephone number, including area code, of agent for service)



Copies to:

Chris K.H. Lin, Esq.
Simpson Thacher & Bartlett LLP
35th Floor, ICBC Tower
3 Garden Road, Central
Hong Kong
(852) 2514-7600

 

Z. Julie Gao, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
c/o 42nd Floor, Edinburgh Tower, The Landmark
15 Queen's Road Central
Hong Kong
(852) 3740-4700



          Approximate date of commencement of proposed sale to the public: as soon as practicable after the effective date of this registration statement.

          If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.  o

          If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o                    

          If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o                    

          If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o                    

          If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box.  o



CALCULATION OF REGISTRATION FEE

               
 
Title of each class of securities to be registered(1)(2)
  Amount to be Registered(2)(3)
  Proposed Maximum
Offering Price
per Class A
Ordinary Share(3)

  Proposed maximum aggregate
offering price(3)

  Amount of
registration fee(4)

 

Class A ordinary shares, par value $0.01 per share

  117,461,000   $1.75   $205,556,750   $23,865

 

(1)
American depositary shares issuable upon deposit of the Class A ordinary shares registered hereby have been registered under a separate registration statement on Form F-6 (Registration No. 333-173736). Each American depositary share represents eight Class A ordinary shares.

(2)
Includes (i) Class A ordinary shares initially offered and sold outside the United States that may be resold from time to time in the United States either as part of their distribution or within 40 days after the later of the effective date of this registration statement and the date the shares are first bona fide offered to the public, and (ii) Class A ordinary shares that may be purchased by the underwriters pursuant to an option to purchase additional Class A ordinary shares represented by American depositary shares. These Class A ordinary shares are not being registered for the purpose of sales outside the United States.

(3)
Estimated solely for the purpose of determining the amount of registration fee in accordance with Rule 457(a) under the Securities Act of 1933, as amended.

(4)
Of which $23,220 was already paid.



          The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to such Section 8(a), may determine.


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The information in this prospectus is not complete and may be changed. Neither we nor the selling shareholders may sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and neither we nor the selling shareholders are soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.

PROSPECTUS (SUBJECT TO COMPLETION)
ISSUED APRIL 27, 2011

12,767,500 American Depositary Shares

LOGO

Phoenix New Media Limited

Representing 102,140,000 Class A Ordinary Shares

         This is an initial public offering of American depositary shares, or ADSs, of Phoenix New Media Limited. Each ADS represents eight Class A ordinary shares of Phoenix New Media Limited, par value US$0.01 per share. We are offering 11,500,000 ADSs and the selling shareholders identified in this prospectus are offering 1,267,500 ADSs. We will not receive any of the proceeds from the ADSs sold by the selling shareholders.

         Prior to this offering, there has been no public market for our shares or ADSs. We anticipate the initial public offering price will be between US$12.00 and US$14.00 per ADS.

         We have applied to have our ADSs listed on the New York Stock Exchange, or the NYSE, under the symbol "FENG."

         Investing in our ADSs involves a high degree of risk. See "Risk Factors" beginning on page 17.



PRICE US$            PER ADS



 
  Price to
Public
  Underwriting
Discounts and
Commissions
  Proceeds to Us,
Before Expenses
  Proceeds to
the Selling
Shareholders
 

Per ADS

  US$     US$     US$     US$    

Total

  US$     US$     US$     US$

 

         The underwriters have an option to purchase up to 1,915,125 additional ADSs from us at the initial public offering price, less underwriting discounts and commissions, within 30 days from the date of this prospectus, to cover over-allotments.

         Following this offering, our outstanding share capital will consist of Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary shares and Class B ordinary shares have the same rights except for voting and conversion rights. Each Class A ordinary share is entitled to one vote, and each Class B ordinary share is entitled to 1.3 votes and is convertible at any time into one Class A ordinary share. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances.

         Neither the United States Securities and Exchange Commission nor any state securities commission or other regulatory body has approved or disapproved of these securities or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

         The underwriters expect to deliver the ADSs to purchasers on or about                        , 2011.



Morgan Stanley   Deutsche Bank Securities   Macquarie Capital

Cowen and Company

 

CICC

The date of this prospectus is            , 2011.


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COVER


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TABLE OF CONTENTS

 
  Page

PROSPECTUS SUMMARY

  1

THE OFFERING

  11

RISK FACTORS

  17

FORWARD-LOOKING STATEMENTS

  58

USE OF PROCEEDS

  59

DIVIDEND POLICY

  60

CAPITALIZATION

  61

DILUTION

  62

EXCHANGE RATE INFORMATION

  64

ENFORCEABILITY OF CIVIL LIABILITIES

  65

OUR HISTORY AND CORPORATE STRUCTURE

  67

SELECTED CONSOLIDATED FINANCIAL DATA

  74

RECENT DEVELOPMENTS

  76

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

  78

OUR INDUSTRY

  116

BUSINESS

  122

REGULATION

  144

MANAGEMENT

  159

PRINCIPAL AND SELLING SHAREHOLDERS

  167

RELATED PARTY TRANSACTIONS

  170

DESCRIPTION OF SHARE CAPITAL

  174

DESCRIPTION OF AMERICAN DEPOSITARY SHARES

  185

SHARES ELIGIBLE FOR FUTURE SALE

  195

TAXATION

  197

UNDERWRITING

  204

EXPENSES RELATING TO THIS OFFERING

  212

LEGAL MATTERS

  213

EXPERTS

  213

WHERE YOU CAN FIND ADDITIONAL INFORMATION

  213

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

  F-1

        You should rely only on the information contained in this prospectus or in any related free writing prospectus filed with the Securities and Exchange Commission and used or referred to in an offering to you of these securities. Neither we nor the underwriters have authorized anyone to provide information different from that contained in this prospectus. This prospectus may only be used where it is legal to offer and sell our ADSs. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our ADSs.

        Until                        , 2011, all dealers that buy, sell or trade our ADSs, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealer's obligation to deliver a prospectus when acting as an underwriter and with respect to unsold allotments or subscriptions.

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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 8th 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" ( GRAPHIC ), 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" ( GRAPHIC ) 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

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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

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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 52.17% and 58.65%, respectively, of our outstanding ordinary shares, assuming the underwriters do not exercise their over-allotment option, the entire assured entitlement distribution to Phoenix TV's shareholders is made in ADSs and the assured entitlement distribution occurs immediately after this offering. 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

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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:

    integrated delivery platform capitalizing on media convergence;

    premium, differentiated and diverse professional content;

    leading and influential brand;

    highly educated, affluent and engaged user base;

    unique value proposition for blue chip advertisers;

    robust and scalable integrated technology systems; and

    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:

    expand and enrich our content offerings;

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

    further monetize our service offerings;

    enhance our product offerings and technology platform; and

    pursue strategic partnerships and acquisitions.

Our Challenges

        We face risks and uncertainties related to:

    our limited operating history;

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

    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;

    our ability to successfully expand our MIVAS business;

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

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

    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;

    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;

    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;

    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;

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

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

    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

    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

    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.

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        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.

GRAPHIC


(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 5.55% 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

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contractual arrangements with Tianying Jiuzhou and Yifeng Lianhe and their respective shareholders enable us to:

    receive substantially all of the economic benefits from Tianying Jiuzhou and its subsidiary and Yifeng Lianhe in consideration for the technical and consulting services provided and intellectual rights licensed by Fenghuang On-Line;

    exercise effective control over Tianying Jiuzhou and its subsidiary and Yifeng Lianhe; and

    have an exclusive option to purchase all of the equity interests in Tianying Jiuzhou and Yifeng Lianhe when, and to the extent permitted, under PRC laws.

        We do not have any equity interest in Tianying Jiuzhou or Yifeng Lianhe. However, as a result of these contractual arrangements, we are considered the primary beneficiary of Tianying Jiuzhou and Yifeng Lianhe, and we account for them as our consolidated affiliated entities under the generally accepted accounting principles in the United States, or U.S. GAAP. We have consolidated the financial results of these companies in our consolidated financial statements in accordance with U.S. GAAP as we are determined to be the primary beneficiary in these arrangements. In 2010, Tianying Jiuzhou and its subsidiary accounted for 87.5% of our total revenues, and Yifeng Lianhe accounted for 10.0% of our total revenues. Tianying Jiuzhou and its subsidiary currently conduct all of our advertising services. Tianying Jiuzhou also provides most of our WVAS services, our digital reading services, most of our mobile game services, our video VAS services and a portion of our Internet VAS services. Yifeng Lianhe conducts a portion of our WVAS services and a small portion of our mobile game services. Fenghuang On-line generates revenue from conducting certain promotional activities for Phoenix TV, which we categorize within our Internet VAS from an accounting perspective under US GAAP. For a description of our contractual arrangements with our affiliated consolidated entities, see "Our History and Corporate Structure." For a detailed description of the regulations that prohibit or restrict foreign investment in the Internet-related and mobile value-added services industries, thereby necessitating the adoption of our corporate structure, see "Regulation." For a detailed description of the risks associated with our corporate structure and the contractual arrangements that support our corporate structure, see "Risk Factors—Risks Relating to Our Corporate Structure."

        Outstanding equity interests in Tiangying Jiuzhou and Yifeng Lianhe are held by Haiyan Qiao and Ximin Gao, and Yinxia Liu and Yansheng He, respectively. Mssrs. Qiao, Gao and He are all current employees of our company and have each been employed by us for approximately ten years. Mr. Liu is an employee of Zhongcheng Letian Property Development Company, a company founded by the chairman of Phoenix TV, Mr. Changle Liu. See "Risk Factors—Risks Relating to Our Corporate Structure—The shareholders of the affiliated consolidated entities may have potential conflicts of interest with us."

        We established Phoenix New Media (Hong Kong) Company Limited, a Hong Kong limited liability company, on February 24, 2011 in order to begin to establish a corporate structure that may allow for more efficient withholding tax treatment of any dividends to our company, provided that Phoenix New Media (Hong Kong) Company Limited becomes the parent company of our PRC subsidiary and the beneficial owner of any of its dividends, and receives approval from the PRC tax authority to enjoy preferential withholding tax treatment.

        In 1999, PHOENIXi Investment Limited, which holds 100% equity ownership of PHOENIXi Inc. and Guofeng On-line (Beijing) Information Technology Co., Ltd., was established primarily to develop an Internet business in North America. The business operations of PHOENIXi Investment Limited and its subsidiaries ceased before 2006, and the legal process of liquidating these three entities, which began in 2006, is expected to be completed in 2011. Given that these entities have long ceased their operations, we do not anticipate that the dissolution of PHOENIXi Investment Limited and its subsidiaries will have any effect on our business, results of operations or financial position. Our

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consolidated financial statements do not include the financial statements of PHOENIXi Investment Limited and its subsidiaries, but rather account for them under the cost method and recognize any other than temporary impairment.

Our Relationship with Phoenix TV

        We are currently a subsidiary of Phoenix TV, the leading Hong Kong-based satellite TV network broadcasting Chinese language content globally and into China. Phoenix TV indirectly owns 62.44% of our outstanding share capital as of the date of this prospectus. Phoenix TV first reported its new media business as one of its business segments in its annual report submitted to the Hong Kong Stock Exchange for the year ended December 31, 2007. Prior to this offering, in an effort to more clearly delineate our related party transactions with Phoenix TV, Fenghuang On-line entered into a cooperation agreement with Phoenix TV, or the Phoenix TV Cooperation Agreement, on November 24, 2009. Under this agreement, Fenghuang On-line and Phoenix TV agreed to certain cooperative arrangements in the areas of content, branding, promotion and technology and Phoenix TV agreed to procure and procured its subsidiaries, Phoenix Satellite Television Company Limited and Phoenix Satellite Television Trademark Limited, to enter into the Content License Agreements and Trademark Licenses Agreements, respectively, with each of our affiliated consolidated entities on November 24, 2009.

        We have a mutually beneficial relationship with Phoenix TV. We and Phoenix TV share a common vision of the convergence of traditional and new media channels, and work together to realize this vision. While we furnish Phoenix TV with access to our new media delivery channels, Phoenix TV enables us to display our proprietary content on its TV programs. Pursuant to the Content License Agreements, Phoenix TV has also granted each of our affiliated consolidated entities an exclusive license to use its content on our Internet and mobile channels in China. These exclusive content licenses 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. In addition, our affiliated consolidated entities license certain of Phoenix TV's logos. These logos help to affiliate our brand name with that of Phoenix TV and vice versa, which helps to enhance our respective brand names. These logos, however, do not directly contribute any revenues to our company and are not material to our business. Phoenix Satellite Television Trademark Limited has completed the application form to transfer the "ifeng" logo from Phoenix Satellite Television Trademark Limited to Tianying Jiuzhou, and Tianying Jiuzhou has submitted the application to the PRC Trademark Office to serve to remedy a current noncompliance with PRC regulation. See "Risk Factors—Risks Relating to Our Business and Industry—Our consolidated affiliated entities and their respective shareholders do not own the trademarks used in their value-added telecommunications services, which may subject them to revocation of their licenses or other penalties or sanctions."

        As compensation for the rights granted to Fenghuang On-line under the Phoenix TV Cooperation Agreement, Fenghuang On-line is obligated to pay Phoenix TV an annual service fee in the amount of RMB1.6 million for the first year of the agreement that incrementally increases by 25% for each subsequent year of the agreement, as well as 50% of the after tax revenue we earn from sublicensing Phoenix TV's certain video content. In the event that Phoenix TV's indirect voting interest in Fenghuang On-line decreases to 50% or below, Phoenix TV has the right to amend the annual service fee, provided that it may not be raised to more than 500% of the original annual service fee. Each of the Phoenix TV Cooperation Agreement, the Content License Agreements and the Trademark License Agreements will expire in March 2016 unless both of the relevant parties agree to extend their respective terms. Each of these agreements may be terminated early subject to the occurrence of certain events. For more information about these agreements, see "Related Party Transactions—

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Transactions and Agreements with Phoenix TV and Certain of its Subsidiaries." Our chief executive officer is also a vice president of Phoenix TV.

        Upon completion of this offering, Phoenix TV, through its wholly owned subsidiary, Phoenix TV (BVI), will continue to be our controlling shareholder, with beneficial ownership and voting power of 52.17% and 58.65%, respectively, of our outstanding ordinary shares, assuming the underwriters do not exercise their over-allotment option, the entire assured entitlement distribution to Phoenix TV's shareholders is made in ADSs and the assured entitlement distribution occurs immediately after this offering. 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 so, the resolution may be less favorable to us than if we were dealing with a non-controlling shareholder. For more information about our potential conflicts of interest with Phoenix TV, 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 interest in our company, may not be able to resolve such conflicts on terms favorable for us."

PRC Regulation of Loans and Direct Investment by Offshore Holding Companies

        In utilizing the proceeds of this offering, as an offshore holding company, we are permitted, under PRC laws and regulations, to provide funding to our PRC operating subsidiary only through loans or capital contributions, and to our affiliated consolidated entities only through loans. Subject to the satisfaction of applicable government registration and approval requirements, we may extend loans to our operating subsidiary and affiliated consolidated entities in China or make additional capital contributions to our operating subsidiary in China to fund their capital expenditures or working capital. In addition, pursuant to a circular issued by the SAFE in 2008, Renminbi capital converted from foreign currency registered capital of a foreign-invested enterprise may only be used within the business scope approved by the applicable government authority and may not be used for equity investments within the PRC, unless it is provided for otherwise. We expect that if we convert the net proceeds we receive from this offering into Renminbi pursuant to SAFE Circular 142, our use of Renminbi funds will be for purposes within the approved business scope of our PRC subsidiary. Such business scope permits our PRC subsidiary to provide technical and operational support to our affiliated consolidated entities. However, we may not be able to use such Renminbi funds to make equity investments in the PRC through our PRC subsidiary. For more information about risks related to PRC regulation of loans and direct investment by offshore holding companies, like our company, to PRC entities, see "Risk Factors—Risks Relating to Doing Business in China—PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds from this offering to make loans or additional capital contributions to our PRC subsidiary and affiliated consolidated entities."

Corporate Information

        Our principal executive offices are located at Fusheng Building Tower 2, 16th Floor, 4 Hui Xin Dong Jie, Chaoyang District, Beijing 100029, People's Republic of China. Our telephone number at this address is (86) 10 8445 8000 and our fax number is (86) 10 8445 8446. Our registered office in the Cayman Islands is located at the offices of Codan Trust Company (Cayman) Limited, Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111, Cayman Islands. Our agent for service of process in the United States is Law Debenture Corporate Services Inc., located at 400 Madison Avenue, 4th Floor, New York, New York 10017.

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        Investors should contact us for any inquiries through the address and telephone number of our principal executive offices. Our website is www.ifeng.com. The information contained on our website is not a part of this prospectus.


Conventions Which Apply to This Prospectus

        Except where the context otherwise requires and for purposes of this prospectus only:

    "ADSs" refers to our American depositary shares, each of which represents eight Class A ordinary shares, and "ADRs" refers to the American depositary receipts that may evidence our ADSs;

    "affiliated consolidated entities" refer to Yifeng Lianhe (Beijing) Technology Co., Ltd. and Beijing Tianying Jiuzhou Network Technology Co., Ltd., each of which is a PRC domestic company. Substantially all of our operations in China are conducted by our affiliated consolidated entities, in which we do not own any equity interest, through our contractual arrangements. We treat the affiliated consolidated entities as variable interest entities and have consolidated their financial results in our financial statements in accordance with generally accepted accounting principles in the United States, or U.S. GAAP;

    "China" or "PRC" refers to the People's Republic of China, excluding, for the purposes of this prospectus only, Taiwan, Hong Kong and Macau;

    "Class A ordinary shares" are to our Class A ordinary shares, par value US$0.01 per share, to be authorized under our second amended and restated memorandum and articles of association that will become effective immediately prior to the completion of this offering;

    "Class B ordinary shares" are to our Class B ordinary shares, par value US$0.01 per share, each of which shall be entitled to 1.3 votes on all matters subject to shareholders' vote, to be authorized under our second amended and restated memorandum and articles of association that will become effective immediately prior to the completion of this offering;

    "Fenghuang On-line" refers to Fenghuang On-line (Beijing) Information Technology Co., Ltd., a wholly foreign-owned PRC entity;

    "ordinary shares" are to our ordinary shares, par value US$0.01 per share, authorized under our amended and restated memorandum and articles of association prior to the completion of this offering, and are to our Class A ordinary shares and Class B ordinary shares, collectively, immediately prior to the completion of this offering;

    "Phoenix TV" refers to Phoenix Satellite Television Holdings Limited;

    "Phoenix TV (BVI)" refers to Phoenix Satellite Television (B.V.I) Holding Limited, a wholly owned direct subsidiary of Phoenix TV, which directly owns 62.44% of our share capital as of the date of this prospectus;

    "RMB" or "Renminbi" refers to the legal currency of China; "$," "dollars," "US$" and "U.S. dollars" refer to the legal currency of the United States;

    "Series A convertible redeemable preferred shares" refers to our Series A convertible redeemable preferred shares, par value US$0.01 per share;

    "Tianying Jiuzhou" refers to Beijing Tianying Jiuzhou Network Technology Co., Ltd., a PRC domestic company and an affiliated consolidated entity;

    "we," "us," "our company," "our" and "Phoenix New Media" refer to Phoenix New Media Limited, a Cayman Islands company and its predecessor entities and subsidiaries, and, unless the context otherwise requires, our affiliated consolidated entities and their subsidiaries in China; and

    "Yifeng Lianhe" refers to Yifeng Lianhe (Beijing) Technology Co., Ltd., a PRC domestic company and an affiliated consolidated entity.

        This prospectus contains statistical data that we obtained from various government and private publications. We have not independently verified the data in these reports. Statistical data in these publications also include projections based on a number of assumptions. If any one or more of the assumptions underlying the statistical data turns out to be incorrect, actual results may differ from the projections based on these assumptions.

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THE OFFERING

Offering price

 

We anticipate that the initial public offering price will be between $12.00 and $14.00 per ADS.

ADSs offered by us

 

11,500,000 ADSs

ADSs offered by the selling shareholders

 

1,267,500 ADSs

Class A ordinary shares outstanding immediately after this offering

 

289,105,437 Class A ordinary shares.

 

The number of Class A ordinary shares that will be outstanding immediately after this offering:

 

•       assumes the underwriters' option to purchase additional ADSs is not exercised;

 

•       assumes 575,000 ADSs representing 4,600,000 Class A ordinary shares will be distributed to Phoenix TV's shareholders in the assured entitlement distribution and that the assured entitlement distribution will occur immediately after this offering;

 

•       excludes 33,267,350 Class A ordinary shares issuable upon the exercise of options to purchase our Class A ordinary shares and the satisfaction of conditions and raising of restrictions applicable to our contingently issuable shares and restricted share units outstanding as of the date of this prospectus; and

 

•       excludes 227,213 Class A ordinary shares reserved for future issuance under our share incentive plans.

Class B ordinary shares outstanding immediately after this offering

 

315,400,000 Class B ordinary shares, all of which will be owned by Phoenix TV (BVI), a wholly owned direct subsidiary of Phoenix TV. The number of Class B ordinary shares that will be outstanding immediately after this offering assumes that Phoenix TV, through Phoenix TV (BVI), will distribute 575,000 ADSs representing 4,600,000 Class A ordinary shares to its shareholders in the assured entitlement distribution and that the assured entitlement distribution will occur immediately after this offering.

Ordinary shares

 

Following this offering, our outstanding share capital will consist of Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary shares and Class B ordinary shares have the same rights except for voting and conversion rights. Each Class A ordinary share shall be entitled to one vote on all matters subject to shareholders' vote, and each Class B ordinary share shall be entitled to 1.3 votes on all matters subject to shareholders' vote. Each Class B ordinary share shall be convertible into one Class A ordinary share at any time by the holder thereof. Class A ordinary shares shall not be convertible into Class B ordinary shares under any circumstances.

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The ADSs

 

Each ADS represents eight Class A ordinary shares, par value US$0.01 per share.

 

The depositary will hold the Class A ordinary shares underlying your ADSs. You will have the rights as provided in the deposit agreement between us, the depositary and holders and beneficial owners of our ADSs from time to time.

 

If we declare dividends on our Class A ordinary shares, the depositary will pay you the cash dividends and other distributions it receives on our Class A ordinary shares, after deducting its fees and expenses.

 

You may surrender your ADSs to the depositary in exchange for the Class A ordinary shares underlying your ADSs. The depositary will charge you fees for any exchange.

 

We may amend or terminate the deposit agreement without your consent. If an amendment becomes effective and you continue to hold your ADSs, you will be bound by the deposit agreement as amended.

 

To better understand the terms of the ADSs, you should carefully read the section of this prospectus entitled "Description of American Depositary Shares." You should also read the deposit agreement, which is filed as an exhibit to the registration statement that includes this prospectus.

Over-allotment option

 

We and the selling shareholders have granted to the underwriters an option, which is exercisable within 30 days from the date of this prospectus, to purchase a maximum of 1,915,125 additional ADSs.

Reserved ADSs

 

At our request, the underwriters have reserved for sale, at the initial public offering price, up to 766,050 ADSs offered by this prospectus for sale to some of our directors, officers, employees, business associates and related persons. See "Underwriting" for additional information.

Use of proceeds

 

Our net proceeds from this offering are expected to be approximately US$135.0 million, assuming an initial public offering price of US$13.00 per ADS, the mid-point of the estimated public offering price range set forth on the cover of this prospectus, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.

 

We intend to use our net proceeds from this offering for the following purposes:

 

•       US$60.0 million for content acquisition and production;

 

•       US$40.0 million for product development and technology infrastructure; and

 

•       US$30.0 million for marketing and sales.

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We intend to use the remaining portion of the net proceeds we receive from this offering for other general corporate purposes, including potential facilities upgrade, and for potential acquisitions, although we are not currently negotiating any acquisition transactions. See "Use of Proceeds" for additional information.

Lock-up

 

We have agreed with the underwriters to a lock-up of shares for a period of 180 days after the date of this prospectus. In addition, our executive officers, directors, existing shareholders and major holders of share-based awards have also agreed with the underwriters to a lock-up of shares for a period of 180 days after the date of this prospectus, except, with respect to Phoenix TV (BVI), to the extent necessary to allow Phoenix TV to make available to its shareholders an "assured entitlement" to a certain number of our ADSs, not to exceed 575,000 ADSs, as required pursuant to the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Ltd. In addition, we have instructed Deutsche Bank Trust Company Americas, as depositary, not to accept any deposit of Class A ordinary shares or issue any ADSs for a period of 180 days after the date of this prospectus (other than in connection with this offering and the distribution of "assured entitlement" ADSs to certain of Phoenix TV's shareholders), unless we otherwise instruct the depositary with the prior written consent of the representatives of the underwriters. See "Principal and Selling Shareholders—Assured Entitlement Distribution" for more information about Phoenix TV's assured entitlement distribution. For more information about the lock-up agreements, see "Underwriting."

Listing

 

We have applied to list the ADSs on the New York Stock Exchange under the symbol "FENG." The ADSs or Class A ordinary shares will not be listed on any other exchange or traded on any other automated quotation system.

Risk factors

 

See "Risk Factors" and other information included in this prospectus for a discussion of risks you should carefully consider before investing in our ADSs.

Depositary

 

Deutsche Bank Trust Company Americas.

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Our Summary Consolidated Financial Data

        The following summary consolidated statements of operations for the years ended December 31, 2008, 2009 and 2010 and the summary consolidated balance sheet data as of December 31, 2008, 2009 and 2010 have been derived from our audited consolidated financial statements, which are included elsewhere in this prospectus. You should read the summary consolidated financial data in conjunction with those financial statements and the related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus. Our consolidated financial statements are prepared and presented in accordance with United States generally accepted accounting principles, or U.S. GAAP. Our historical results are not necessarily indicative of our results expected for future periods.

 
  For the Year Ended
December 31,
 
 
  2008   2009   2010  
 
  RMB
  RMB
  RMB
  US$
 
 
  (in thousands, except for per share data)
 

Total revenues

    222,626     262,347     528,696     80,105  
 

Net advertising revenues

    40,259     81,632     204,370     30,965  
 

Paid service revenues

    182,367     180,715     324,326     49,140  

Cost of revenues(1)

    (163,502 )   (170,062 )   (299,423 )   (45,367 )
                   

Gross profit

    59,124     92,285     229,273     34,738  
                   

Operating expenses:

                         
 

Sales and marketing expenses(1)

    (33,855 )   (46,364 )   (76,153 )   (11,538 )
 

General and administrative expenses(1)

    (37,613 )   (27,727 )   (39,955 )   (6,054 )
 

Technology and product development expenses(1)

    (17,104 )   (16,579 )   (31,012 )   (4,699 )
                   

Total operating expenses

    (88,572 )   (90,670 )   (147,120 )   (22,291 )
                   

Income/(loss) from operations

    (29,448 )   1,615     82,153     12,447  
                   

Other income/(expenses):

                         
 

Interest income

    1,049     496     582     88  
 

Foreign currency exchange gain

    512     22     313     47  
 

Others, net

    (415 )   (186 )   1,534     233  
                   

Income/(loss) before tax

    (28,302 )   1,947     84,582     12,815  
                   
 

Income tax benefits/(expenses)

    149     (1,660 )   (10,499 )   (1,590 )
                   

Net income/(loss) attributable to Phoenix New Media Limited

    (28,153 )   287     74,083     11,225  
                   

Net loss attributable to ordinary shareholders

    (28,153 )   (31,267 )   (165,418 )   (25,063 )
                   

Net loss per ordinary share—Basic

    (0.09 )   (0.10 )   (0.51 )   (0.08 )

Net loss per ordinary share—Diluted

    (0.09 )   (0.10 )   (0.51 )   (0.08 )

Weighted average number of ordinary shares used in computing basic loss per share

    320,013     321,388     327,045     327,045  
 

Weighted average number of ordinary shares used in computing diluted loss per share

    320,013     321,388     327,045     327,045  

Non-GAAP adjusted net income(2)

   
1,777
   
10,527
   
90,644
   
13,734
 

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Notes:

(1)
Includes share-based compensation expenses as follows:

   
  For the Year Ended
December 31,
 
   
  2008   2009   2010  
   
  RMB
  RMB
  RMB
  US$
 
   
  (in thousands)
 
 

Cost of revenues

    2,455     775     854     129  
 

Sales and marketing expenses

    6,539     2,904     4,664     707  
 

General and administrative expenses

    18,374     5,757     10,406     1,577  
 

Technology and product development expenses

    2,562     804     637     96  
(2)
We define adjusted net income, a non-GAAP financial measure, as net income attributable to Phoenix New Media Limited excluding share-based compensation expenses. We believe that separate analysis and exclusion of the non-cash impact of share-based compensation adds clarity to the constituent parts of our performances. We review adjusted net income together with net income/(loss) to obtain a better understanding of our operating performance. We use this non-GAAP financial measure for planning and forecasting and measuring results against the forecast. Using several measures to evaluate our business allows us and our investors to assess our relative performance against our competitors and ultimately monitor our capacity to generate returns for our investors. We also believe it is useful supplemental information for investors and analysts to assess our operating performance without the effect of non-cash share-based compensation expenses, which have been and will continue to be significant recurring expenses in our business. However, the use of adjusted net income has material limitations as an analytical tool. One of the limitations of using non-GAAP adjusted net income is that it does not include all items that impact our net income/(loss) for the period. In addition, because adjusted net income is not calculated in the same manner by all companies, it may not be comparable to other similar titled measures used by other companies. In light of the foregoing limitations, you should not consider adjusted net income in isolation from or as an alternative to net income/(loss) prepared in accordance with U.S. GAAP.

        Our non-GAAP adjusted net income is calculated as follows for the periods presented:

   
  For the Year Ended
December 31,
 
   
  2008   2009   2010  
   
  RMB
  RMB
  RMB
  US$
 
   
  (in thousands)
 
 

Net income/(loss) attributable to Phoenix New Media Limited

    (28,153 )   287     74,083     11,225  
 

Add back: Share-based compensation expenses

    29,930     10,240     16,561     2,509  
                     
 

Non-GAAP adjusted net income

    1,777     10,527     90,644     13,734  
                     

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  As of December 31,  
 
  2008   2009   2010  
 
  RMB   RMB   RMB   US$   RMB   US$  
 
  (in thousands)
 
 
   
   
   
   
  (Pro-Forma)(1)
 

Consolidated Balance Sheet Data

                                     

Cash and cash equivalents

    67,999     223,086     287,173     43,511     287,173     43,511  

Accounts receivable, net

    21,892     35,318     77,043     11,673     77,043     11,673  

Total current assets

    106,277     275,059     400,705     60,713     400,705     60,713  

Total assets

    144,208     314,302     447,262     67,767     447,262     67,767  

Current liabilities

    126,817     115,358     148,555     22,508     148,555     22,508  

Total liabilities

    127,942     116,931     152,038     23,036     152,038     23,036  

Net assets

    16,266     197,371     295,224     44,731     295,224     44,731  

Mezzanine equity:

                                     

Series A convertible redeemable preferred shares (US$0.01 par value, 130 million shares authorized and issued as of December 31, 2009 and 2010; aggregate liquidation value of RMB197 million and RMB246 million as of December 31, 2009 and 2010, respectively, and none outstanding on a pro-forma basis as of December 31, 2010)

        183,774     390,182     59,119          

Total shareholders' equity/(deficit)

    16,266     13,597     (94,958 )   (14,388 )   295,224     44,731  

Total liabilities, mezzanine equity and shareholders' equity/(deficit)

    144,208     314,302     447,262     67,767     447,262     67,767  

(1)
Our consolidated balance sheet data as of December 31, 2010 is presented on a pro forma basis to reflect the automatic conversion of all of our outstanding Series A convertible redeemable preferred shares into 130,000,000 Class A ordinary shares immediately upon the closing of this offering.

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RISK FACTORS

        You should consider carefully all of the information in this prospectus, including the risks and uncertainties described below and our consolidated financial statements and related notes, before making an investment in our ADSs. Any of the following risks and uncertainties could have a material adverse effect on our business, results of operations, financial condition and prospects. The market price of our ADSs could decline as a result of any of these risks and uncertainties, and you may lose all or part of your investment.

Risks Relating to Our Business and Industry

    We have a limited operating history, which makes it difficult to evaluate our business.

        We have a limited operating history for you to evaluate our business, financial performance and prospects. Significant growth in our business, employees, operations and revenues has occurred only since 2005. Our media convergence business model is new in China and we may not be able to achieve results or growth in future periods as we did in past periods. Although we have achieved profitability in recent periods, we incurred a net loss attributable to Phoenix New Media Limited for the fiscal year ended December 31, 2008. Our ability to achieve and maintain profitability depends on, among other factors, the growth of the Internet advertising market and mobile Internet services and applications industry in China, our ability to maintain cooperative relationships with Phoenix TV and mobile operators, our ability to control our costs and expenses and the continued relevance and usage of our wireless value-added services, or WVAS. We may not be able to achieve or sustain profitability on a quarterly or annual basis. Accordingly, due to our limited operating history, our historical growth rates may not be indicative of our future performance.

    If we fail to retain existing advertisers or attract new advertisers for our online advertising services, our business, results of operations and growth prospects could be materially affected.

        In 2008, 2009 and 2010, we generated 18.1%, 31.1% and 38.7% of our total revenues from advertising services. Going forward, we expect our net advertising revenues to contribute an increasing portion of our total revenues. Our ability to generate and maintain substantial advertising revenues will depend on a number of factors, many of which are ultimately beyond our control, including but not limited to:

    the acceptance of online advertising as an effective way for advertisers to market their businesses;

    the maintenance and enhancement of our brand;

    the development of independent and reliable means of measuring online traffic and verifying the effectiveness of our online advertising services;

    the development and retention of a large user base with attractive demographics for advertisers; and

    our ability to have continued success with innovative advertising services.

        Our advertisers may choose to reduce or discontinue their business with us if they believe their advertising spending has not generated or would not generate enough sales to end customers or has not improved or would not effectively improve their brand recognition. In addition, certain technologies could potentially be developed and applied to block the display of our online advertisements and other marketing products on our website, which may in turn cause us to lose advertisers and adversely affect our operating results. Moreover, changes in government policies could restrict or curtail our online advertising services. Failure to retain our existing advertisers or attract new advertisers for our advertising services could seriously harm our business, results of operations and growth prospects.

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        We plan to strengthen our sales team in order to more effectively build and maintain loyal relationships with our advertisers and agencies. If we fail to improve our sales team or provide satisfactory customer service to our advertisers and agencies, our business and results of operations could be materially and adversely affected.

    Any failure to retain large advertising agencies or attract new agencies on reasonable terms could materially and adversely affect our business. If consolidation continues among Chinese advertising agencies, our gross margin may be negatively affected.

        Approximately 71.5%, 71.4% and 74.8% of our net advertising revenues in China were derived from advertising agencies in 2008, 2009 and 2010, respectively. We primarily serve our advertisers through advertising agencies and rely on these agencies for sourcing our advertisers and collecting advertising revenue. In consideration for these agencies' services, the agencies earn advertising agency service fees which are deducted from our gross advertising revenues. While advertising agencies in China commonly increase their agency service fees on a sliding scale basis along with increased volume of business, if our agency service fees increase at a materially disproportional rate relative to our gross advertising revenues, our results of operations may be negatively affected. We do not have long-term or exclusive arrangements with these agencies, and we cannot assure you that we will continue to maintain favorable relationships with them. If we fail to maintain favorable relationships with large advertising agencies or attract additional agencies, we may not be able to retain existing advertisers or attract new advertisers and our business and results of operations could be materially and adversely affected.

        Over the years, there has been some consolidation among advertising agencies in China. If the consolidation trend continues and the market is effectively controlled by a small number of large advertising agencies, such advertising agencies may be in a position to demand higher advertising agency service fees based on increased bargaining power, which could reduce our net advertising revenues.

    If we fail to continue to anticipate user preferences and provide high quality content that attracts and retains users, we may not be able to generate sufficient user traffic to remain competitive.

        Our success depends on our ability to generate sufficient user traffic through the provision of attractive content. If we are not able to license popular premium content at commercially reasonable terms, if our desired premium content becomes exclusive to our competitors, or if we do not continue to possess an exclusive license to Phoenix TV's content, the attractiveness of our offerings to users may be severely impaired. We also produce content in-house, and intend to continue to invest resources in producing original content. If we are unable to continue to procure premium and distinctive licensed content or produce in-house content that meets users' tastes and preferences, we may lose users, and our operating results may suffer. In addition, we rely on our team of skilled editors to edit and repackage our sourced content in a timely and professional manner for our users and any deterioration in our editing team's capabilities or losses in personnel may materially and adversely affect our operating results. If our content fails to cater to the needs and preferences of our users, we may suffer from reduced user traffic and our business and results of operations may be materially and adversely affected.

    We may not be successful in growing our mobile Internet and value-added services, or MIVAS, business and any expected economic benefits from this business may not be realized.

        We have made significant efforts in recent years to expand our mobile Internet and value-added services, or MIVAS, which consists of digital reading services, mobile game services and WVAS. In 2008, 2009 and 2010, respectively, our MIVAS revenues accounted for 94.6%, 94.9% and 87.3% of our paid service revenues. However, our MIVAS business has a short operating history. As a result, there is limited financial data that can be used to evaluate our mobile business and its potential to generate

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revenues in the future. In addition, we cannot assure you that we will be successful in developing our mobile business, which will depend, among other things, on our ability to:

    respond to market developments, including the development of new channels and technologies, and changes in pricing and distribution models;

    maintain and diversify our distribution channels, including through our own mobile Internet site, the platforms of China Mobile Communications Corporation, or China Mobile, and the other Chinese mobile operators, mobile device manufacturers and mobile application stores;

    develop new high quality MIVAS that can achieve significant market acceptance, and improve our existing MIVAS in a timely manner to extend their life spans and to maintain their competitiveness in the Chinese mobile market;

    supplement our internally developed MIVAS by acquiring mobile Internet applications and/or services from third-party mobile Internet developers or cooperating with third-party mobile Internet developers to jointly develop mobile Internet applications and/or services;

    develop and upgrade our technologies; and

    execute our business and marketing strategies successfully.

        In addition, the MIVAS market, in particular with respect to mobile Internet services and applications, is an emerging market in China. The growth of this market and the level of demand and market acceptance of our services are subject to many uncertainties. The development of this market and our ability to derive revenues from this market depends on a number of factors, some of which are beyond our control, including but not limited to:

    the growth rate of mobile Internet in China;

    changes in consumer demographics and preferences;

    development in mobile device platform technologies and mobile Internet distribution channels; and

    potential competition from more established companies that decide to enter the mobile Internet market.

        Due to the uncertainties in connection with our MIVAS in particular and the MIVAS industry in China generally, we cannot guarantee that our MIVAS will contribute significantly to our future revenues. Our failure to successfully develop this business could have a material adverse effect on our business, financial condition and results of operations.

    If we fail to successfully develop and introduce new products and services to meet the preferences of users, our competitive position and ability to generate revenues could be harmed.

        The preferences of media viewers are continuously evolving and we must continue to develop new products and services. If we fail to react to changes in user preferences in a timely manner or fall behind our competitors in providing innovative products and services, we may lose user traffic, which would negatively affect our results of operations. In addition, the planned timing or introduction of new products and services is subject to risks and uncertainties. Actual timing may differ materially from original plans. Unexpected technical, operational, distribution or other problems could delay or prevent the introduction of one or more of our new products or services. Moreover, we cannot be sure that any of our new products and services will achieve widespread market acceptance or generate incremental revenue. At the same time, other media providers may be more successful in developing more attractive products and services. If our efforts to develop, market and sell new products and services to the market are not successful, our financial position, results of operations and cash flows could be

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materially adversely affected, the price of our ordinary shares could decline and you could lose part or all of your investment.

    We operate in highly competitive markets and we may not be able to compete successfully against our competitors.

        We face significant competition in the new media industry in China, including competition from major Internet portals, "pure play" Internet video companies, online video sites of major TV broadcasters and interactive and social network service providers, as well as companies with strong online video and MIVAS businesses. Some of our competitors have longer operating histories and significantly greater financial resources than we do, which may allow them to attract and retain more users and advertisers. Our competitors may compete with us in a variety of ways, including by obtaining exclusive online distribution rights for popular content, conducting more aggressive brand promotions and other marketing activities and making acquisitions to increase their user bases. If any of our competitors achieves greater market acceptance or are able to offer more attractive online content, interactive services or MIVAS than us, our user traffic and our market share may decrease, which may result in a loss of advertisers and have a material and adverse effect on our business, financial condition and results of operations.

        We also face competition from traditional advertising media such as television, newspapers, magazines, billboards and radio. Most large companies in China allocate, and will likely continue to allocate, a significant portion of their advertising budgets to traditional advertising media, particularly television. If online advertising as a new marketing channel does not become more widely accepted in China, we may experience difficulties in competing with traditional advertising media.

    We have contracted with third-party content providers and we may lose users and revenues if these relationships deteriorate or arrangements are terminated.

        We have relied and will continue to rely mostly on third parties for the content we distribute across our channels. If these parties fail to develop and maintain high-quality and engaging content, raise their licensing fees or if a large number of our existing relationships are terminated, we could lose users and advertisers and our brand could be materially harmed. In addition, the Chinese government has the ability to restrict or prevent state-owned media from cooperating with us in providing certain content to us, which, if exercised, would result in a significant decrease in the amount of content we are able to source for our website and negatively impact our results of operations. Moreover, we cannot assure you that our third-party content providers will not increase their content licensing fees in the future, which would negatively affect our income from operations.

    We may not be able to continue 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 effect 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 effect on our business and results of operation.

        Phoenix TV, our majority shareholder, is a leading global Chinese language TV network broadcasting premium content globally and into China. In November 2009, our PRC subsidiary, Fenghuang On-line, entered into a cooperation agreement with Phoenix TV, or the Phoenix TV Cooperation Agreement, under which Fenghuang On-line and Phoenix TV agreed to certain cooperative arrangements in the areas of content, branding, promotion and technology. Pursuant to the Phoenix TV Cooperation Agreement, in November 2009 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

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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.

        We benefit materially from the exclusive license granted to our affiliated consolidated entities by Phoenix Satellite Television Company Limited, a wholly owned subsidiary of Phoenix TV, to use Phoenix TV's copyrighted content on our Internet and mobile channels in China pursuant to the Content License Agreements. This exclusive license helps to distinguish our content offerings from those of other Internet and new media companies in China. Each of the Content License Agreements can be terminated earlier (i) by the non-breaching party in the event of a breach and if the breach is not cured within ten business days after receipt of notice of breach from the non-breaching party, (ii) in the event of bankruptcy or the cessation of business operations of either party, or a change in the shareholder or equity structure of the relevant affiliated consolidated entity, other than in connection with the contractual arrangements, (iii) if either party's performance of its obligations is held unlawful under PRC law; or (iv) if an event occurs that adversely affects the performance by either party of its obligations and upon written notice by the unaffected party. The Content License Agreements will, unless extended further, expire in March 2016, or may be terminated early, and we may not be able to obtain rights to use Phoenix TV's content on our platform on commercially reasonable terms, on an exclusive basis or at all, which would have a material adverse effect on our video VAS, which accounted for 5.0% of our total revenues in 2010, and may also negatively affect our video advertising business. Together, these impacts could have a material and adverse effect on our business, results of operations and financial condition.

        In addition, our affiliated consolidated entities are able to use certain of Phoenix TV's logos pursuant to the Trademark License Agreements. We believe that our use of these logos helps to affiliate us with the brand of Phoenix TV, which helps to enhance our own brand. Tianying Jiuzhou and Yifeng Lianhe are obligated to pay annual license fees of US$7,000 and US$3,000, respectively, under the Trademark License Agreements, which fees are not subject to adjustment and may be waived at the discretion of Phoenix TV. Each of these agreements may be terminated early (i) by agreement of both parties in writing or (ii) by the non-breaching party in the event of a material breach by the other party of any covenant or a material failure by such party to perform any of its obligation and if the breach or failure, as applicable, is not rectified within ten days of receipt of written notice from the non-breaching party. The Trademark License Agreements expire in March 2016 and we cannot assure you that we will be able to continue to use Phoenix TV's logos in order to help maintain our brand affiliation with Phoenix TV. If our brand image deteriorates as a result of a weaker brand affiliation with Phoenix TV, our business and the price of your ADSs could be negatively affected.

        We provide our in-house produced content and UGC to Phoenix TV on a regular and frequent basis for display on its TV programs and Phoenix TV promotes our brand name and content on its TV network pursuant to the Phoenix TV Cooperation Agreement. As compensation for the rights granted to us under the Phoenix TV Cooperation Agreement, Fenghuang On-line is currently obligated to pay Phoenix TV an annual service fee in the amount of RMB1.6 million for the first year of the agreement, which incrementally increases by 25% for each subsequent year of the agreement. If Phoenix TV's indirect voting interest in Fenghuang On-line decreases to 50% or below, Phoenix TV has the right to amend the annual service fee under the Phoenix TV Cooperation Agreement, provided that it may not be raised to more than 500% of the original annual service fee. In addition to the annual service fee, Fenghuang On-line must also pay to Phoenix TV 50% of the after-tax revenues Tianying Jiuzhou earns from sublicensing Phoenix TV's video content to third parties, which is not subject to adjustment. In addition, if Phoenix TV's indirect equity interest in our company decreases to 35% or below, Phoenix TV has the right to immediately terminate the Phoenix TV Cooperation Agreement. The Phoenix TV Cooperation Agreement will, unless extended further, expire in March 2016, or may be terminated early, and therefore we cannot guarantee you that we may continue to benefit from promotional or other cooperative arrangements with Phoenix TV in the future. We cannot assure you that we will continue to receive the same level of support from Phoenix TV after we become a public company.

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    Any negative development in Phoenix TV's market position, harm to Phoenix TV's brand or operations, or regulatory actions or legal proceedings affecting Phoenix TV's intellectual properties on which our business relies could materially and adversely affect our business and results of operations.

        Our business benefits significantly from our association with Phoenix TV's brand. Many of our users and advertisers are attracted to the "Phoenix" ( GRAPHIC ) brand, with which our brand, "ifeng.com" ( GRAPHIC ) shares a similar Chinese name. Any negative development in Phoenix TV's market position or brand recognition may materially and adversely affect our marketing efforts and the popularity of our business. Any negative development in Phoenix TV's operations or attractiveness to users or advertisers may materially and adversely affect our business and results of operations. Moreover, as our benefits materially from the content licensed to us by Phoenix TV, any regulatory actions or legal proceedings against Phoenix TV related to such content could have a material adverse impact on our results of operation.

    If we are unable to keep pace with rapid technological changes in the Internet and mobile Internet industries, our business may suffer.

        The Internet and mobile Internet industries have been experiencing rapid technological changes. For example, with the advances of search engines and social networking sites, Internet users may choose to access information through search engines or social networking sites instead of web portals or similar websites. With the advances in Internet interactivity, the interests and preferences of Internet users may increasingly shift to UGC, such as blogs, micro-blogs, and video podcasts. As broadband becomes more accessible, Internet users may increasingly demand content in pictorial, audio-rich and video-rich format. With the development of the mobile Internet in China, mobile users may shift from the current predominant text messaging services and other WVAS to newer services, such as mobile commerce, mobile video streaming, mobile Internet browsing and mobile digital reading services. Our future success will depend on our ability to anticipate, adapt and support new technologies and industry standards. If we fail to anticipate and adapt to these and other technological changes, our market share and our profitability could suffer.

    Our lack of an Internet audio-visual program transmission license may expose us to administrative sanctions, including the banning of our video VAS, non-paid video services and video advertising services, which would materially and adversely affect our business and results of operation.

        The PRC government regulates the Internet industry extensively, including foreign ownership of, and the licensing requirements pertaining to, companies in the Internet industry. A number of regulatory agencies, including the State Administration of Radio, Film, and Television, or SARFT, the Ministry of Culture, or the MOC, the Ministry of Industry and Information Technology, or MIIT, the General Administration of Press and Publication, or GAPP, the State Council Information Office, or the SCIO, and other governmental authorities, jointly regulate all major aspects of the Internet industry. Operators are required to obtain various government approvals and licenses prior to providing the relevant Internet information services.

        Pursuant to the Administrative Provisions on Internet Audio-visual Program Service, or the Audio-visual Program Provisions, which was issued by SARFT and MIIT on December 20, 2007 and came into effect on January 31, 2008, online transmission of audio and video programs requires an Internet audio-visual program transmission license and online audio-visual service providers must be either wholly state-owned or state-controlled. In a press conference jointly held by SARFT and MIIT to answer questions with respect to the Audio-visual Program Provisions in February 2008, SARFT and MIIT clarified that online audio-visual service providers that already had been operating lawfully prior to the issuance of the Audio-visual Program Provisions may re-register and continue to operate without becoming state-owned or controlled, provided that such providers have not engaged in any unlawful activities. See "Regulation—Regulation of Online Transmission of Audio-visual Programs."

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        We started offering Internet audio-visual program services through Tianying Jiuzhou in China prior to the issuance of the Audio-visual Program Provisions. Tianying Jiuzhou submitted an application to SARFT to apply for the Internet audio-visual program transmission license when the relevant regulation came into effect. However, as of the date of this prospectus, SARFT has not issued Tianying Jiuzhou an Internet audio-visual program transmission license. Although we have been communicating with the relevant government authorities, such government authorities have not informed us as to when they will make a decision on whether to issue such license to Tianying Jiuzhou. To date, we have not received any notice of warning or been subject to penalties or other disciplinary action from the relevant governmental authorities regarding our dissemination of audio-visual programs through our website or mobile channel without such license. We cannot assure you that Tianying Jiuzhou will be able to obtain the Internet audio-visual program transmission license. Due to Tianying Jiuzhou's lack of an Internet audio-visual program transmission license, the applicable local counterpart of SARFT may issue warnings, order us to rectify our violating activity and impose on us a fine of no more than RMB30,000. In case of severe contravention as determined by SARFT or its applicable local counterpart in its discretion, the applicable local counterpart of SARFT may ban the violating operations, seize our equipment in connection with such operations and impose a penalty of one to two times the amount of the total investment in such operations. The banning of our video VAS, non-paid video services and video advertising services would materially and adversely affect our business and results of operations.

    Our lack of an Internet news license may expose us to administrative sanctions, including an order to cease our Internet information services that provide political news or to cease the Internet access services provided by third parties to us. In 2010, approximately 42.0% of our total revenues were derived from Internet information services and services that relied on Internet access services from third parties.

        We are required to obtain an Internet news license from SCIO for the dissemination of news through our website. See "Regulation—Regulation of Internet News Dissemination." Tianying Jiuzhou submitted an application to the SCIO to apply for the Internet news license when the relevant regulation came into effect. However, as of the date of this prospectus, the SCIO has not issued an Internet news license to Tianying Jiuzhou. As a result of Tianying Jiuzhou's lack of an Internet news license, the SCIO or applicable information office at the provincial level may order us to cease the violating operations and impose a fine on us of not more than RMB30,000. In the case of severe contravention as determined by SCIO or its applicable local counterpart in its sole discretion, the telecommunications administrative authorities may, based on written confirmation opinions of SCIO or the applicable information office at the provincial level, and in accordance with the relevant regulations on Internet information services, cease our Internet information services that provide current political news or cease the Internet access services that third parties provide to us. In 2010, approximately 42.0% of our total revenues were derived from Internet information services and services that relied on Internet access services from third parties.

    During the course of the audit of our financial statements, we and our independent registered public accounting firm identified one material weakness and one significant deficiency in our internal control over financial reporting. If we fail to establish and maintain effective internal control over financial reporting, our ability to accurately and timely report our financial results in accordance with U.S. GAAP may be materially and adversely affected. In addition, investor confidence in us and the market price of our ADSs may decline significantly if we or our independent registered public accounting firm conclude that our internal control over financial reporting is not effective.

        We have a relatively short operating history and limited accounting personnel and other resources with which to address our internal controls and procedures over financial reporting prior to this offering. During the course of the audit of our consolidated financial statements for the year ended December 31, 2008, 2009 and 2010, we and our independent registered public accounting firm

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identified one material weakness and one significant deficiency in our internal control over financial reporting, as defined in AU 325, Communicating Internal Control Related Matters Identified in an Audit, of the AICPA Professional Standards. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of our company's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

        The material weakness identified in connection with the audit of our financial statements in 2008, 2009 and 2010 relates to the lack of sufficient accounting personnel with appropriate understanding of U.S. GAAP accounting issues and the SEC reporting requirements. The significant deficiency relates to the lack of written accounting manual and closing procedures to facilitate preparation of financial statements for financial reporting purposes. The material weakness resulted in audit adjustments and corrections to our financial statements.

        We appointed a chief financial officer with public company SEC reporting and U.S. GAAP experience in early December 2010. In addition, we plan to take initiatives to improve our internal control over financial reporting and disclosure controls, including (i) establishing an audit committee to oversee the accounting and financial reporting processes as well as external and internal audits of our company, (ii) establishing an internal audit function, (iii) hiring additional qualified professionals with relevant accounting experience for our finance and accounting department, (iv) providing additional accounting and financial reporting training for our accounting personnel, (v) standardizing our accounting systems by introducing additional programs and procedures, (vi) formalizing and standardizing policies and procedures in relation to period-end-closing and financial reporting at both headquarters and subsidiaries levels and (vii) increasing the level of interaction among our management, audit committee and other external advisors. However, the implementation of these initiatives may not fully address the material weakness and significant deficiency in our internal control over financial reporting. In addition, the process of designing and implementing an effective financial reporting system is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a financial reporting system that is adequate in satisfying our reporting obligations. Our failure to cure the material weakness and significant deficiency or our failure to discover and address any other weaknesses or deficiencies may result in inaccuracies in our financial statements in accordance with U.S. GAAP or delay in preparing our financial statements. As a result, our business, financial condition, results of operations and prospects, as well as the trading price of our ADSs, may be materially and adversely affected. Ineffective internal control over financial reporting could also expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which our ADSs are listed, regulatory investigations or civil or criminal sanctions.

        Upon the completion of this offering, we will become a public company in the United States that is, or will be, subject to the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act. The SEC, as required under Section 404 of the Sarbanes-Oxley Act, or Section 404, has adopted rules requiring public companies to include a report of management on the effectiveness of these companies' internal control over financial reporting in their annual reports. In addition, an independent registered public accounting firm must report on the effectiveness of public companies' internal control over financial reporting. These requirements will first apply to us beginning with our annual report on Form 20-F for the fiscal year ending December 31, 2012. Our management may conclude that our internal control over financial reporting is not effective due to our failure to cure the identified material weakness and significant deficiency or otherwise. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm may not conclude that our internal control over financial reporting is effective or may issue a report that is qualified if it is not satisfied with our internal control over financial reporting or the level at which our

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controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In addition, during the course of the evaluation, documentation and testing of our internal control over financial reporting, we may identify deficiencies that we may not be able to remediate in time to meet the deadline imposed by the SEC for compliance with the requirements of Section 404. If we fail to achieve and maintain the adequacy of our internal control over financial reporting, as these standards are modified, supplemented or amended from time to time, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with the Sarbanes-Oxley Act, our independent registered public accounting firm may determine that our internal control over financial reporting is not effective or it may decline to attest to the effectiveness of our internal control over financial reporting.

    We depend on China Mobile, a related party, and other PRC mobile telecommunications operators for the majority of our paid service revenues, and any termination or deterioration of our relationship with these telecommunications operators may result in severe disruptions to our business operations and the loss of the majority of our revenues.

        We derive substantially all of our MIVAS revenues, as well as our revenues from our mobile subscription and pay-per-view video services from the provision of content through the networks of the PRC telecommunications operators. In particular, we rely primarily on the networks of China Mobile, a shareholder of Phoenix TV since August 2006 with an equity interest of 19.71% as of March 31, 2011, to deliver our services. In 2008, 2009 and 2010, we derived approximately 90.3%, 87.0% and 86.8%, respectively, of our paid service revenues from China Mobile. Within these revenues, we generated a significant portion through fixed fee arrangements with China Mobile for our digital reading services. The remainder of our MIVAS revenues and revenues from our mobile subscription and pay-per-view video services are derived from China United Telecommunications Corporation, or China Unicom, and China Telecommunications Corporation, or China Telecom.

        We have entered into a series of agreements with China Mobile and other Chinese mobile operators and their provincial subsidiaries to provide MIVAS and mobile subscription and pay-per-view video services through their networks. These mobile operators could terminate cooperation with us or refuse to perform their obligations to pay for the MIVAS and mobile subscription and pay-per-view video services we provide under the terms of our agreements with them for a variety of reasons, including failure to meet specified performance standards, the provision of poor services that gives rise to a high level of customer complaints or the delivery of content that violates the relevant operator's policies and applicable law. In addition, our agreements with the mobile operators are generally for terms of one year or less, the majority of which have automatic renewal provisions. There is no assurance that we will be able to renew these agreements on commercially reasonable terms, or at all. If any of the Chinese mobile operators ceases to cooperate with us, it is unlikely that such operator's customers will continue to use our mobile services. In particular, if China Mobile ceases to cooperate with us, it is unlikely that we will be able to build up sufficient new customers through the networks of other Chinese mobile operators to develop a customer base comparable to that which we have developed through China Mobile. Due to our reliance on China Mobile and other Chinese mobile operators to deliver our MIVAS and mobile subscription and pay-per-view video services to our customers, any termination or deterioration of our relationship with China Mobile or other Chinese mobile operators may result in severe disruptions to our business operations and the loss of the majority of our revenues, and could have a material adverse effect on our financial condition and results of operations.

        In addition, our negotiating leverage with China Mobile and other Chinese mobile operators is limited because China Mobile and other Chinese mobile operators operate the mobile networks through which a large number of service and content providers deliver their products to mobile phone users in China. We cannot assure you that such operators will not adopt business strategies that could have a material adverse effect on our business. In addition, our ability to develop certain new MIVAS

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or mobile video businesses going forward may be restricted by the business policies of China Mobile or other Chinese mobile operations. Due to our limited negotiating leverage with these mobile operators, we cannot exert any influence on their business decisions. Therefore, we cannot assure you that China Mobile or other Chinese mobile operators will not implement business strategies that could have a material adverse effect on our results of operation and financial condition, or limit our ability to grow our MIVAS or mobile video businesses in the future.

    Our quarterly revenues and operating results may fluctuate, which makes our results of operations difficult to predict and may cause our quarterly results of operations to fall short of expectations.

        Our quarterly revenues and operating results have fluctuated in the past and may continue to fluctuate depending upon a number of factors, many of which are out of our control. For these reasons, comparing our operating results on a period-to-period basis may not be meaningful, and you should not rely on our past results as an indication of our future performance. Our quarterly and annual revenues and costs and expenses as a percentage of our revenues may be significantly different from our historical or projected rates. Our operating results in future quarters may fall below expectations. Any of these events could cause the price of our ADSs to fall. Other factors that may affect our financial results include, among others:

    global economic conditions;

    our ability to maintain and increase user traffic;

    our ability to attract and retain advertisers;

    changes in the policies of mobile operators;

    changes in government policies or regulations, or their enforcement;

    geopolitical events or natural disasters such as war, threat of war, earthquake or epidemics.

        Our operating results tend to be seasonal. For instance, we may have higher net advertising revenues during the fourth quarter of each year primarily due to greater advertising spending by our advertisers near the end of the year when they spend the remaining portions of their annual budgets. In addition, advertising spending in China has historically been cyclical, reflecting overall economic conditions as well as the budgeting and buying patterns of our customers.

    Our efforts to develop additional distribution channels for our MIVAS and mobile subscription and pay-per-view video services may not succeed or may be restricted or halted by telecommunications operators.

        Cooperation with mobile device manufacturers has provided us with an important distribution channel for our MIVAS and mobile video services businesses. We pre-install into the menus of certain mobile devices certain of our MIVAS icons and short codes for products offered on the multimedia messaging service, or MMS, short message service, or SMS, and interactive voice response, or IVR, platforms. A consumer who buys a new mobile device pre-installed with our MIVAS or mobile video icons and codes can access and subscribe to our services quickly and easily. Mobile device manufacturers have, through our cooperation with them, become an important distribution channel. We cannot guarantee that mobile device manufacturers will continue their cooperation with us directly or maintain their current revenue sharing arrangements with us.

    Our dependence on the billing systems and records of mobile operators may require us to estimate portions of our reported revenues and cost of revenues for most of our MIVAS and mobile subscription and pay-per-view video services, which may require subsequent adjustments to our financial statements.

        We depend largely on the billing systems and records of the telecommunications operators to record the volume of our MIVAS and mobile subscription and pay-per-view video services provided, bill

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our customers, collect payments and remit to us our portion of the revenues. We record revenues based on monthly statements from the mobile operators confirming the value of our services that the mobile operators billed to customers during the month. Due to our past experience with the timing of receipt of the monthly statements from the mobile operators, we expect that we may need to rely on our own internal estimates for the portion of our reported revenues and cost of revenues for which we will not have received monthly statements. In such instances, our internal estimates would be based on our own internal data of expected revenues and related fees from services provided. As a result of such reliance on internal estimates, we may overstate or understate our revenues and cost of revenues for the relevant reporting period, and may be required to make adjustments in our financial reports when we actually receive the mobile operators' monthly statements for such period. We endeavor to reduce the discrepancy between our revenue estimates and the revenues calculated by the mobile operators and their subsidiaries; however, we cannot assure you that these efforts will be successful. In addition, we generally do not have the ability to independently verify or challenge the accuracy of the billing systems of the mobile operators. We cannot assure you that any negotiations between us and mobile operators to reconcile billing discrepancies would be resolved in our favor or that our financial condition and results of operations would not be materially and adversely affected as a result. Historically, there has been no significant difference between our revenue estimates and the mobile operators' billing statements.

    Significant changes in the policies or guidelines of China Mobile or other Chinese mobile operators with respect to services provided by us may result in lower revenues or additional costs for us and materially and adversely affect our business operations, financial condition and results of operations.

        China Mobile or other Chinese mobile operators may from time to time issue policies or guidelines, requesting or stating their preferences for certain actions to be taken by all mobile Internet service providers using their networks. Due to our reliance on China Mobile and other Chinese mobile operators, a significant change in their policies or guidelines may cause our revenues to decrease or operating costs to increase. We cannot assure you that our financial condition and results of operations will not be materially adversely affected by policy or guideline changes by China Mobile or other Chinese mobile operators.

        For example, on November 30, 2009, China Mobile implemented a series of measures on PRC-based WAP sites targeted at eliminating offensive or unauthorized content, including pornographic content. As a result, China Mobile and other Chinese mobile operators suspended billing for their customers for all WAP and G+ mobile gaming platform services, including those services that do not contain offensive or unauthorized content, on behalf of third-party service providers of such services. China Mobile and mobile other operators have not yet indicated how long these new measures will remain in effect or whether they will expand the current measures. In the fourth quarter of 2009, mobile operators also imposed restrictions on pre-installations of mobile applications on handsets and tightened the requirement of additional billing confirmations. Largely due to such measures, our revenues from WVAS decreased in 2009 as compared to 2008.

        In January 2010, China Mobile began implementing an additional series of measures targeted at further improving the user experience for mobile device embedded services, in addition to the introduction of a new short message service, or SMS, code management system. Under these measures, WVAS that are embedded in mobile devices will be required to introduce additional notices and confirmations to end-consumers during the purchase of such services. In addition, services related to SMS short codes will be required to be more tailored to the specific service offerings or service partners. Previously, a single SMS code could be used for multiple service offerings or partners.

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        We cannot assure you that China Mobile or other Chinese mobile operators will not introduce additional requirements with respect to the procedures for ordering monthly subscriptions or single-transaction downloads of our MIVAS (including WVAS) and our mobile subscription and pay-per-view video services, notifications to customers, the billing of customers or other consumer-protection measures or adopt other policies that may require significant changes in the way we promote and sell our MIVAS and mobile subscription and pay-per-view video services and develop our MIVAS and mobile video businesses, any of which could have a material adverse effect on our financial condition and results of operations.

    Our strategy of acquiring complementary assets, technologies and businesses may fail and may result in equity or earnings dilution.

        As part of our business strategy, we intend to identify and acquire assets, technologies and businesses that are complementary to our business. Acquired businesses or assets may not yield the results we expect. In addition, acquisitions could result in the use of substantial amounts of cash, potentially dilutive issuances of equity securities, significant amortization expenses related to intangible assets and exposure to potential unknown liabilities of the acquired business. Moreover, the cost of identifying and consummating acquisitions, and integrating the acquired businesses into ours, may be significant, and the integration of acquired business may be disruptive to our business operations. In addition, we may have to obtain approval from the relevant PRC governmental authorities for the acquisitions and comply with any applicable PRC rules and regulations, which may be costly. In the event our acquisitions are not successful, our financial condition and results of operation may be materially and adversely affected.

    Failure to obtain SARFT's approval for introducing and broadcasting foreign television programs could have a material adverse effect on our ability to conduct our business.

        A substantial amount of the video content on our website is closely linked to or is the online version of the TV content of Phoenix TV. PRC law requires approval from SARFT for introducing and broadcasting foreign television programs into China. In September 2004, SARFT promulgated certain regulations the Administrative Regulations on the Introduction and Broadcasting of Foreign Television Programs, pursuant to which only organizations designated by SARFT are qualified to apply to SARFT or its authorized entities for the introduction or broadcasting of foreign television programs. In addition, on July 6, 2004, SARFT issued the Measures for the Administration of Publication of Audio-Visual Programs through the Internet or Other Information Networks, or the 2004 A/V Measures, which explicitly prohibit Internet service providers from broadcasting any foreign television program over an information network and state that any violation may result in warnings, monetary penalties or, in severe cases, criminal liabilities. On November 19, 2009, SARFT issued a notice which extended this prohibition to broadcasting over mobile phones. In December 2007 and March 2009, however, SARFT issued two notices which provide that certain foreign audio-visual programs may be published through the Internet provided that certain regulatory requirements have been met and certain permits have been obtained, thereby implying that the absolute restriction against broadcasting foreign television programs on the Internet as set forth in the 2004 A/V Measures has been lifted. See "Regulation—Regulation of Foreign Television Programs and Satellite Channels." As of the date of this prospectus, we have not obtained an approval from SARFT for introducing and broadcasting foreign TV programs produced by Phoenix TV or other foreign TV stations in China. We have made oral inquiries with SARFT, and were orally informed that such operations do not violate the regulations on the introduction and distribution of foreign TV programs. Therefore, there is considerable uncertainty as to whether we are permitted to transmit foreign television programs through the online video services, including video VAS, that we offer. If SARFT or its local branch requires us to obtain its approval for our introduction and online broadcasting of overseas TV programs, we may not be able to obtain such approval in a timely manner or at all. In such case, the PRC government would have the power to,

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among other things, levy fines against us, confiscate our income, order us to cease certain content service, or require us to temporarily or permanently discontinue the affected portion of our business.

    Failure to obtain certain permits for our health and Chinese medicine verticals would subject us to penalties.

        Entities in China are not allowed to provide drug-related or medical care information services online before obtaining an Internet Medicine Information Service Qualification Certificate and a Consent Letter for Internet Medical Care Information from the relevant local government agencies. See "Regulation—Regulation of Certain Internet Content." Certain of our verticals, such as our health and traditional Chinese medicine verticals contain drug-related information and certain online health diagnoses and treatment advices provided by our users. We do not currently have such certificate or consent letter, but have engaged an agency to assist us in applying for such certificate and consent letter. We cannot assure you that we may be able to obtain them. Without such certificate and consent letter, we may be subject to administrative warnings, termination of any Internet drug-related services and online health diagnoses and treatment services on our website, and other penalties that are not clearly provided for in the relevant regulations.

    If we fail to obtain or maintain all applicable permits and approvals relating to online games, our ability to conduct our online game business and certain other businesses could be affected and we could be subject to penalties and other administrative sanctions.

        Pursuant to PRC regulations regulating online games, online games (including mobile games) are categorized as a type of "online cultural product" and the provision of online games is deemed an Internet publication activity. Therefore, in order to operate an online game business, an operator should obtain an Online Culture Operating Permit from MOC (with a business scope covering operation of online games) and an Internet Publication License from GAPP in order to directly make its online games publicly available in China. Furthermore, pursuant to the Provisional Measures on the Administration of Online Games promulgated by MOC on June 3, 2010, an online mobile games operator should make a filing with MOC in respect of each domestic game within 30 days of commencing operations. In addition, each online game must be screened by GAPP by way of an approval process before it is first published and made publicly available. See "Regulation—Regulation of Online Cultural Activities, Online Games and Internet Music".

        Both Tianying Jiuzhou and Yifeng Lianhe are currently operating online game businesses. As of the date of this prospectus, Tianying Jiuzhou has obtained an Online Culture Operating Permit from MOC with respect to its operation of online games, and an Internet Publication License from GAPP with respect to books and periodicals published on the Internet, including the mobile Internet, and online and mobile games. Yifeng Lianhe has not, however, obtained an Online Culture Operation Permit or an Internet Publication License. In addition, we have not obtained advanced approval for any of our online games from GAPP or filed our online games with MOC. We cannot assure you that (i) Yifeng Lianhe can obtain Online Culture Operating Permit from MOC allowing it to operate online games; (ii) Yifeng Lianhe can obtain an Internet Publication License; or (iii) Tianying Jiuzhou and Yifeng Lianhe can obtain all the required approvals and complete the relevant filing procedures with the relevant government authorities for each game they operate in a timely manner or at all. If the relevant authority challenges the commercial operation of our games and determines that we are in violation of the relevant laws and regulations regarding online and mobile games, it would have the power to, among other things, levy fines against us, confiscate our income and require us to discontinue our online game business. In addition, if we were deemed to be in violation of the relevant laws and regulations regarding online and mobile games, GAPP would have the ability to withdraw the Internet Publication License that it recently granted to Tianying Jiuzhou on April 15, 2011, which may affect, directly or indirectly, our ability to conduct our online digital reading services and game services.

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    Our consolidated affiliated entities and their respective shareholders do not own the trademarks used in their value-added telecommunications services, which may subject them to revocation of their licenses or other penalties or sanctions.

        Pursuant to the Notice on Strengthening the Administration of Foreign Investment in Value-added Telecommunications Services issued on July 13, 2006 by MIIT, or the MIIT 2006 Notice, domestic telecommunications service providers are prohibited from leasing, transferring or selling telecommunications business operating licenses to any foreign investors in any form, or providing any resources, sites or facilities to any foreign investors for their operation of telecommunications businesses in China. According to the MIIT 2006 Notice, the holder of a value-added telecommunications business operating license, or ICP License, or its shareholders must directly own the domain names and trademarks used in their value-added telecommunications business operations. After the promulgation of the MIIT 2006 Notice in July 2006, the MIIT issued a subsequent notice in October 2006, or the MIIT October Notice, urging value-added telecommunication service operators to conduct self-examination regarding any noncompliance with the MIIT 2006 Notice prior to November 1, 2006. Pursuant to the MIIT October Notice, ICP License-holders who were not in compliance with the MIIT 2006 Notice were allowed to submit a self-correction report to the local provincial-level branch of MIIT by November 20, 2006.

        Our PRC consolidated affiliated entities, Tianying Jiuzhou and Yifeng Lianhe, are currently engaged in the provision of value-added telecommunications services and each of them has obtained ICP Licenses from MIIT or its local counterpart in Beijing. In addition, Tianying Jiuzhou owns our material domain names, including ifeng.com. However, our affiliated consolidated entities have not registered any trademarks to date and all the trademarks used in the value-added telecommunications services of Tianying Jiuzhou and Yifeng Lianhe, which consist of certain of Phoenix TV's logos, are licensed from Phoenix Satellite Television Trademark Limited, a wholly owned subsidiary of Phoenix TV. Therefore, we are not currently in compliance with the MIIT 2006 Notice.

        Phoenix Satellite Television Trademark Limited has completed the application form to transfer the "ifeng" logo, which the affiliated consolidated entities now license from Phoenix Satellite Television Trademark Limited, to Tianying Jiuzhou, and Tianying Jiuzhou has submitted the application to the PRC Trademark Office. It is expected that the transfer and related registration should take approximately six to nine months to complete. In addition, we will continue to examine the possibility of transferring to our affiliated consolidated entities all or part of the ownership of additional licensed logos currently used by them in a manner that would meet the requirements of PRC trademark regulations in due course in the future. Furthermore, we will register some of our own trademarks. We have begun the process of designing proprietary logos for use in the respective businesses of Tianying Jiuzhou and Yifeng Lianhe and plan to finish the designs in the next three months. Once the designs are finished, we plan to submit our registration applications to the PRC Trademark Office. The Trademark Office will first undertake a preliminary examination for compliance with the PRC Trademark Law, and if it finds our proposed trademarks to be in compliance, will make a public announcement allowing any person to file a claim to the trademark within a period of three months. If there is no such opposition, the Trademark Office will register the trademark, issue a registration certificate to us and make a public announcement. We expect the design and registration process to take approximately two years to complete. We intend to continue to use the logos we license from Phoenix TV in the interim period until our proprietary logos have been registered, and may continue to use these logos after our proprietary logos have been registered and the "ifeng" logo has been transferred to Tianying Jiuzhou.

        Although, neither of our consolidated affiliated entities has been required by the MIIT or its local counterpart to obtain and hold the ownership of the relevant trademarks related to our value-added telecommunications services to date, the provincial-level counterpart of MIIT may enforce the MIIT 2006 Notice on our affiliated consolidated entities. In such case, the provincial-level counterpart of

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MIIT could order our affiliated consolidated entities to own the registered trademarks used in their value-added telecommunications business within a specified period of time. We do not have knowledge about the period of time that MIIT would provide us to complete the necessary remediation measures. We are also not aware that since issuing the MIIT October Notice, MIIT has promulgated any additional notices or guidelines with respect to timelines for self-examination or remediation of noncompliance with the MIIT 2006 Notice. Moreover, the MIIT October Notice does not specify how much time the MIIT allows for ICP License-holders to remedy their noncompliance issues. If we failed to remedy any noncompliance within the time frame specified by the provincial counterpart of MIIT, the relevant governmental authority would have the discretion to revoke our affiliated consolidated entities' licenses for value-added telecommunications or subject them to other penalties or sanctions, which would have a material and adverse effect on our business, financial condition, results of operations and prospects. Our value-added telecommunications services currently account for substantially all of our total revenues.

    We may be adversely affected by the complexity, uncertainties and changes in PRC regulation of Internet businesses and companies, including limitations on our ability to own key assets such as our website.

        The Chinese government heavily regulates the Internet industry, including foreign investment in the Chinese Internet industry, content on the Internet and license and permit requirements for service providers in the Internet industry. Since some of the laws, regulations and legal requirements with respect to the Internet are relatively new and evolving, their interpretation and enforcement involve significant uncertainties. In addition, the Chinese legal system is based on written statutes, such that prior court decisions can only be cited for reference and have little precedential value. As a result, in many cases it is difficult to determine what actions or omissions may result in liabilities. Issues, risks and uncertainties relating to China's government regulation of the Chinese Internet sector include the following:

    We operate our website in China through contractual arrangements due to restrictions on foreign investment in businesses providing value-added telecommunication services, including substantially all of our paid services and advertising services.

    Uncertainties relating to the regulation of the Internet business in China, including evolving licensing practices, give rise to the risk that some of our permits, licenses or operations may be subject to challenge, which may be disruptive to our business, subject us to sanctions or require us to increase capital, compromise the enforceability of relevant contractual arrangements, or have other adverse effects on us. The numerous and often vague restrictions on acceptable content in China subject us to potential civil and criminal liability, temporary blockage of our website or complete shut-down of our website. For example, the State Secrecy Bureau, which is directly responsible for the protection of state secrets of all Chinese government and Chinese Communist Party organizations, is authorized to block any website it deems to be leaking state secrets or failing to meet the relevant regulations relating to the protection of state secrets in the distribution of online information. In addition, the newly amended Law on Preservation of State Secrets which became effective on October 1, 2010 provides that whenever an Internet service provider detects any leakage of state secrets in the distribution of online information, it should stop the distribution of such information and report to the authorities of state security and public security. As per request of the authorities of state security, public security or state secrecy, the Internet service provider should delete any contents on its website that may lead to disclosure of state secrets. Failure to do so on a timely and adequate basis may subject the service provider to liability and certain penalties imposed by the State Security Bureau, Ministry of Public Security and/or MIIT or their respective local counterparts.

    On September 28, 2009, GAPP and the National Office of Combating Pornography and Illegal Publications jointly published a circular expressly prohibiting foreign investors from participating

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      in Internet game operating business via wholly owned, equity joint venture or cooperative joint venture investments in China, and from controlling and participating in such businesses directly or indirectly through contractual or technical support arrangements. It is not clear yet as to whether other PRC government authorities, such as the Ministry of Commerce, or MIIT, will support GAPP in enforcing such prohibition.

    Due to the increasing popularity and use of the Internet and other online services, it is possible that a number of laws and regulations may be adopted with respect to the Internet or other online services covering issues such as user privacy, pricing, content, copyrights, distribution, antitrust and characteristics and quality of products and services. The adoption of additional laws or regulations may impede the growth of the Internet or other online services, which could, in turn, decrease the demand for our products and services and increase our cost of doing business. Moreover, the applicability to the Internet and other online services of existing laws in various jurisdictions governing issues such as property ownership, sales and other taxes, libel and personal privacy is uncertain and may take years to resolve. Any new legislation or regulation, the application of laws and regulations from jurisdictions whose laws do not currently apply to our business, or the application of existing laws and regulations to the Internet and other online services could significantly disrupt our operations or subject us to penalties.

        The interpretation and application of existing PRC laws, regulations and policies, the stated positions of relevant PRC government authorities and possible new laws, regulations or policies have created substantial uncertainties regarding the legality of existing and future foreign investments in, and the businesses and activities of, Internet businesses in China, including our business.

    Failure to fully comply with PRC regulations regarding value-added telecommunications services may subject us to fines and other legal or administrative sanctions.

        Our affiliated consolidated entities provide value-added telecommunication services in China, from which we derive substantially all of our total revenues. Pursuant to the relevant PRC regulations regarding value-added telecommunications services, commercial operators of value-added telecommunications services must first obtain an ICP License from MIIT or its provincial-level counterparts. Operators providing ICP services across provinces are required to apply for a trans-regional ICP License directly from MIIT and make a filing with the relevant provincial counterparts of MIIT before they commence their operation in the relevant provinces. If there is any change or update to the registered information recorded on the ICP License or filed with the local provincial level counterparts of MIIT, the ICP License holder shall apply to MIIT or its relevant provincial-level counterpart to amend the relevant registered information or records. In addition, an approved ICP service operator must conduct its business in accordance with the specifications recorded on its ICP License. See "Regulation—Regulation of Telecommunications and Internet Information Services." In addition, with respect to services relating to SMS short codes, operators are required to obtain a SMS services access code license, or the SMS License, from MIIT or its provincial-level counterparts. If they provide services relating to SMS short codes across provinces, operators must apply for a trans-regional SMS License from MIIT and conduct filings with each of the provincial-level counterparts of MIIT where they conduct businesses. See "Regulation—Regulation of Telecommunications Networks Code Number Resources."

        Each of our affiliated consolidated entities has obtained a trans-regional ICP License and a SMS License from MIIT and completed filing procedures in connection with the ICP License with the relevant MIIT provincial level counterparts prior to the commencement of its operations in the relevant provinces. Currently, Tianying Jiuzhou and Yifeng Lianhe are handling filing procedures in connection with SMS Licenses in certain provinces and updating certain information with regard to ICP Licenses and SMS Licenses filed with certain local MIIT counterparts. Failure to complete the SMS License filings in certain provinces or to update the filing information of the ICP Licenses in a timely manner,

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may cause us to be ordered to rectify our noncompliance, given a warning and made subject to a fine of between RMB5,000 and RMB30,000. In addition, pursuant to the specifications recorded on the appendices to the ICP License of Tianying Jiuzhou and Yifeng Lianhe, Tianying Jiuzhou must establish a server platform as well as a branch office in each of Beijing, Zhengzhou, Henan Province and Dongguan, Guangzhou Province, and Yifeng Lianhe must establish server platforms as well as branch offices in each of Beijing and Nanjing Jiangsu Province. As of the date of this prospectus, Tianying Jiuzhou has not yet established server platforms or branch offices in Zhengzhou or Dongguan, and Yifeng Lianhe has not set up a server platform in Nanjing. Neither of Tianying Jiuzhou and Yifeng Lianhe has obtained any approval from MIIT allowing them to suspend, or waive the aforesaid requirement to establish branch offices and/or server platform(s) in the relevant cities. To date, Tianying Jiuzhou and Yifeng Lianhe have passed the annual inspections of their ICP Licenses and we have not received any notice of warning or penalties from MIIT or any of its local counterparts. If Tianying Jiuzhou or Yifeng Lianhe is deemed to be in violation of the relevant PRC regulations regarding value-added telecommunications services due to its non-compliance with respect to establishing certain servers or branch offices, MIIT or its applicable provincial-level counterpart may order us to rectify the noncompliance, confiscate the revenues generated therefrom and impose a fine of three to five times of the revenues (if the revenues generated therefrom are at least RMB50,000) or a fine of between RMB100,000 and RMB1,000,000 (if the revenues generated therefrom is less than RMB50,000). In such an event, we would promptly rectify the noncompliance by setting up the requisite branch offices and/or server platform(s), which would not be administratively difficult and would not cause us to incur material expenses. If we were to fail to do so and the MIIT or its relevant provincial-level counterpart deemed us to be in severe contravention of the relevant PRC regulations, then such authority may order us to stop doing business for internal rectification.

    The Chinese government may prevent us from advertising or distributing content, including UGC, that it believes is inappropriate and we may be subject to penalties for such content or we may have to interrupt or stop the operation of our website.

        China has enacted regulations governing Internet access and the distribution of news and other information. In the past, the Chinese government has stopped the distribution of information over the Internet or through mobile Internet devices that it believes violates Chinese law, including content that it believes is obscene or defamatory, incites violence, endangers the national security, or contravenes the national interest. In addition, certain news items, such as news relating to national security, may not be published without permission from the Chinese government. If the Chinese government were to take any action to limit or prohibit the distribution of information through our websites or through our services, or to limit or regulate any current or future content or services available to users on our network, our business could be significantly harmed.

        In addition to professionally produced content, content from Phoenix TV and our in-house produced content, we allow our users to upload text and images (UGC) to our websites. We have a content screening team of 30 editors who are responsible for monitoring and preventing the public release of inappropriate or illegal content, including UGC, on our websites or through our services. Although we have adopted internal procedures to monitor the content displayed on our websites, due to the significant amount of UGC uploaded by our users, we may not be able to identify all the UGC that may violate relevant laws and regulations. Failure to identify and prevent inappropriate or illegal content from being displayed on our websites may subject us to liability.

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        Moreover, because the definition and interpretation of prohibited content is in many cases vague and subjective, it is not always possible to determine or predict what content might be prohibited under existing restrictions or restrictions that might be imposed in the future. For example, in 2005, SARFT issued a notice prohibiting commercials for WVAS related to "fortune-telling" from airing on radio and television stations effective in February 2005. SARFT or other Chinese government authorities may prohibit the marketing of other Internet VAS, video VAS or MIVAS via a channel we depend on to generate revenues, which could have a material adverse effect on our business, results of operations or financial position.

    Content provided on our website may expose us to libel or other legal claims which may result in costly legal damages.

        Claims have been threatened and filed against us for libel, defamation, invasion of privacy and other theories based on the nature and content of the materials posted on our website. While we screen our content for such potential liability, there is no assurance that our screening process will identify all potential liability, especially liability arising from UGC and content we license from thirty parties. In the past, some of the claims brought against us have resulted in liability. Although none of such liability was material, we cannot assure you we will not be subject to future claims that could be costly, encourage similar lawsuits, distract our management team and harm our reputation and possibly our business.

    Advertisements on our website may subject us to penalties and other administrative actions.

        Under PRC advertising laws and regulations, we are obligated to monitor the advertising content shown on our website to ensure that such content is true, accurate and in full compliance with applicable laws and regulations. In addition, where a special government review is required for specific types of advertisements prior to website posting, such as advertisements relating to pharmaceuticals, medical instruments, agrochemicals and veterinary pharmaceuticals, we are obligated to confirm that such review has been performed and approval has been obtained from relevant governmental authorities, which include the local branch of the SAIC, the local branch of the State Food and Drug Administration, the local branch of the Ministry of Health and the local branch of the State Administration of Traditional Chinese Medicine. To fulfill these monitoring functions, we include clauses in all of our advertising contracts requiring that all advertising content provided by advertisers must comply with relevant laws and regulations. Pursuant to the contracts between us and advertising agencies, advertising agencies are liable for all damages to us caused by their breach of such representations. Before a sale is confirmed and the advertisement is publicly posted on our website, our account execution personnel, who comprise a separate back-office team, are required to review all advertising materials to ensure there is no racial, violent, pornographic or any other improper content, and will request the advertiser to provide proof of governmental approval if the advertisement is subject to special government review. Violation of these laws and regulations may subject us to penalties, including fines, confiscation of our advertising income, orders to cease dissemination of the advertisements and orders to publish an announcement correcting the misleading information. In circumstances involving serious violations, such as posting an advertisement for fake pharmaceutical products, PRC governmental authorities may force us to terminate our advertising operation or revoke our licenses.

        A majority of the advertisements shown on our website are provided to us by third-party advertising agencies on behalf of advertisers. We cannot assure you that all of the content contained in such advertisements is true and accurate as required by the advertising laws and regulations. For example, the Advertisement Law provides that an advertisement operator who knows or should have known the posted advertisement is false or fraudulent will be subject to joint and several liability. Under the Detailed Implementation Rules on the Administrative Regulations for Advertisement, a website must not post any advertisements that are untrue or lacking the requisite governmental approval if such

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type of advertisements are subject to special governmental review. However, for the determination of the truth and accuracy of the advertisements, there are no implementing rules or official interpretations, and such a determination is at the sole discretion of the relevant local branch of the SAIC, which results in uncertainty in the application of these laws and regulations. If we are found to be in violation of applicable PRC advertising laws and regulations in the future, we may be subject to penalties and our reputation may be harmed, which may have a material and adverse effect on our business, financial condition, results of operations and prospects.

    Ineffective implementation of the separation of our advertising sales and regulatory compliance functions may result in insufficient supervision over the content of advertisements shown on our website and may subject us to penalties or administrative actions.

        We keep our advertising sales function separate from our team that is in charge of government compliance in order to prevent potential conflicts between our advertising business and our compliance with relevant PRC advertising laws and regulations. Before a sale is confirmed and the relevant advertisements are publicly posted on our website, our account execution personnel, who comprise a separate back-office team that does not interface directly with advertisers, are required to review all advertising materials to ensure that the relevant advertisements do not contain any racial, violent, pornographic or any other improper content. These personnel will request an advertiser to provide proof of governmental approval if its advertisement is subject to special governmental review. Such procedures are designed to enhance our regulatory compliance efforts. However, in the event that the separation of advertising sales and regulatory compliance functions is not effectively implemented, the content of our advertisements may not be in full compliance with applicable laws and regulations. If we are found to be in violation of applicable laws and regulations in the future, we may be subject to penalties and our reputation may be harmed. This may have a material and adverse effect on our business, financial condition and results of operations.

    The continuing and collaborative efforts of our senior management, key employees and other employees are crucial to our success, and our business may be harmed if we were to lose their services.

        Our success depends on the continuous efforts and services of Mr. Shuang Liu, our chief executive officer, Mr. Ya Li, our chief operating officer, and other members of our experienced senior management team, including Ms. Qianli Liu, our chief financial officer, and Mr. Yulin Wang, our executive vice president of mobile video and digital reading. If, however, one or more of our executives or other key personnel are unable or unwilling to continue to provide services to us, we may not be able to find suitable replacements easily or at all. Competition for management and key personnel is intense and the pool of qualified candidates is limited. We may not be able to retain the services of our executives or key personnel, or attract and retain experienced executives or key personnel in the future. We do not maintain key-man life insurance for any of our key personnel. If any of our executive officers or key employees joins a competitor or forms a competing company, we may lose advertisers, know-how and key professionals and staff members. Each of our executive officers and key employees has entered into an employment agreement with us, which contains non-compete provisions. However, if any dispute arises between us and our executives or key employees, these agreements may not be enforceable in China, where these executives and key employees reside, in light of uncertainties with China's legal system. See "—Risks Relating to Doing Business in China—Uncertainties with respect to the PRC legal system could limit the protections available to you and us."

        Our future success will also depend on our ability to attract and retain highly skilled technical, managerial, editorial, finance, marketing, sales and customer service employees. Qualified individuals are in high demand, and we may not be able to successfully attract, assimilate or retain the personnel we need to succeed.

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    We have granted, and may continue to grant, stock options, restricted shares and restricted share units under our share incentive plans or adopt new share incentive plans in the future, which may result in increased share-based compensation expenses.

        We adopted a share option plan in June 2008 and a restricted share and restricted share unit plan in March 2011. As of the date of this prospectus, 19,008,200 restricted shares of our company, 5,618,167 contingently issuable shares, options to purchase 17,619,725 ordinary shares and restricted share units obligating our company to issue and deliver 10,029,458 ordinary shares are outstanding. See "Management—Share Incentive Plans". For the years ended December 31, 2008, 2009 and 2010, we recorded RMB29.9 million, RMB10.2 million and RMB16.6 million (US$2.5 million), respectively, in share-based compensation expenses. We believe the granting of stock options is of significant importance to our ability to attract and retain key personnel and employees, and we will continue to grant stock options to employees in the future. Our share-based compensation expenses will increase materially in the first quarter of 2011 from the fourth quarter of 2010 and these expenses may continue to increase, which may have an adverse effect on our results of operations in the relevant periods.

    We have been and expect we will continue to be exposed to intellectual property infringement and other claims, including claims based on content posted on our website, which could be time-consuming and costly to defend and may result in substantial damage awards and/or court orders that may prevent us from continuing to provide certain of our existing services.

        Our success depends, in large part, on our ability to operate our business without infringing third-party rights, including third party intellectual property rights. Companies in the Internet, technology and media industries own, and are seeking to obtain, a large number of patents, copyrights, trademarks and trade secrets, and they are frequently involved in litigation based on allegations of infringement or other violations of intellectual property rights or other related legal rights. There may be patents issued or pending that are held by others that cover significant aspects of our technologies, products, business methods or services. Although our license agreements with licensors of premium licensed content require that the licensors have the legal right to license such content to us and give us the right to promptly remove any content that we have been notified contains infringing material, we cannot ensure that each licensor has such authorization and we may not receive notification of infringement. If any purported licensor does not actually have sufficient authorization relating to the premium licensed content or right to license a work of authorship provided to us, we may be subject to claims of copyright infringement from third parties, and we cannot ensure we can be fully indemnified by the relevant licensor for all losses we may incur from such claims.

        Third parties may take action and file claims against us if they believe that certain content on our site violates their copyrights or other related legal rights. We have been subject to such claims in the PRC. From January 1, 2008 to March 31, 2011, we have been subject to ten copyright infringement cases in the PRC, nine of which have been concluded. We have lost one case, settled five cases and three cases have been withdrawn. The damages awards or settlement we paid among the lost and settled cases range from approximately RMB6,000 to RMB300,000 per case.

        In addition, our platform is open to Internet users for uploading text and images. As a result, content posted by our users may expose us to allegations by third parties of infringement of intellectual property rights, invasion of privacy, defamation and other violations of third-party rights. Pursuant to our user agreement, users agree not to use our services in a way that is illegal, obscene or may otherwise violate generally accepted codes of ethics. However, given the volume of content uploaded it is not possible, and we do not attempt to identify and remove all potentially infringing content uploaded by our users.

        We cannot assure you that we will not become subject to copyright laws in other jurisdictions, such as the United States, by virtue of our listing in the United States, the ability of users to access our videos in the United States and other jurisdictions, the ownership of our ADSs by investors, the

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extraterritorial application of foreign law by foreign courts or otherwise. In addition, as a publicly listed company, we may be exposed to increased risk of litigation. Although we have not previously been subject to legal actions for copyright infringement in jurisdictions other than China, it is possible that we may be subject to such claims in the future. Any such claims in China, U.S., or elsewhere, regardless of their merit, could be time-consuming and costly to defend, and may result in litigation and divert management's attention and resources. Furthermore, an adverse determination in any such litigation or proceedings to which we may become a party in China, U.S. or elsewhere could cause us to pay substantial damages. For example, statutory damage awards in the U.S. can range from US$750 to US$30,000 per infringement, and if the infringement is found to be intentional, can be as high as US$150,000 per infringement. Additionally, the risk of an adverse determination in such litigation or an actual adverse determination may result in harm to our reputation or in adverse publicity. The risk of an adverse result or the actual adverse result in litigation may also require us to seek licenses from third parties, pay ongoing royalties or become subject to injunctions requiring us to remove content or take other steps to prevent infringement, each of which could prevent us from pursuing some or all of our business and result in our users and advertisers or potential users and advertising customers deferring or limiting their use of our services, which could materially adversely affect our financial condition and results of operations.

    We may not be able to adequately protect our intellectual property, which could cause us to be less competitive.

        We rely on a combination of copyright, trademark and trade secret laws and restrictions on disclosure to protect our intellectual property rights. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy or otherwise obtain and use our copyrighted content and other intellectual property. Monitoring such unauthorized use is difficult and costly, and we cannot be certain that the steps we have taken will prevent misappropriation. From time to time, we may have to resort to litigation to enforce our intellectual property rights, which could result in substantial costs and diversion of our resources. The PRC has historically afforded less protection to a company's intellectual property than the United States and the Cayman Islands, and therefore companies such as ours operating in the PRC face an increased risk of intellectual property piracy.

    The discontinuation of any of the preferential tax treatments available to us in China could materially and adversely affect our results of operations and financial condition.

        Under PRC tax laws and regulations, our PRC subsidiary, Fenghuang On-line enjoyed, or is qualified to enjoy, certain preferential income tax benefits. The Enterprise Income Tax Law, effective on January 1, 2008, or the EIT Law, and its implementation rules significantly curtail tax incentives granted to foreign-invested enterprises. The EIT Law, however (i) reduces the statutory rate of enterprise income tax from 33% to 25%, (ii) permits companies established before March 16, 2007 to continue to enjoy their existing tax incentives, subject to certain transitional rules, and (iii) introduces new tax incentives, subject to various qualification criteria. For example, the EIT Law permits certain "high and new technology enterprises strongly supported by the state" to enjoy a reduced enterprise tax rate of 15%. According to the relevant administrative measures, to qualify as "high and new technology enterprises strongly supported by the state," Fenghuang On-line must meet certain financial and non-financial criteria and complete verification procedures with the administrative authorities. Continued qualification as a "high and new technology enterprise" is subject to a three-year review by the relevant government authorities in China, and in practice certain local tax authorities also require annual evaluation of the qualification. In the event the preferential tax treatment for Fenghuang On-line is discontinued or is not verified by the local tax authorities, and the affected entity fails to obtain preferential income tax treatment based on other qualifications such as Advanced Technology Service Enterprise, it will become subject to the standard PRC enterprise income tax rate of 25%. We cannot assure you that the tax authorities will not, in the future, discontinue any of our preferential tax

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treatments, potentially with retroactive effect. On April 21, 2010, the State Administration of Taxation issued Circular 157 providing additional guidance on the interaction of certain preferential tax rates under the transitional rules of the EIT Law. Prior to Circular 157, we understood that if a high and new technology enterprise, or HNTE, entity was in a tax holiday period, where it was entitled to a 50% reduction in the tax rate, and it was also entitled to the 15% HNTE preferential tax rate, then it would be entitled to pay tax at the rate of 7.5%. Circular 157 appears on its face to have the effect that such an entity is entitled to pay taxes at either the lower of 15% or 50% of the applicable PRC tax rate (in terms of a foreign investment enterprise during transition period such as Fenghuang On-line, 22% for 2010, 24% for 2011 and 25% starting from 2012). However, to date, Beijing local-level tax bureau has not implemented Circular 157 and is holding the view that the relevant provisions may not apply to NHTEs in Science & Technology Park of Haidian District. Therefore, Fenghuang On-line's current tax rate remained unchanged. We expect the relevant tax authority to issue more guidance in the future and, upon the issuance of such guidance, Fenghuang On-line's effective tax rate may increase. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Taxation."

    Our operations could be disrupted by unexpected network interruptions caused by system failures, natural disasters or unauthorized tampering with our systems, and there is no assurance that our back-up system is sufficient to guarantee uninterrupted operation.

        The continual accessibility of website and the performance and reliability of our network infrastructure are critical to our reputation and our ability to attract and retain users, advertisers and merchants. Any system failure or performance inadequacy that causes interruptions in the availability of our services or increases the response time of our services could reduce our appeal to advertisers and consumers. Factors that could significantly disrupt our operations include: system failures and outages caused by fire, floods, earthquakes, power loss, telecommunications failures and similar events; software errors; computer viruses, break-ins and similar disruptions from unauthorized tampering with our computer systems; and security breaches related to the storage and transmission of proprietary information, such as credit card numbers or other personal information. Although we perform system back-up on a regular basis, there is no assurance that our back-up system is sufficient to guarantee uninterrupted operation. Future disruptions or any of the foregoing factors could damage our reputation, require us to expend significant capital and other resources and expose us to a risk of loss or litigation and possible liability. We do not carry business interruption insurance to compensate for losses that may occur as a result of any of these events. Accordingly, our revenues and results of operations may be materially and adversely affected if any of the above disruptions should occur.

    We have limited business insurance coverage.

        The insurance industry in China is still young and the business insurance products offered in China are limited. We do not have any business liability or disruption insurance coverage for our operations. Any business disruption, litigation or natural disaster may cause us to incur substantial costs and divert our resources.

    A prolonged slowdown in the PRC economy may materially and adversely affect our results of operations, financial condition, prospects and future expansion plans.

        Since the second half of 2008, global credit and capital markets, particularly in the United States and Europe, have experienced difficult conditions. These challenging market conditions have resulted in reduced liquidity, greater volatility, widening of credit spreads, lack of price transparency in credit markets, a reduction in available financing and lack of market confidence. These factors, combined with declining business and consumer confidence and increased unemployment in the United States and elsewhere in the world, have precipitated a global economic slowdown, including a slowdown in the rate of economic growth in recent quarters in China. Given the dramatic change in the overall credit environment and economy, it is difficult to predict how long these conditions will exist and the extent

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to which we may be affected. While there have been signs of economic recovery in China and the world's major economies, there can be no assurance that the economic recovery may be sustained. As a result, prolonged disruptions to the global credit and capital markets and the global economy may materially and adversely affect the Chinese economy, consumer spending in China and our business, results of operations, financial condition, prospects and future expansion plans.

    We may become a passive foreign investment company, or PFIC, which could result in adverse United States federal income tax consequences to United States Holders (as defined below).

        Based upon the past and projected composition of our income and valuation of our assets, including goodwill, we do not expect to be a "passive foreign investment company," or PFIC, for the current taxable year, and we do not expect to become one in the future, although there can be no assurance in this regard. The determination of whether or not we are a PFIC is made on an annual basis and will depend on the composition of our income and assets from time to time. Specifically, we will be classified as a PFIC for United States federal income tax purposes for any taxable year in which: (i) at least 75% of our gross income in a taxable year is passive income, or (ii) at least 50% of the value (determined based on a quarterly average) of our assets is attributable to assets that produce or are held for the production of passive income. The calculation of the value of our assets will be based, in part, on the quarterly market value of our ADSs, which is subject to change. See "Taxation—Material United States Federal Income Tax Consequences—Passive Foreign Investment Company."

        In addition, there are substantial uncertainties as to the treatment of our corporate structure and ownership of our affiliated consolidated entities for United States federal income tax purposes. If it is determined that we do not own the stock of our affiliated consolidated entities for United States federal income tax purposes (for instance, because the relevant PRC authorities do not respect these arrangements), we would likely be treated as a PFIC.

        If we are a PFIC for any taxable year during which you hold our ADSs or ordinary shares, such characterization could result in adverse United States federal income tax consequences to you if you are a United States Holder, as defined under "Taxation—Material United States Federal Income Tax Consequences." For example, if we are or become a PFIC, you may become subject to increased tax liabilities under United States federal income tax laws and regulations, and will become subject to burdensome reporting requirements. You can sometimes avoid the adverse tax consequences of the PFIC tax rules with respect to the stock you own in a PFIC by electing to treat such PFIC as a "qualified electing fund" under Section 1295 of the Code. However, this election is not available to you because we do not intend to comply with the requirements necessary to permit you to make this election. See "Taxation—Material United States Federal Income Tax Consequences—Passive Foreign Investment Company."

        If we were a PFIC for any year during which a United States Holder held our ADSs or ordinary shares, we generally would continue to be treated as a PFIC for all succeeding years during which such United States Holder held our ADSs or ordinary shares. See "Taxation—Material United States Federal Income Tax Consequences—Passive Foreign Investment Company." We cannot assure you that we will not be a PFIC for the current taxable year or any future taxable year. Moreover, the determination of our PFIC status is based on an annual determination that cannot be made until the close of a taxable year. This investigation includes ascertaining the fair market value of all of our assets on a quarterly basis and the character of each item of income we earn, which involves extensive factual investigation and cannot be completed until the close of a taxable year, and therefore, our U.S. counsel expresses no opinion with respect to our PFIC status.

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Risks Relating to Our Corporate Structure

    Phoenix TV (BVI) will own our Class B ordinary shares with 1.3 votes per share immediately prior to the completion of this offering, allowing it and Phoenix TV to exercise significant influence over matters subject to shareholder approval, and their interests may not be aligned with the interests of our other shareholders.

        Phoenix TV (BVI), a wholly owned direct subsidiary of Phoenix TV, owns 62.44% of our total issued and outstanding shares prior to this offering, and immediately following this offering will beneficially own 52.17% of our outstanding shares if the underwriters do not exercise their over-allotment option, or 50.89% if the underwriters exercise their overallotment option in full, in each case assuming that the entire assured entitlement distribution to Phoenix TV's shareholders is made in ADSs and the assured entitlement distribution will occur immediately after this offering. Moreover, all shares held by Phoenix TV (BVI) will become Class B ordinary shares with 1.3 votes per share immediately prior to the completion of this offering. As a result, Phoenix TV (BVI) will hold 58.65% of the total voting power of our shares immediately following this offering if the underwriters do not exercise their over-allotment option, or 57.39% if the underwriters exercise their overallotment option in full. Accordingly, Phoenix TV (BVI), and Phoenix TV through Phoenix TV (BVI), will have substantial control over the outcome of corporate actions requiring shareholder approval, including the election of directors, any merger, consolidation or sale of all or substantially all of our assets or any other significant corporate transaction, and their interests may not align with the interests of our other shareholders. Phoenix TV (BVI) may take actions that are not in the best interest of us or our other shareholders and may also delay or prevent a change of control or otherwise discourage a potential acquirer from attempting to obtain control of us, even if such a change of control would benefit our other shareholders. This significant concentration of share ownership may adversely affect the trading price of our ADSs due to investors' perception that conflicts of interest may exist or arise.

    We may have conflicts of interest with Phoenix TV and, because of Phoenix TV's controlling beneficial ownership interest in our company, may not be able to resolve such conflicts on terms favorable for us.

        Conflicts of interest may arise between Phoenix TV and us in a number of areas relating to our past and ongoing relationships. Potential conflicts of interest that we have identified include the following:

    Our board members or executive officers may have conflicts of interest.  Certain of our board members and executive officers own shares, restricted share units and/or options in Phoenix TV. Phoenix TV may continue to grant incentive share compensation to certain of our board members and executive officers from time to time. These relationships could create, or appear to create, conflicts of interest when these persons are faced with decisions with potentially different implications for Phoenix TV and us.

    Sale of shares in our company.  Phoenix TV (BVI) may decide to sell all or a portion of our shares that it beneficially owns to a third party, including to one of our competitors, thereby giving that third party substantial influence over our business and our affairs. Such a sale could be contrary to the interests of certain of our shareholders, including our employees or public shareholders.

    Competition.  We do not have a non-compete agreement with Phoenix TV and therefore neither we nor Phoenix TV is prohibited from entering into competition with each other in respect of our respective current businesses or new businesses.

    Allocation of business opportunities.  Business opportunities may arise that both we and Phoenix TV find attractive, and which would complement our respective businesses. We and Phoenix TV do not have an agreement governing the allocation of new business opportunities presented to us and Phoenix TV in the future, and therefore, it is not certain which company will have the priority to pursue such business opportunities when such opportunities arise.

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        Although our company is a separate, stand-alone entity, Phoenix TV (BVI), a wholly owned direct subsidiary of Phoenix TV, will own Class B ordinary shares immediately prior to the completion of this offering, each of which will be entitled to 1.3 votes on all matter subject to shareholders' vote, and we expect to operate as a part of the Phoenix TV group. Phoenix TV may from time to time make strategic decisions that it believes are in the best interests of its business as a whole, including our company. These decisions may be different from the decisions that we would have made on our own. Phoenix TV's decisions with respect to us or our business may be resolved in ways that favor Phoenix TV and therefore Phoenix TV's own shareholders, which may not coincide with the interests of our other shareholders. We may not be able to resolve any potential conflicts, and even if we do so, the resolution may be less favorable to us than if we were dealing with non-controlling shareholder. Even if both parties seek to transact business on terms intended to approximate those that could have been achieved among unaffiliated parties, this may not succeed in practice.

    If the PRC government finds that the agreements that establish the structure for operating our businesses in China do not comply with PRC governmental restrictions on foreign investment in Internet businesses, or if these regulations or the interpretation of existing regulations change in the future, we would be subject to severe penalties or be forced to relinquish our interests in those operations.

        Current PRC laws and regulations place certain restrictions on foreign ownership of companies that engage in Internet and mobile Internet businesses. Specifically, pursuant to the Regulations for Administration of Foreign-Invested Telecommunications Enterprises issued by the State Council issued on December 11, 2001 and amended on September 10, 2008, foreign ownership in an Internet content provider or other value-added telecommunication service providers may not exceed 50%. We conduct our operations in China principally through contractual arrangements among our wholly-owned PRC subsidiary, Fenghuang On-line and two consolidated affiliated entities in the PRC, namely, Yifeng Lianhe and Tianying Jiuzhou, and their respective shareholders. Yifeng Lianhe holds the licenses and permits necessary to conduct our mobile business in China, while Tianying Jiuzhou holds the licenses and permits necessary to conduct our Internet portal, video, mobile Internet business, and Internet advertising and related businesses in China. Our contractual arrangements with Yifeng Lianhe and Tianying Jiuzhou and their respective shareholders enable us to exercise effective control over these entities and hence treat them as our consolidated affiliated entities and consolidate their results. For a detailed discussion of these contractual arrangements, see "Our History and Corporate Structure."

        We cannot assure you, however, that we will be able to enforce these contracts. Although we believe we are in compliance with current PRC regulations, we cannot assure you that the PRC government would agree that these contractual arrangements comply with PRC licensing, registration or other regulatory requirements, with existing policies or with requirements or policies that may be adopted in the future. PRC laws and regulations governing the validity of these contractual arrangements are uncertain and the relevant government authorities have broad discretion in interpreting these laws and regulations. If the PRC government determines that we do not comply with applicable laws and regulations, it could revoke our business and operating licenses, require us to discontinue or restrict our operations, restrict our right to collect revenues, block our website, require us to restructure our operations, impose additional conditions or requirements with which we may not be able to comply, or take other regulatory or enforcement actions against us that could be harmful to our business. The imposition of any of these penalties would result in a material and adverse effect on our ability to conduct our business.

    We rely on contractual arrangements with our affiliated consolidated entities in China, and their shareholders, for our business operations, which may not be as effective in providing operational control or enabling us to derive economic benefits as through ownership of controlling equity interest.

        We rely on and expect to continue to rely on contractual arrangements with our affiliated consolidated entities in China and their respective shareholders to operate our Internet and mobile

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Internet businesses. These contractual arrangements may not be as effective in providing us with control over the affiliated consolidated entities as ownership of controlling equity interests would be in providing us with control over, or enabling us to derive economic benefits from the operations of, the affiliated consolidated entities. If we had direct ownership of the affiliated consolidated entities, we would be able to exercise our rights as a shareholder to (i) effect changes in the board of directors of those entities, which in turn could effect changes, subject to any applicable fiduciary obligations, at the management level, and (ii) derive economic benefits from the operations of the affiliated consolidated entities by causing them to declare and pay dividends. However, under the current contractual arrangements, as a legal matter, if any of the affiliated consolidated entities or any of their shareholders fails to perform its, his or her respective obligations under these contractual arrangements, we may have to incur substantial costs and resources to enforce such arrangements, and rely on legal remedies available under PRC laws, including seeking specific performance or injunctive relief, and claiming damages, which we cannot assure you will be effective. For example, if shareholders of an affiliated consolidated entity were to refuse to transfer their equity interests in such affiliated consolidated entity to us or our designated persons when we exercise the purchase option pursuant to these contractual arrangements, we may have to take a legal action to compel them to fulfill their contractual obligations.

        If (i) the applicable PRC authorities invalidate these contractual arrangements for violation of PRC laws, rules and regulations, (ii) any affiliated consolidated entity or its shareholders terminate the contractual arrangements or (iii) any affiliated consolidated entity or its shareholders fail to perform their obligations under these contractual arrangements, our business operations in China would be adversely and materially affected, and the value of your ADSs would substantially decrease. Further, if we fail to renew these contractual arrangements upon their expiration, we would not be able to continue our business operations unless the then current PRC law allows us to directly operate the applicable businesses in China.

        In addition, if any affiliate consolidated entity or all or part of its assets become subject to liens or rights of third-party creditors, we may be unable to continue some or all of our business activities, which could materially and adversely affect our business, financial condition and results of operations. If any of the affiliated consolidated entities undergoes a voluntary or involuntary liquidation proceeding, its shareholders or unrelated third-party creditors may claim rights to some or all of these assets, thereby hindering our ability to operate our business, which could materially and adversely affect our business, our ability to generate revenue and the market price of your ADSs.

        All of these contractual arrangements are governed by PRC law and provide for the resolution of disputes through arbitration in the PRC. The legal environment in the PRC is not as developed as in some other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could limit our ability to enforce these contractual arrangements. In the event we are unable to enforce these contractual arrangements, we may not be able to exert effective control over our operating entities, and our ability to conduct our business may be negatively affected.

    The shareholders of our affiliated consolidated entities may have potential conflicts of interest with us.

        Current PRC laws and regulations place certain restrictions on foreign ownership of companies that engage in Internet and mobile Internet businesses. The shareholders of our affiliated consolidated entities are individuals who are PRC citizens. Since we are over 85% owned by foreign investors, none of the shareholders of our affiliated consolidated entities are significant shareholders of our company. In addition, one of the shareholders, Mr. Yinxia Liu, does not own any shares or rights to purchase any shares of our company. Therefore, the interests of these individuals as shareholders of the affiliated consolidated entities and the interests of our company may conflict. We cannot assure you that when conflicts of interest arise, any or all of these individuals will act in the best interests of our company or that any conflict of interest will be resolved in our favor. In addition, these individuals may breach or

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cause the affiliated consolidated entities that they beneficially own to breach or refuse to renew the existing contractual arrangements, which will have an adverse effect on our ability to effectively control our affiliated consolidated entities and receive economic benefits from them. Currently, we do not have existing arrangements to address potential conflicts of interest between these shareholders and our company. We rely on these shareholders to abide by the laws of the Cayman Islands and China. If we cannot resolve any conflicts of interest or disputes between us and the shareholders of the affiliated consolidated entities, we would have to rely on legal proceedings, the outcome of which is uncertain and which could be disruptive to our business.

    The contractual arrangements with the affiliated consolidated entities may be subject to scrutiny by the PRC tax authorities and may result in a finding that we owe additional taxes or are ineligible for tax exemption, or both, which could substantially increase our taxes owed and thereby reduce our net income.

        Under applicable PRC laws, rules and regulations, arrangements and transactions between related parties may be subject to audits or challenges by the PRC tax authorities. If any of the transactions we have entered into between our wholly-owned subsidiary in China and any of the affiliated consolidated entities and their respective shareholders are determined by the PRC tax authorities not to be on an arm's length basis, or are found to result in an impermissible reduction in taxes under applicable PRC laws, rules and regulations, the PRC tax authorities may adjust the profits and losses of such affiliated consolidated entity and assess more taxes on it. In addition, the PRC tax authorities may impose late payment fees and other penalties to such affiliated consolidated entity for under-paid taxes. Our net income may be adversely and materially affected if the tax liabilities of any of the affiliated consolidated entities increase or if it is found to be subject to late payment fees or other penalties.

    We may rely on dividends and other distributions on equity paid by our wholly-owned operating subsidiary to fund any cash and financing requirements we may have, and any limitation on the ability of our operating subsidiary to pay dividends to us could have a material adverse effect on our ability to conduct our business.

        We are a holding company, and we may rely on dividends and other distributions on equity paid by Fenghuang On-line, our PRC subsidiary, for our cash requirements, including the funds necessary to service any debt we may incur. If Fenghuang On-line incurs debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us. In addition, the PRC tax authorities may require us to adjust our taxable income under the contractual arrangements Fenghuang On-line currently has in place with the affiliated consolidated entities in a manner that would materially and adversely affect the ability of Fenghuang On-line to pay dividends and other distributions to us. Further, relevant PRC laws, rules and regulations permit payments of dividends by Fenghuang On-line only out of its retained earnings, if any, determined in accordance with accounting standards and regulations of China. Under PRC laws, rules and regulations, Fenghuang On-line is also required to set aside a portion of its net income each year to reserve funds and staff incentive and welfare funds. Fenghuang On-line must set aside at least 10% of after-tax income each year to reserve funds prior to payment of dividends until the cumulative fund reaches 50% of the registered capital. As for staff incentive and welfare funds, the contribution percentage is to be decided by Fenghuang On-line on its own discretion. As a result of these PRC laws, rules and regulations, Fenghuang On-line is restricted from transferring a portion of its net assets to us whether in the form of dividends. As of December 31, 2010, Fenghuang On-line's restricted reserves totaled RMB9.1 million. These restricted reserves are not distributable as cash dividends. Any limitation on the ability of our operating subsidiary to pay dividends to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends or otherwise fund and conduct our business.

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    Strengthened scrutiny over acquisition and disposition transactions by the PRC tax authorities may have a negative impact on us or your disposition of our shares or ADS.

        Our operations and transactions are subject to review by the PRC tax authorities pursuant to relevant PRC laws and regulations. However, these laws, regulations and legal requirements change frequently, and their interpretation and enforcement involve uncertainties. For example, on April 30, 2009, the Ministry of Finance and the State Administration of Taxation jointly issued the Notice on Issues Concerning Process of Enterprise Income Tax in Enterprise Restructuring Business, or Circular 59. On December 10, 2009, the State Administration of Taxation issued the Notice on Strengthening the Management on Enterprise Income Tax for Equity Transfers of Non-resident Enterprises, or Circular 698. Both Circular 59 and Circular 698 became effective retroactively on January 1, 2008. Pursuant to the two circulars, in the event that we or Phoenix Satellite Television Information Limited dispose of any equity interests in Fenghuang On-line, whether directly or indirectly, we or Phoenix Satellite Television Information Limited may be subject to income tax on capital gains generated from disposition of such equity interests. The PRC tax authorities have the discretion under Circular 59 and Circular 698 to make adjustments to taxable capital gains based on the difference between the fair value of the equity interests transferred and the cost of the corresponding investment. If the PRC tax authorities make such an adjustment, our income tax costs will be increased.

        By promulgating and implementing the circulars, the PRC tax authorities have strengthened their scrutiny over the direct or indirect transfer by non-resident enterprises of equity interests in PRC resident enterprises. For example, Circular 698 specifies that the PRC State Administration of Taxation is entitled to redefine the nature of an equity transfer where offshore holding vehicles are interposed for tax-avoidance purposes and without reasonable commercial purpose. Further, non-resident enterprises may be required to submit filings with the PRC tax authorities to report their indirect transfer of equity interests in a PRC resident company if certain criteria are met, i.e., where the transferred offshore holding vehicle is incorporated in a tax jurisdiction where the capital gain tax rate is less than 12.5%. It is not clear to what extent the holders of our shares or ADS may be subject to these requirements. We have conducted and may conduct acquisitions and dispositions involving complex corporate structures, and we may not be able to make timely filings with the PRC tax authorities as required. The PRC tax authorities may, at their discretion, impose or adjust the capital gains on us or the holders of our shares or ADS or request us or the holders of our shares or ADS to submit additional documentation for their review in connection with any relevant acquisition or disposition, and thus cause us or the holders of our shares or ADS to incur additional costs.

Risks Relating to Doing Business in China

    Adverse changes in political and economic policies of the PRC government could have a material adverse effect on the overall economic growth of China, which could reduce the demand for our services and materially and adversely affect our competitive position.

        Since substantially all of our business operations are conducted in China, our business, financial condition, results of operations and prospects are affected significantly by economic, political and legal developments in China. The Chinese economy differs from the economies of most developed countries in many respects, including:

    the degree of government involvement;

    the level of development;

    the growth rate;

    the control of foreign exchange;

    access to financing; and

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    the allocation of resources.

        While the Chinese economy has grown significantly in the past 30 years, the growth has been uneven, both geographically and among various sectors of the economy. The PRC government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures benefit the overall Chinese economy, but may also have a negative effect on our operations. For example, our results of operations and financial condition may be materially and adversely affected by government control over capital investments or changes in tax regulations that are applicable to us.

        The Chinese economy has been transitioning from a planned economy to a more market-oriented economy. Although the PRC government has in recent years implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets and the establishment of sound corporate governance in business enterprises, a substantial portion of the productive assets in China is still owned by the PRC government. The continued control of these assets and other aspects of the national economy by the PRC government could materially and adversely affect our business. The PRC government also exercises significant control over China's economic growth through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. From late 2003 to mid-2008, the PRC government implemented a number of measures, such as increasing the People's Bank of China's statutory deposit reserve ratio and imposing commercial bank lending guidelines, which had the effect of slowing the growth of credit availability. In response to the recent global and Chinese economic downturn, the PRC government has promulgated several measures aimed at expanding credit and stimulating economic growth. Since September 2008, the People's Bank of China has decreased the statutory deposit reserve ratio and lowered benchmark interest rates several times in response to the global downturn. However, since January 2010, the People's Bank of China has begun to increase the statutory reserve ratio in response to rapid domestic growth, which may have a negative impact on the Chinese economy. It is unclear whether PRC economic policies will be effective in sustaining stable economic growth in the future. In addition, other economic measures, as well as future actions and policies of the PRC government, could also materially affect our liquidity and access to capital and our ability to operate our business. Substantially all of our assets are located in China and substantially all of our revenues are derived from our operations in China. Accordingly, our business, financial condition, results of operations and prospects are subject, to a significant extent, to economic, political and legal developments in China.

    Uncertainties with respect to the PRC legal system could limit the protections available to you and us.

        The PRC legal system is a civil law system based on written statutes. Unlike in the common law system, prior court decisions may be cited for reference but have limited precedential value. Since 1979, PRC legislation and regulations have significantly enhanced the protections afforded to various forms of foreign investments in China. We conduct substantially all of our business through our subsidiary and consolidated affiliates and their subsidiaries established in China. However, since the PRC legal system continues to rapidly evolve, the interpretations of many laws, regulations and rules are not always uniform and enforcement of these laws, regulations and rules involve uncertainties, which may limit legal protections available to us. For example, we may have to resort to administrative and court proceedings to enforce the legal protection that we enjoy either by law or contract. However, since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of Chinese administrative and court proceedings and the level of legal protection we enjoy in China than in more developed legal systems. These uncertainties may impede our ability to enforce the contracts we have entered into with our employees, business partners, customers and suppliers. In addition, such uncertainties, including the inability to enforce our contracts, could materially and adversely affect our business and operations. Furthermore, intellectual property rights and confidentiality protections in

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China may not be as effective as in the United States or other countries. Accordingly, we cannot predict the effect of future developments in the PRC legal system, including the promulgation of new laws, changes to existing laws or the interpretation or enforcement thereof, or the preemption of local regulations by national laws. These uncertainties could limit the legal protections available to us and other foreign investors, including you. In addition, any litigation in China may be protracted and result in substantial costs and diversion of our resources and management attention.

    Fluctuations in exchange rates of the Renminbi could materially affect our reported results of operations.

        The exchange rates between the Renminbi and the U.S. dollar, Euro and other foreign currencies is affected by, among other things, changes in China's political and economic conditions. In July 2005, the PRC government changed its policy of pegging the value of the Renminbi to the U.S. dollar, and the Renminbi was permitted to fluctuate within a band against a basket of certain foreign currencies. As a result, the Renminbi appreciated more than 20% against the U.S. dollar over the following three years. However, the People's Bank of China regularly intervenes in the foreign exchange market to limit fluctuations in RMB exchange rates and achieve policy goals. For almost two years after July 2008, the RMB traded within a very narrow range against the U.S. dollar, remaining within 1% of its July 2008 high. As a consequence, the RMB fluctuated significantly during that period against other freely traded currencies, in tandem with the U.S. dollar. In June 2010, the PRC government announced that it would increase RMB exchange rate flexibility. However, it remains unclear how this flexibility might be implemented. There remains significant international pressure on the PRC government to adopt a more flexible currency policy, which could result in a further and more significant appreciation of the Renminbi against the U.S. dollar.

        As we may rely on dividends and other fees paid to us by our subsidiary and affiliated consolidated entities in China, any significant revaluation of the Renminbi may materially and adversely affect our cash flows, revenues, earnings and financial position, and the value of, and any dividends payable on, our ADSs in U.S. dollars. To the extent that we need to convert U.S. dollars we received from our initial public offering into Renminbi for our operations, appreciation of the Renminbi against the U.S. dollar would have an adverse effect on the Renminbi amount we would receive from the conversion. Conversely, if we decide to convert our Renminbi into U.S. dollars for the purpose of making payments for dividends on our ordinary shares or ADSs or for other business purposes, appreciation of the U.S. dollar against the Renminbi would have a negative effect on the U.S. dollar amount available to us.

    You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in China, based on United States or other foreign laws, against us, our management or the experts named in this prospectus.

        We conduct substantially all of our operations in China and substantially all of our assets are located in China. In addition, a majority of our senior executive officers reside within China. As a result, it may not be possible to effect service of process within the United States or elsewhere outside China upon our senior executive officers, including with respect to matters arising under U.S. federal securities laws or applicable state securities laws. Moreover, our PRC counsel has advised us that China does not have treaties with the United States or many other countries providing for the reciprocal recognition and enforcement of legal judgments. For more information regarding the relevant laws of the China and the Cayman Islands, see "Enforceability of Civil Liabilities."

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    PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds from this offering to make loans or additional capital contributions to our PRC subsidiary and affiliated consolidated entities.

        In utilizing the proceeds from this offering, as an offshore holding company of our PRC subsidiary and affiliated consolidated entities, we may make loans to our PRC subsidiary and affiliated consolidated entities, or we may make additional capital contributions to our PRC subsidiary. Any loans to our subsidiary or affiliated consolidated entities in China are subject to PRC regulations, registrations and/or approvals. For example, loans by us, as an offshore holding company, to our affiliated consolidated entities must be approved by the relevant government authorities and registered with the State Administration of Foreign Exchange or SAFE, or its local counterpart. If we provide loans to our PRC subsidiary, the total amount of such loans may not exceed the difference between its total investment as approved by the foreign investment authorities and its registered capital at the time of the provision of such loans. Such loans need to be registered with the SAFE which usually takes no more than 20 working days to complete. The cost of completing such registration is minimal. We may also determine to finance our PRC subsidiary by means of capital contributions. These capital contributions must be approved by the Ministry of Commerce or its local counterpart. Because the affiliated consolidated entities are domestic PRC enterprises, we are not likely to finance their activities by means of capital contributions due to regulatory issues relating to foreign investment in domestic PRC enterprises, as well as the licensing and other regulatory issues. We cannot assure you that we can obtain the required government registrations or approvals on a timely basis, if at all, with respect to future loans or capital contributions by us to our PRC subsidiary or any of the affiliated consolidated entities. If we fail to receive such registrations or approvals, our ability to use the proceeds from this offering and to fund our operations in China would be negatively affected which would adversely and materially affect our liquidity and our ability to expand our business.

        In addition, on August 29, 2008, SAFE promulgated the Circular on the Relevant Operating Issues Concerning the Improvement of the Administration of the Payment and Settlement of Foreign Currency Capital of Foreign Invested Enterprises, or SAFE Circular 142, regulating the conversion by a foreign-invested enterprise of foreign currency registered capital into Renminbi by restricting how the converted Renminbi may be used. SAFE Circular 142 provides that the Renminbi capital converted from foreign currency registered capital of a foreign-invested enterprise may only be used within the business scope approved by the applicable governmental authority and may not be used for equity investments within the PRC, unless it is provided for otherwise. In addition, SAFE strengthened its oversight of the flow and use of the Renminbi capital converted from foreign currency registered capital of a foreign-invested company. The use of such Renminbi capital may not be altered without SAFE approval, and such Renminbi capital may not in any case be used to repay Renminbi loans if the proceeds of such loans have not been used. We expect that if we convert the net proceeds we receive from this offering into Renminbi pursuant to SAFE Circular 142, our use of Renminbi funds will be for purposes within the approved business scope of our PRC subsidiary. Such business scope permits our PRC subsidiary to provide technical and operational support to our affiliated consolidated entities. However, we may not be able to use such Renminbi funds to make equity investments in the PRC through our PRC subsidiary.

    If the PRC government finds that our PRC beneficial owners are subject to the SAFE registration requirement under SAFE Circular No. 75 and the relevant implementing rules and our PRC beneficial owners fail to comply with such registration requirements, such PRC beneficial owners may be subject to personal liability, our ability to acquire PRC companies or to inject capital into our PRC subsidiary may be limited, our PRC subsidiary's ability to distribute profits to us may be limited, or our business may be otherwise materially and adversely affected.

        SAFE has promulgated several regulations, including the Circular on Several Issues concerning Foreign Exchange Administration for Domestic Residents to Engage in Financing and in Return Investments

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via Overseas Special Purpose Companies, or SAFE Circular No. 75, effective on November 1, 2005, and the relevant implementing rules thereunder. These regulations require PRC residents, including both legal persons and natural persons, to register with the competent local SAFE branch before establishing or controlling any company outside of China, referred to as an "offshore special purpose company", for the purpose of acquiring any assets of or equity interest in PRC companies and raising funds from overseas. In addition, any PRC resident that is the shareholder of an offshore special purpose company is required to amend his or her SAFE registration with the local SAFE branch, with respect to any material events of that offshore special purpose company, such as any increase or decrease of its capital, transfer of shares, merger, division, equity investment or creation of any security interest over any assets located in China. Furthermore, PRC subsidiaries of an offshore special purpose company are required to coordinate and supervise the filing of a SAFE registration by the offshore special purpose company's shareholders who are PRC residents in a timely manner. See "Regulation—Regulation of Foreign Exchange Registration of Offshore Investment by PRC Residents".

        Based on the opinion of our PRC counsel, Zhong Lun Law Firm, we understand that the aforesaid registration requirement under SAFE Circular No. 75 and the relevant implementing rules do not apply to our PRC subsidiary or our PRC resident beneficial owners due to the following reasons: (i) our company was incorporated and controlled by Phoenix TV, a Hong Kong listed company, rather than any PRC residents defined under SAFE Circular No. 75; (ii) none of the former or current shareholders of our PRC consolidated affiliated entities established or acquired interest in our company by injecting the assets of, or equity interest in, our consolidated affiliated entities; and (iii) all of our PRC resident beneficial owners obtained interest in our company through exercise of options granted to them under our employee share option plan. However, we cannot assure you that the PRC government would hold the same opinion as us, and the relevant government authorities have broad discretion in interpreting these rules and regulations. If SAFE or any of its local branches requires our PRC resident beneficial owners to register their interest in our company pursuant to SAFE Circular No 75 and the related implementing rules, we will request our PRC resident beneficial owners to make the necessary registration, filings and amendments as required. However, we cannot provide any assurances that these PRC resident beneficial owners will apply for and complete any applicable registrations, filing and amendments. The failure or inability of such PRC resident beneficial owners to do so may subject our PRC subsidiary to fines or legal sanctions, restrictions on our cross-border investment activities or our PRC subsidiary's ability to distribute dividends to, or obtain foreign-exchange-dominated loans from, our company, or prevent us from making distributions or paying dividends. As a result, our business operations and our ability to make distributions to you could be materially and adversely affected.

    Failure to comply with PRC regulations regarding the registration requirements for employee stock ownership plans, share option plans or restricted stock plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions.

        Under the applicable PRC regulations, PRC citizens who participate in an employee stock ownership plan or a stock option plan in an overseas publicly-listed company are required to register with the SAFE and complete certain other procedures. These participants should retain a PRC agent, which can be a subsidiary of the overseas listed company in China to handle various foreign exchange matters associated with their employee stock options plans. In the case of a stock ownership plan, an overseas custodian bank should be retained by the PRC agent to hold in trusteeship all overseas assets held by such participants under the employee share ownership plan. In the case of a stock option plan, a financial institution with stock brokerage qualification in the jurisdiction where the overseas publicly-listed company is listed or a qualified institution designated by the overseas publicly-listed company is required to be retained by the PRC agent to handle matters in connection with the exercise or sale of stock options for the stock option plan participants. The PRC agents or employers should, on behalf of the domestic individuals, apply annually to the SAFE or its competent local branches for a quota for

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the conversion and/or payment of foreign currencies in connection with the domestic individuals' exercise of the employee stock options. The foreign exchange proceeds received by the domestic individuals from sale of shares under the stock option plans granted by the overseas listed companies must be remitted into the bank accounts in China opened by their employers or PRC agents. We and our PRC citizen employees who participate in an employee stock ownership plan or a stock option plan will be subject to these regulations when our company becomes a publicly-listed company in the United States. If we or our PRC optionees fail to comply with these regulations, we or our PRC optionees may be subject to fines and other legal or administrative sanctions. See "Regulation—Regulations on Employee Share Options."

    The approval of the China Securities Regulatory Commission, or the CSRC, may be required in connection with this offering. Any requirement to obtain prior CSRC approval could delay, or create uncertainties regarding, this offering, and our failure to obtain this approval, if required, could have a material adverse effect on our business, operating results, reputation and trading price of our ADSs.

        On August 8, 2006, six PRC regulatory authorities, including the CSRC, jointly promulgated the 2006 M&A Rules, which were later amended on June 22, 2009. According to the 2006 M&A Rules, an offshore special purpose vehicle, or SPV, refers to an overseas company controlled directly or indirectly by domestic companies or individuals for purposes of overseas listing of equity interests in domestic companies (defined as enterprises in the PRC other than foreign invested enterprises). If an SPV purchases, for the purpose of overseas listing and by means of paying consideration in shares of such SPV, domestic interests held by PRC domestic companies or individuals controlling such SPV, then the overseas listing by the SPV must obtain the approval of the CSRC. However, the applicability of the 2006 M&A Rules with respect to CSRC approval is unclear. The CSRC currently has not issued any definitive rule concerning whether offerings like the offering contemplated by our company are subject to the 2006 M&A Rules and related clarifications.

        Our PRC counsel, Zhong Lun Law Firm, has advised us that the 2006 M&A Rules do not require that we obtain prior CSRC approval for the listing and trading of our ADSs on the New York Stock Exchange, given that:

    the CSRC approval requirement applies to SPVs that acquired equity interests in PRC companies through share exchanges and seek overseas listing;

    our PRC operating subsidiary was incorporated indirectly by Phoenix TV, a Hong Kong-listed company, rather than a SPV as defined under the 2006 M&A Rules; and

    our PRC operating subsidiary was incorporated as a wholly foreign-owned enterprise by means of direct investment rather than by merger or acquisition by our company of the equity interest or assets of any "domestic company" as defined under the 2006 M&A Rules, and no provision in the 2006 M&A Rules classifies the contractual arrangements between our PRC operating subsidiary and each of the affiliated consolidated entities as a type of acquisition transaction falling under the 2006 M&A Rules.

        Our PRC counsel has further advised us that there are uncertainties regarding the interpretation and application of relevant PRC laws, regulations and rules. If the CSRC subsequently determines that its prior approval is required, we may face regulatory actions or other sanctions from the CSRC or other PRC regulatory agencies. These regulatory agencies may impose fines and penalties on our operations, limit our operating privileges, delay or restrict sending the proceeds from this offering into China, or take other actions that could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our ADSs. The CSRC or other PRC regulatory agencies also may take actions requiring us, or making it advisable for us, to halt this offering before settlement and delivery of the ADSs offered hereby. Consequently, if

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you engage in market trading or other activities in anticipation of and prior to settlement and delivery, you do so at the risk that such settlement and delivery may not occur.

        We cannot predict when the CSRC may promulgate additional rules or other guidance, if at all. If implementing rules or guidance is issued prior to the completion of this offering and consequently we conclude that we are required to obtain CSRC approval, this offering will be delayed until we obtain CSRC approval, which may take several months or longer. Moreover, implementing rules or guidance, to the extent issued, may fail to resolve current ambiguities under this new PRC regulation. Uncertainties and/or negative publicity regarding this new PRC regulation could have a material adverse effect on the trading price of our ADSs.

    The approval of the Ministry of Commerce may be required in connection with the establishment of our contractual arrangements with the affiliated consolidated entities. Our failure to obtain this approval, if required, could have a material adverse effect on our business, operating results, reputation and trading price of our ADSs.

        The 2006 M&A Rules also provide that approval by the Ministry of Commerce is required prior to a foreign company acquiring a PRC domestic company where the foreign company and the domestic company have the same de facto controlling person(s) that are PRC domestic individual(s) or enterprise(s). The applicability of the 2006 M&A Rules with respect to the Ministry of Commerce's approval is unclear.

        Our PRC legal counsel has advised us that an approval from the Ministry of Commerce is not required for our contractual arrangements among our PRC operating subsidiary and each of the affiliated consolidated entities, based on their understanding of the current PRC laws, rules and regulations, given that our PRC operating subsidiary was incorporated as a wholly foreign-owned enterprise by means of direct investment rather than by merger or acquisition by our company of the equity interest or assets of any "domestic company" as defined under the 2006 M&A Rules, and no provision in the 2006 M&A Rules classifies the contractual arrangements between our PRC operating subsidiary and each of the respective affiliated consolidated entities as a type of acquisition transaction falling under the 2006 M&A Rules.

        However, if the Ministry of Commerce subsequently determines that its prior approval was required for our contractual arrangements with the affiliated consolidated entities, we may face regulatory actions or other sanctions from the Ministry of Commerce or other PRC regulatory agencies. These regulatory agencies may impose fines and penalties on us and the affiliated consolidated entities, require us to restructure our ownership structure or operations, limit our operations, delay or restrict sending the proceeds from this offering into China, or take other actions. These regulatory actions could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our ADSs.

    Governmental control of currency conversion may affect the value of your investment.

        The PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. We receive substantially all of our revenues in Renminbi. Under our current corporate structure, our income is primarily derived from dividend payments from our PRC subsidiary. Shortages in the availability of foreign currency may restrict the ability of our PRC subsidiary to remit sufficient foreign currency to pay dividends or other payments to us, or otherwise satisfy their foreign currency-denominated obligations. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from trade related transactions, can be made in foreign currencies without prior approval from the SAFE by complying with certain procedural requirements. However, approval from the SAFE or its local branch is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans

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denominated in foreign currencies. The PRC government may also at its discretion restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currency to satisfy our currency demands, we may not be able to pay dividends in foreign currencies to our shareholders, including holders of our ADSs.

    Dividends we receive from our operating subsidiary located in the PRC may be subject to PRC withholding tax.

        The PRC Enterprise Income Tax Law, or the EIT Law, provides that a maximum income tax rate of 20% may be applicable to dividends payable to non-PRC investors that are "non-resident enterprises," to the extent such dividends are derived from sources within the PRC, and the State Council of the PRC has reduced such rate to 10% through the implementation regulations. We are a Cayman Islands holding company and substantially all of our income may be derived from dividends we receive from our subsidiary located in the PRC. Thus, dividends paid to us by our subsidiary in China may be subject to the 10% income tax if we are considered as a "non-resident enterprise" under the EIT Law. If we are required under the EIT Law to pay income tax for any dividends we receive from our subsidiary in China, it would materially and adversely affect the amount of dividends, if any, we may pay to our shareholders and ADS holders.

    We may be deemed a PRC resident enterprise under the EIT Law and be subject to the PRC taxation on our worldwide income.

        The EIT Law also provides that enterprises established outside of China whose "de facto management bodies" are located in China are considered "resident enterprises" and are generally subject to the uniform 25% enterprise income tax rate as to their worldwide income. Under the implementation regulations for the EIT Law issued by the PRC State Council, "de facto management body" is defined as a body that has material and overall management and control over the manufacturing and business operations, personnel and human resources, finances and treasury, and acquisition and disposition of properties and other assets of an enterprise. Although substantially all of our operational management is currently based in the PRC, it is unclear whether PRC tax authorities would treat us as a PRC resident enterprise. Despite the present uncertainties as a result of limited guidance from PRC tax authorities on the issue, we do not believe that our legal entities organized outside of the PRC should be treated as residents under the EIT Law. If we are treated as a resident enterprise for PRC tax purposes, we will be subject to PRC tax on our worldwide income at the 25% uniform tax rate, which could have an impact on our effective tax rate and an adverse effect on our net income and results of operations.

    Dividends payable by us to our foreign investors and gain on the sale of our ADSs or ordinary shares may become subject to taxes under PRC tax laws.

        Under the EIT Law and implementation regulations issued by the State Council, PRC withholding tax at the rate of 10% is applicable to dividends payable to investors that are "non-resident enterprises," which do not have an establishment or place of business in the PRC, or which have such establishment or place of business but the relevant income is not effectively connected with the establishment or place of business, to the extent such dividends have their sources within the PRC. Similarly, any gain realized on the transfer of ADSs or shares by such investors is also subject to 10% PRC income tax if such gain is regarded as income derived from sources within the PRC. The implementation regulations of the EIT Law set forth that, (i) if the enterprise that distributes dividends is domiciled in the PRC, or (ii) if gains are realized from transferring equity interest of enterprises domiciled in the PRC, then such dividends or capital gains are treated as China-sourced income. It is not clear how "domicile" may be interpreted under the EIT Law, and it may be interpreted as the jurisdiction where the enterprise is a tax resident. Therefore, if we are considered a PRC tax resident enterprise for tax purposes, the dividends we pay with respect to our ordinary shares or ADSs, or the

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gain you may realize from the transfer of our ordinary shares or ADSs, may be treated as income derived from sources within the PRC and be subject to PRC withholding tax. Furthermore, it is unclear in these circumstances whether holders of our ordinary shares or ADSs would be able to claim the benefit of income tax treaties entered into between China and other countries or regions. If we are required under the EIT Law to withhold PRC income tax on dividends payable to our non-PRC investors that are "non-resident enterprises," or if you are required to pay PRC income tax on the transfer of our ordinary shares or ADSs, the value of your investment in our ordinary shares or ADSs may be materially and adversely affected.

    We may be required to register our operating offices not located at our residence addresses as branch companies under PRC law.

        Under PRC law, a company setting up premises outside its resident address for business operations must register such operating offices with the relevant local industry and commerce bureau at the place where such premises are located as branch companies and shall obtain business licenses for such branches. Our affiliated consolidated entities have operations at locations other than their respective resident addresses. If the PRC regulatory authorities determine that we are in violation of relevant laws and regulations, we may be subject to relevant penalties, including fines, confiscation of income, and suspension of operation. If we are subject to these penalties, our business, results of operations, financial condition and prospects could be materially and adversely affected.

Risks Relating to this Offering

    There has been no public market for our ordinary shares or ADSs prior to this offering, and you may not be able to resell our ADSs at or above the price you paid, or at all.

        Prior to this initial public offering, there has been no public market for our ordinary shares or ADSs. We have applied to list our ADSs on the New York Stock Exchange. Our ordinary shares will not be listed on any exchange or quoted for trading on any over-the-counter trading system. If an active trading market for our ADSs does not develop after this offering, the market price and liquidity of our ADSs will be materially and adversely affected.

        The initial public offering price for our ADSs will be determined by negotiations between us and the underwriters and may bear no relationship to the market price for our ADSs after the initial public offering. An active trading market for our ADSs may not develop and the market price of our ADSs may decline below the initial public offering price.

    The market price for our ADSs may be volatile which could result in a loss to you.

        The market price for our ADSs is likely to be highly volatile and subject to wide fluctuations in response to factors, including the following:

    announcements of competitive developments;

    regulatory developments in China affecting us, our clients or our competitors;

    announcements regarding litigation or administrative proceedings involving us;

    actual or anticipated fluctuations in our quarterly operating results;

    changes in financial estimates by securities research analysts;

    addition or departure of our executive officers;

    release or expiry of lock-up or other transfer restrictions on our outstanding ordinary shares or ADSs; and

    sales or perceived sales of additional ordinary shares or ADSs.

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        In addition, the securities market has from time to time experienced significant price and volume fluctuations that are not related to the operating performance of particular companies. These market fluctuations may also have a material adverse effect on the market price of our ADSs.

    We have not determined a specific use for a portion of our net proceeds from this offering and we may use these proceeds in ways with which you may not agree.

        We have not determined a specific use for a portion of our net proceeds of this offering. Our management will have considerable discretion in the application of these proceeds received by us. You will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately. You must rely on the judgment of our management regarding the application of the net proceeds of this offering. The net proceeds may be used for corporate purposes that do not improve our profitability or increase our ADS price. The net proceeds from this offering may also be placed in investments that do not produce income or lose value.

    Since the initial public offering price is substantially higher than our net tangible book value per share, you will incur immediate and substantial dilution.

        If you purchase our ADSs in this offering, you will pay more for your ADSs than the amount paid by our existing shareholders for their ordinary shares on a per ADS basis. As a result, you will experience immediate and substantial dilution of approximately US$10.55 per ADS (assuming no exercise by the underwriters of their option to purchase additional ADSs), representing the difference between our net tangible book value per ADS as of December 31, 2010, after giving effect to this offering at an assumed initial public offering price of US$13.00 per ADS, the midpoint of the estimated public offering price range set forth on the cover of this prospectus. In addition, you may experience further dilution to the extent that our ordinary shares are issued upon the exercise of share options. See "Dilution" for a more complete description of how the value of your investment in our ADSs will be diluted upon completion of this offering.

    Substantial future sales or perceived sales of our ADSs in the public market could cause the price of our ADSs to decline.

        Sales of our ADSs or ordinary shares in the public market after this offering, or the perception that these sales could occur, could cause the market price of our ADSs to decline. Upon completion of this offering, we will have 604,505,437 ordinary shares outstanding, including 315,400,000 Class B ordinary shares and 289,105,437 Class A ordinary shares part of which will be represented by 13,342,500 ADSs assuming that the entire assured entitlement to Phoenix TV's shareholders is made in ADSs and that the assured entitlement distribution occurs immediately after completion of this offering, and 619,826,437 ordinary shares outstanding, including 315,400,000 Class B ordinary shares and 304,426,437 Class A ordinary shares part of which will be represented by 15,257,625 ADSs, if the underwriters exercise their over-allotment option in full and assuming that the entire assured entitlement distribution to Phoenix TV's shareholders is made in ADSs and that the assured entitlement distribution occurs immediately after completion of this offering. All ADSs sold in this offering will be freely transferable without restriction or additional registration under the Securities Act of 1933, as amended, or the Securities Act. Except with respect to Phoenix TV (BVI), our existing shareholder and a wholly owned subsidiary of Phoenix TV, to the extent necessary to allow Phoenix TV to make available to its shareholders an "assured entitlement" to a certain number of our ADSs, the remaining ordinary shares outstanding after this offering will be available for sale upon the expiration of certain lock-up arrangements entered into between us, the underwriters and other shareholders as further described under "Underwriting" and "Shares Eligible for Future Sale." In addition, ordinary shares that certain option holders will receive when they exercise their share options will not be available for sale until the expiration of any relevant lock-up periods, subject to volume and other restrictions that may be applicable under Rule 144 and Rule 701 under the Securities Act. We cannot

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predict what effect, if any, market sales of securities held by our significant shareholders or any other shareholder or the availability of these securities for future sale will have on the market price of our ADSs.

        In addition, certain of our shareholders or their transferees and assignees will have the right to cause us to register the sale of their shares under the Securities Act upon the occurrence of certain circumstances. See "Description of Share Capital." Registration of these shares under the Securities Act would result in these shares becoming freely tradable without restriction under the Securities Act immediately upon the effectiveness of the registration. Sales of these registered shares in the public market could cause the price of our ADSs to decline.

    Our dual-class ordinary share structure with different voting rights could discourage others from pursuing any change of control transactions that holders of our Class A ordinary shares and ADSs may view as beneficial.

        Our second amended and restated memorandum and articles of association that will become effective immediately prior to the completion of this offering provide for a dual-class ordinary share structure. Our ordinary shares are divided into Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary shares are entitled to one vote per share, while holders of Class B ordinary shares are entitled to 1.3 votes per share. We will issue Class A ordinary shares represented by our ADSs in this offering. Our existing shareholder, Phoenix TV (BVI), which is wholly owned by Phoenix TV, will hold Class B ordinary shares, each of which is convertible into one Class A ordinary share at any time by the holder thereof, upon the completion of this offering. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. Due to the disparate voting rights attached to these two classes, our existing shareholders will have significant voting rights over matters requiring shareholder approval, including the election and removal of directors and certain corporate transactions, such as mergers, consolidations and other business combinations. This concentrated control could discourage others from pursuing any potential merger, takeover or other change of control transactions that holders of Class A ordinary shares and ADSs may view as beneficial.

    Anti-takeover provisions in our articles of association may discourage a third party from offering to acquire our company, which could limit your opportunity to sell your ADSs at a premium.

        Our second amended and restated articles of association that will become effective immediately prior to the completion of this offering include provisions that could limit the ability of others to acquire control of us, modify our structure or cause us to engage in change of control transactions. These provisions could have the effect of depriving our shareholders of an opportunity to sell their shares at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of us in a tender offer or similar transaction.

        For example, our board of directors will have the authority, without further action by our shareholders, to issue preference shares in one or more series and to fix the powers and rights of these shares, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights associated with our ordinary shares. Preference shares could thus be issued quickly with terms calculated to delay or prevent a change in control or make removal of management more difficult. In addition, if our board of directors issues preference shares, the market price of our ordinary shares may fall and the voting and other rights of the holders of our ordinary shares may be adversely affected.

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    As a foreign private issuer, we are permitted to, and we may, rely on exemptions from certain NYSE corporate governance standards applicable to U.S. issuers. This may afford less protection to holders of our ordinary shares and ADSs.

        The NYSE Listed Company Manual in general require listed companies to have, among other things, a majority of its board be independent, an audit committee consisting of a minimum of three members and a nominating and corporate governance committee consisting solely of independent directors. As a foreign private issuer, we are permitted to, and we will, follow home country corporate governance practices instead of the above requirements of the NYSE Listed Company Manual. The corporate governance practice in our home country, the Cayman Islands, does not require a majority of our board to consist of independent directors or the implementation of an audit committee or nominating and corporate governance committee. We will rely upon the relevant home country exemption and exemptions afforded to controlled companies in lieu of certain corporate governance practices, such as having less than a majority of the board be independent and establishing an audit committee consisting of two independent directors. As a result, the level of independent oversight over management of our company may afford less protection to holders of our ordinary shares and ADSs.

    We will be a foreign private issuer and, as a result, we will not be subject to U.S. proxy rules and will be subject to Exchange Act reporting obligations that, to some extent, are more lenient and less frequent than those of a U.S. issuer.

        Upon consummation of this offering, we will report under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as a foreign private issuer. As a foreign private issuer, we will be exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic issuers, including (i) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act, (ii) the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time, and (iii) the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K, upon the occurrence of specified significant events. In addition, the executive compensation disclosure requirements to which we will be subject under Form 20-F will be less rigorous than those required of U.S. issuers under Form 10-K. Furthermore, in the fiscal years ending on or after December 15, 2011, foreign private issuers will not be required to file their annual report on Form 20-F until 120 days after the end of each fiscal year, while U.S. domestic issuers that are not large accelerated filers or accelerated filers are required to file their annual report on Form 10-K within 90 days after the end of each fiscal year. Foreign private issuers are also exempt from the Regulation FD, aimed at preventing issuers from making selective disclosures of material information. Although we intend to make quarterly reports available to our shareholders in a timely manner and are required under the Exchange Act to provide current reports on Form 6-K, you may not have the same protections afforded to stockholders of companies that are not foreign private issuers.

    We are a Cayman Islands company and, because judicial precedent regarding the rights of shareholders is more limited under Cayman Islands law than under U.S. law, you may have less protection of your shareholder rights than you would under U.S. law.

        Our corporate affairs are governed by our second amended and restated memorandum and articles of association, the Cayman Islands Companies Law (as amended) and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as that from English common law, which has persuasive, but not binding, authority on a court in the Cayman

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Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of securities laws than the United States. In addition, some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. Furthermore, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States. As a result, public shareholders may have more difficulties in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as shareholders of a Delaware company.

    Judgments obtained against us by our shareholders may not be enforceable.

        We are a Cayman Islands company and substantially all of our assets are located outside of the United States. Substantially all of our current operations are conducted in the PRC. In addition, most of our directors and officers are nationals and residents of countries other than the United States. A substantial portion of the assets of these persons are located outside the United States. As a result, it may be difficult for you to effect service of process within the United States upon these persons. It may also be difficult for you to enforce in U.S. courts judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors. Moreover, there is uncertainty as to whether the courts of the Cayman Islands or the PRC would recognize or enforce judgments of United States courts against us or such persons predicated upon the civil liability provisions of the securities laws of the United States or any state. In addition, there is uncertainty as to whether such Cayman Islands or PRC courts would be competent to hear original actions brought in the Cayman Islands or the PRC against us or such persons predicated upon the securities laws of the United States or any state.

    Holders of ADSs must act through the depositary to exercise their rights as shareholders of our company.

        Holders of our ADSs do not have the same rights of our shareholders and may only exercise the voting rights with respect to the underlying ordinary shares in accordance with the provisions of the deposit agreement for the ADSs. Under our second amended and restated memorandum and articles of association, the minimum notice period required to convene a general meeting is seven days. When a general meeting is convened, you may not receive sufficient notice of a shareholders' meeting to permit you to withdraw your ordinary shares to allow you to cast your vote with respect to any specific matter. In addition, the depositary and its agents may not be able to send voting instructions to you or carry out your voting instructions in a timely manner. We will make all reasonable efforts to cause the depositary to extend voting rights to you in a timely manner, but we cannot assure you that you will receive the voting materials in time to ensure that you can instruct the depositary to vote your ADSs. Furthermore, the depositary and its agents will not be responsible for any failure to carry out any instructions to vote, for the manner in which any vote is cast or for the effect of any such vote. As a result, you may not be able to exercise your right to vote and you may lack recourse if your ADSs are not voted as you requested. In addition, in your capacity as an ADS holder, you will not be able to call a shareholders' meeting.

    The depositary for our ADSs will give us a discretionary proxy to vote our ordinary shares underlying your ADSs if you do not vote at shareholders' meetings, except in limited circumstances, which could adversely affect your interests.

        Under the deposit agreement for the ADSs, the depositary will give us a discretionary proxy to vote our ordinary shares underlying your ADSs at shareholders' meetings if you do not vote, unless:

    we have failed to timely provide the depositary with our notice of meeting and related voting materials;

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    we have instructed the depositary that we do not wish a discretionary proxy to be given;

    we have informed the depositary that there is substantial opposition as to a matter to be voted on at the meeting; or

    a matter to be voted on at the meeting would have a material adverse impact on shareholders.

        The effect of this discretionary proxy is that you cannot prevent our ordinary shares underlying your ADSs from being voted, absent the situations described above, and it may make it more difficult for shareholders to influence the management of our company. Holders of our ordinary shares are not subject to this discretionary proxy.

    You may be subject to limitations on transfers of your ADSs.

        Your ADSs are transferable on the books of the depositary. However, the depositary may close its transfer books at any time or from time to time when it deems expedient in connection with the performance of its duties. In addition, the depositary may refuse to deliver, transfer or register transfers of ADSs generally when our books or the books of the depositary are closed, or at any time if we or the depositary deems it advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason.

    Your right to participate in any future rights offerings may be limited, which may cause dilution to your holdings and you may not receive cash dividends or other distributions if it is impractical to make them available to you.

        We may from time to time distribute rights to our shareholders, including rights to acquire our securities. However, we cannot make rights available to you in the United States unless we register the rights and the securities to which the rights relate under the Securities Act or an exemption from the registration requirements is available. Also, under the deposit agreement, the depositary will not make rights available to you unless either both the rights and any related securities are registered under the Securities Act, or the distribution of them to ADS holders is exempted from registration under the Securities Act. We are under no obligation to file a registration statement with respect to any such rights or securities or to endeavor to cause such a registration statement to be declared effective. Moreover, we may not be able to establish an exemption from registration under the Securities Act. Accordingly, you may be unable to participate in our rights offerings and may experience dilution in your holdings.

        In addition, the depositary has agreed to pay to you the cash dividends or other distributions it or the custodian receives on our ordinary shares or other deposited securities after deducting its fees and expenses. You will receive these distributions in proportion to the number of ordinary shares your ADSs represent. However, the depositary may, at its discretion, decide that it is impractical to make a distribution available to any holders of ADSs. For example, the depositary may determine that it is not practicable to distribute certain property through the mail, or that the value of certain distributions may be less than the cost of mailing them. In these cases, the depositary may decide not to distribute such property and you will not receive any such distribution.

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FORWARD-LOOKING STATEMENTS

        This prospectus contains forward-looking statements that involve risks and uncertainties. All statements other than statements of historical facts are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements.

        You can identify these forward-looking statements by words or phrases such as "aim," "anticipate," "believe," "estimate," "expect," "intend," "likely to," "may," "plan," "will" or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include:

    our growth strategies, including without limitation strategies to grow particular products or services;

    our future business development, results of operations and financial condition;

    expected changes in our revenues, including in components of our total revenues, and certain cost or expense items;

    our ability to manage the expansion of our operations; and

    changes in general economic and business conditions in China.

        The forward-looking statements made in this prospectus relate only to events or information as of the date on which the statements are made in this prospectus. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this prospectus and the documents that we reference in this prospectus and have filed as exhibits to the registration statement that includes this prospectus with the understanding that our actual future results may be materially different from what we expect. You should not rely upon forward-looking statements as predictions of future events.

        Other sections of this prospectus include additional factors that could adversely impact our business and financial performance. Moreover, we operate in an evolving environment. New risk factors and uncertainties emerge from time to time and it is not possible for our management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

        This prospectus also contains statistical data and estimates, including those relating to market size and growth rates of the markets in which we participate, that we obtained from industry publications and reports, including, among others, a report generated by Gartner Inc. The Gartner report described herein, or the Gartner Report, represents data, research opinion or viewpoints published, as part of a syndicated service, by Gartner and are not representations of fact. The Gartner Report speaks as of its original publication date (and not as of the date of this prospectus) and opinions expressed in the Gartner Report are subject to change without notice.

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USE OF PROCEEDS

        We estimate that we will receive net proceeds from this offering of approximately US$135.0 million, or approximately US$158.2 million if the underwriters exercise their option to purchase additional ADSs in full, in each case after deducting underwriting discounts and commissions and the estimated offering expenses payable by us. These estimates are based upon an assumed initial public offering price of US$13.00 per ADS, the midpoint of the initial public offering price range set forth on the cover of this prospectus. A US$1.00 increase (decrease) in the assumed initial public offering price would increase (decrease) our net proceeds from this offering by US$10.7 million, or US$12.5 million if the underwriters exercise their option to purchase additional ADSs in full, in each case after deducting underwriting discounts and commissions and the estimated offering expenses payable by us.

        We intend to use the net proceeds from this offering for the following purposes:

    US$60.0 million for content acquisition and production;

    US$40.0 million for product development and technology infrastructure; and

    US$30.0 million for marketing and sales.

        We intend to use the remaining portion of the net proceeds we receive from this offering for other general corporate purposes, including potential facilities upgrade, and for potential acquisitions although we are not currently negotiating any acquisition transactions.

        The foregoing represents our current intentions to use and allocate the net proceeds of this offering based upon our present plans and business conditions. Our management, however, will have significant flexibility and discretion to apply the net proceeds of this offering. If an unforeseen event occurs or business conditions change, we may use the proceeds of this offering differently than as described in this prospectus.

        Pending use of the net proceeds, we intend to hold our net proceeds in demand deposits or invest them in interest-bearing government securities.

        In utilizing the proceeds from this offering, as an offshore holding company, we are permitted, under PRC laws and regulations, to provide funding to our PRC operating subsidiary only through loans or capital contributions and to our affiliated consolidated entities only through loans. Subject to the satisfaction of applicable government registration and approval requirements, we may extend loans to our operating subsidiary and affiliated consolidated entities in China or make additional capital contributions to our operating subsidiary in China to fund their capital expenditures or working capital. For an increase of registered capital of our PRC subsidiary, we need to receive approval from the Ministry of Commerce of the PRC or its local counterparts, who will decide within 90 days after receiving the application documents. If we provide funding to our PRC subsidiary through loans, the total amount of such loans may not exceed the difference between its total investment as approved by the foreign investment authorities and its registered capital. Such loans should be registered with the SAFE which usually takes no more than 20 working days to complete. The cost of obtaining such approvals or completing such registration is minimal. If we are not able to receive such approvals in a timely basis or at all, we may consider adopting legally permissible alternatives, including we and our PRC subsidiary entering into transactions by which our PRC subsidiary borrows RMB loans from a financial institution in China and we or any of our offshore entities providing corporate guarantees to an offshore affiliate of such financial institution in connection with the borrowing of such a loan by our PRC subsidiary.

        We cannot assure you that we will be able to obtain these government registrations or approvals on a timely basis, if at all. See "Risk Factors—Risks Relating to Our Corporate Structure—PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds from this offering to make loans or additional capital contributions to our PRC subsidiary and affiliated consolidated entities."

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DIVIDEND POLICY

        Our board of directors has complete discretion as to whether to distribute dividends. Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that our board of directors may deem relevant.

        We have not paid in the past and do not have any present plan to declare and pay any dividends on our ordinary shares or ADSs in the near future. We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business.

        We are a holding company incorporated in the Cayman Islands. We may rely on dividends from our subsidiary in China, which in turn relies on the payments received from our affiliated consolidated entities in China pursuant to the contractual arrangements that established our corporate structure. Current PRC laws, rules and regulations permit our PRC subsidiary to pay dividends to us only out of its accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, our subsidiary in China is required to set aside a certain amount of its accumulated after-tax profits each year to fund statutory reserves. These reserves may not be distributed as cash dividends. Further, if our subsidiary in China incurs debt on its own behalf, the instruments governing the debt may restrict its ability to pay dividends or make other payments to us.

        If we pay any dividends, we will pay our ADS holders to the same extent as holders of our ordinary shares, subject to the terms of the deposit agreement, including the fees and expenses payable thereunder. Cash dividends on our ordinary shares, if any, will be paid in U.S. dollars.

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CAPITALIZATION

        The following table sets forth our capitalization as of December 31, 2010:

    on an actual basis; and

    on a pro forma basis to reflect the automatic conversion of all of our outstanding Series A convertible redeemable preferred shares into 130,000,000 Class A ordinary shares immediately upon the completion of this offering and the re-designation of our outstanding ordinary shares held by Phoenix TV (BVI) into Class B ordinary shares immediately prior to the completion of this offering; and

    on a pro forma as adjusted basis to reflect (i) the automatic conversion of all of our outstanding Series A convertible redeemable preferred shares into 130,000,000 Class A ordinary shares immediately upon the completion of this offering, (ii) the re-designation of our outstanding ordinary shares held by Phoenix TV (BVI) into Class B ordinary shares immediately prior to the completion of this offering, and (iii) the sale of 92,000,000 Class A ordinary shares in the form of ADSs by us in this offering at an assumed initial public offering price of US$13.00 per ADS, the midpoint of the estimated initial public offering price range set forth on the cover of this prospectus, after deducting the estimated underwriting discounts and commissions and offering expenses payable by us and assuming no exercise of the underwriters' option to purchase additional ADSs.

        You should read this table together with our consolidated financial statements and the related notes included elsewhere in this prospectus and the information under "Management's Discussion and Analysis of Financial Condition and Results of Operations."

 
  As of December 31, 2010  
 
  Actual   Pro-forma   Pro-forma as
adjusted(1)
 

    RMB
    RMB
(unaudited)
    RMB
(unaudited)
 

    (in thousands)  

Series A convertible redeemable preferred shares, US$0.01 par value, total preferred shares authorized 130,000,000, 130,000,000 shares issued and outstanding

    390,182          

Equity:

                   

Ordinary shares, US$0.01 par value, 870,000,000 shares authorized, 363,497,237 shares issued and outstanding on an actual basis, 173,497,237 Class A ordinary shares and 320,000,000 Class B ordinary shares issued and outstanding on a pro forma basis, and 270,097,237 Class A ordindary shares and 315,400,000 Class B ordinary shares issued and outstanding on a pro forma as adjusted basis

    25,140     33,720     39,792  

Additional paid-in capital(2)

        381,602     1,266,564  

Statutory reserve

    10,314     10,314     10,314  

Accumulated deficits

    (129,411 )   (129,411 )   (129,411 )

Accumulated other comprehensive income

    (1,001 )   (1,001 )   (1,001 )
               

Total (deficit) equity(2)

    (94,958 )   295,224     1,186,258  
               

Total capitalization(2)

    295,224     295,224     1,186,258  
               

(1)
Assumes that the entire assured entitlement distribution of 4,600,000 Class A ordinary shares to Phoenix TV's shareholders is made in ADS and that the assured entitlement distribution occurs immediately after this offering.

(2)
A US$1.00 increase (decrease) in the assumed initial public offering price of $13.00 per ADS would increase (decrease) each of additional paid-in capital, total shareholders' equity and total capitalization by US$10.7 million.

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DILUTION

        If you invest in our ADSs, your interest will be diluted to the extent of the difference between the initial public offering price per ADS and our net tangible book value per ADS after the offering. Dilution results from the fact that the per ordinary share offering price of our ADSs is substantially in excess of the book value per ordinary share attributable to the existing shareholders for our presently outstanding ordinary shares.

        Our net tangible book value at December 31, 2010 was US$44.4 million, or US$0.12 per ordinary share and US$0.98 per ADS. Net tangible book value represents total consolidated tangible assets less total consolidated liabilities. Our pro forma net tangible book value at December 31, 2010 was US$44.4 million, or US$0.09 per ordinary share and US$0.72 per ADS. Pro forma net tangible book value adjusts net tangible book value to give effect to the automatic conversion of all our Series A redeemable convertible preferred shares into 130,000,000 ordinary shares immediately prior to the closing of this offering.

        Without taking into account any other changes in such net tangible book value after December 31, 2010, other than to give effect to (i) the automatic conversion of all our Series A redeemable convertible preferred shares into 130,000,000 ordinary shares immediately prior to the closing of this offering, and (ii) our sale of 11,500,000 ADSs in this offering at the initial public offering price of US$13.00 per ADS and after deducting the underwriting discounts and commissions and estimated offering expenses, our pro forma as adjusted net tangible book value as of December 31, 2010 would have been US$179.4 million, or US$0.31 per share and US$2.45 per ADS. This represents an immediate increase in pro forma net tangible book value of US$0.22 per ordinary share, or US$1.73 per ADS, to existing shareholders and an immediate dilution of US$1.32 per ordinary share, or US$10.55 per ADS, to investors purchasing ADSs in this offering.

        Dilution is determined by subtracting pro forma as adjusted net tangible book value per ADS after this offering from the amount of cash paid by a new investor for one ADS. The following table illustrates this per share dilution:

Initial public offering price per ordinary share

  US$ 1.63  

Net tangible book value per ordinary share as of December 31, 2010

  US$ 0.12  

Pro forma net tangible book value per ordinary share as of December 31, 2010

  US$ 0.09  

Increase in pro forma net tangible book value per ordinary share attributable to this offering

  US$ 0.22  

Pro forma as adjusted net tangible book value per ordinary share after giving effect to this offering

  US$ 0.31  

Dilution per ordinary share to new investors

  US$ 1.32  

Dilution per ADS to new investors

  US$ 10.55  

Dilution to new investors (percentage)*

    81.1 %

*
Calculated based on the dilution per ADS to new investors as a percentage of the per ADS initial public offering price of US$13.00 per ADS.

        A US$1.00 increase (decrease) in the assumed initial public offering price of US$13.00 per ADS would increase (decrease) our pro forma net tangible book value after giving effect to the offering by US$10.7 million, or by US$0.02 per ordinary share and by US$0.15 per ADS, assuming no exercise of the underwriters' option to purchase additional ADSs, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us. The pro forma information discussed above is illustrative only. Our net tangible book value following the completion of this offering is subject to adjustment based on the actual initial public offering price of our ADSs and other terms of this offering determined at pricing.

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        The following table summarizes the number of ordinary shares purchased from us as of December 31, 2010, the total consideration paid to us and the average price per ordinary share/ADS paid by existing investors and by new investors purchasing ordinary shares evidenced by ADSs in this offering at the assumed initial public offering price of US$13.00 per ADS after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

 
   
   
   
   
  Average
Price Per
Ordinary
Share
   
 
 
  Ordinary Shares Purchased   Total Consideration   Average
Price Per
ADS
 
 
  Number   Percent   Amount   Percent  

Existing shareholders

  493,497,237   84.3%   $ 26,398,436   15.0%   $ 0.05   $ 0.43  

New investors

  92,000,000   15.7%   $ 149,500,000   85.0%   $ 1.63   $ 13.00  
                             
 

Total

  585,497,237   100.0%   $ 175,898,436   100.0%   $ 0.30   $ 2.40  
                             

        A US$1.00 increase (decrease) in the assumed initial public offering price of US$13.00 per ADS would increase (decrease) total consideration paid by new investors, total consideration paid by all shareholders and the average price per ADS paid by all shareholders by US$11.5 million, US$11.5 million and US$0.16, respectively, assuming no change in the number of ADSs sold by us as set forth on the cover page of this prospectus and without deducting underwriting discounts and commissions and estimated offering expenses payable by us.

        The dilution to new investors will be US$1.29 per ordinary share and US$10.30 per ADS, if the underwriters exercise in full their option to purchase additional ADSs.

        The foregoing discussion and tables assumes no exercise of any outstanding share options and no vesting of any other outstanding awards. As of the date of this prospectus, there are 33,267,350 ordinary shares issuable upon (i) exercise of outstanding stock options at a weighted average exercise price of US$0.03215 per share and (ii) satisfaction of conditions and the raising of restrictions applicable to outstanding contingently issuable shares and restricted share units, and there are 227,213 ordinary shares available for future issuance upon the exercise or vesting of future grants under our share incentive plans. To the extent that any of these options are exercised, conditions are satisfied or restrictions are raised, there will be further dilution to new investors.

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EXCHANGE RATE INFORMATION

        A number of RMB-denominated figures used in this prospectus are accompanied with U.S. dollar translations. These translations are based on the noon buying rate in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York on December 30, 2010, which was RMB6.6000 to US$1.00. We make no representation that any RMB or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or RMB, as the case may be, at any particular rate, the rates stated below, or at all. The PRC government imposes control over its foreign currency reserves in part through direct regulation of the conversion of RMB into foreign currencies and through restrictions on foreign trade.

        The following table sets forth information concerning exchange rates between the RMB and the U.S. dollar for the periods indicated. These rates are provided solely for your convenience and are not necessarily the exchange rates that we used in this prospectus or will use in the preparation of our periodic reports or any other information to be provided to you. The exchange rate of Renminbi per US dollar as set forth in the H.10 statistical release of the Federal Reserve Board was RMB6.5067 to US$1.00 as of April 22, 2011.

 
  Noon Buying Rate  
Period
  Period End   Average(1)   Low   High  
 
  (RMB per US$1.00)
 

2006

    7.8041     7.9579     8.0702     7.8041  

2007

    7.2946     7.6072     7.8127     7.2946  

2008

    6.8225     6.9477     7.2946     6.7800  

2010

    6.6000     6.7605     6.8330     6.6000  
 

January-September

    6.6905     6.8060     6.8330     6.6869  
 

October

    6.6705     6.6675     6.6912     6.6397  
 

November

    6.6670     6.6538     6.6892     6.6330  
 

December

    6.6000     6.6497     6.6745     6.6000  

2011

                         
 

January

    6.6017     6.5964     6.6364     6.5809  
 

February

    6.5713     6.5761     6.5965     6.5520  
 

March

    6.5483     6.5645     6.5743     6.5483  
 

April (through April 22, 2011)

    6.5067     6.5315     6.5477     6.4920  

(1)
Source: Federal Reserve Statistical Reserve

(2)
Annual averages are calculated from month-end rates. Monthly averages are calculated using the average of the daily rates during the relevant period.

        In July 2005, the PRC government changed its policy of pegging the value of the Renminbi to the U.S. dollar, and the Renminbi was permitted to fluctuate within a band against a basket of certain foreign currencies. As a result, the Renminbi appreciated more than 20% against the U.S. dollar over the following three years. However, the People's Bank of China regularly intervenes in the foreign exchange market to limit fluctuations in RMB exchange rates and achieve policy goals. For almost two years after July 2008, the RMB traded within a very narrow range against the U.S. dollar, remaining within 1% of its July 2008 high. As a consequence, the RMB fluctuated significantly during that period against other freely traded currencies, in tandem with the U.S. dollar. In June 2010, the PRC government announced that it would increase RMB exchange rate flexibility. However, it remains unclear how this flexibility might be implemented. There remains significant international pressure on the PRC government to adopt a substantial liberalization of its currency policy, which could result in a further and more significant appreciation in the value of the Renminbi against the U.S. dollar.

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ENFORCEABILITY OF CIVIL LIABILITIES

        We were incorporated in the Cayman Islands in order to enjoy some advantages associated with being a Cayman Islands exempted company, such as:

    political and economic stability;

    an effective judicial system;

    a favorable tax system;

    the absence of exchange control or currency restrictions; and

    the availability of professional and support services.

        However, certain disadvantages accompany incorporation in the Cayman Islands. These disadvantages include:

    the Cayman Islands has a less developed body of securities laws as compared to the United States and these securities laws provide significantly less protection to investors; and

    Cayman Islands companies may not have standing to sue before the federal courts of the United States.

        Our constituent documents do not contain provisions requiring that disputes, including those arising under the securities laws of the United States, between us, our officers, directors and shareholders, be subject to arbitration.

        Substantially all of our operations are conducted in China, and substantially all of our assets are located in China. Most of our officers and directors are nationals and residents of jurisdictions other than the United States and all or a substantial portion of their assets are located outside the United States. As a result, it may be difficult for a shareholder to effect service of process within the United States upon these persons, or to enforce against us or them judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States. In addition, it will be difficult for U.S. shareholders to originate actions against us in China based upon Cayman Islands, U.S. or PRC laws, by virtue only of holding our ADSs or common shares, to establish a connection to the PRC as required by the PRC Civil Procedures Law in order for a PRC court to have jurisdiction. U.S. shareholders may be able to originate actions against us in the Cayman Islands based upon Cayman Islands laws. However, we do not have any substantial assets other than certain corporate documents and records in the Cayman Islands and it may be difficult for a shareholder to enforce a judgment obtained in a Cayman Islands court in China, where all of our operations are conducted.

        We have appointed Law Debenture Corporate Services Inc. as our agent upon whom process may be served in any action brought against us under the securities laws of the United States. Conyers Dill & Pearman, our counsel as to Cayman Islands law, and Zhong Lun Law Firm, our counsel as to PRC law, have advised us, respectively, that there is uncertainty as to whether the courts of the Cayman Islands and China, respectively, would:

    recognize or enforce judgments of United States courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States; or

    entertain original actions brought in each respective jurisdiction against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States.

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        Conyers Dill & Pearman has informed us that the uncertainty with regard to Cayman Islands law relates to whether a judgment obtained from the U.S. courts under civil liability provisions of U.S. securities laws will be determined by the courts of the Cayman Islands as penal or punitive in nature. If such a determination is made, the courts of the Cayman Islands will not recognize or enforce the judgment against a Cayman Islands company, such as our company. As the courts of the Cayman Islands have yet to rule on making such a determination in relation to judgments obtained from U.S. courts under civil liability provisions of U.S. securities laws, it is uncertain whether such judgments would be enforceable in the Cayman Islands. Conyers Dill & Pearman has further advised us that the courts of the Cayman Islands would recognize as a valid judgment a final and conclusive judgment in personam obtained in the federal or state courts in the United States under which a sum of money is payable (other than a sum of money payable in respect of multiple damages, taxes or other charges of a like nature or in respect of a fine or other penalty) and would give a judgment based thereon provided that: (a) such courts had proper jurisdiction over the parties subject to such judgment; (b) such courts did not contravene the rules of natural justice of the Cayman Islands; (c) such judgment was not obtained by fraud; (d) the enforcement of the judgment would not be contrary to the public policy of the Cayman Islands; (e) no new admissible evidence relevant to the action is submitted prior to the rendering of the judgment by the courts of the Cayman Islands; and (f) there is due compliance with the correct procedures under the laws of the Cayman Islands.

        Zhong Lun Law Firm has further advised us that the recognition and enforcement of foreign judgments are provided for under PRC Civil Procedures Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of PRC Civil Procedures Law based either on treaties between China and the country or region where the judgment is made or on principle of reciprocity between jurisdictions, provided that the foreign judgments do not violate the basic principles of laws of the PRC or its sovereignty, security, or social and public interest. However, China does not have any treaties or other form of reciprocity with the United States that provide for the reciprocal recognition and enforcement of foreign judgments. As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States.

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OUR HISTORY AND CORPORATE STRUCTURE

Our History

        Phoenix TV registered the domain name phoenixtv.com for its corporate website in 1998. 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. As part of the reorganization before its initial public offering, in September 1999, Phoenix TV incorporated Phoenix Satellite Television Information Limited in the British Virgin Islands to be the holding company of its new media business.

        In November 2005, Mr. Shuang Liu, a vice president of Phoenix TV, was appointed to lead Phoenix TV's new media business. Upon his appointment, Mr. Liu began implementing his vision to transform the business from a mere corporate website of Phoenix TV into a new media company capitalizing on the future of new media convergence. 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, an exempted limited liability company, 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 Satellite Television (B.V.I.) Holding Limited 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, Intel Capital and Bertelsmann Asia pursuant to which these investors purchased an aggregate of 130,000,000 Series A convertible redeemable Preferred Shares of our company.

        Fenghuang On-line was established in December 2005. Fenghuang On-line's business license states that it may conduct general business activities that do not require approval or registration under PRC laws and regulations or that are not limited by the foreign investment industrial policy of the PRC. Fenghuang On-line does not provide any Internet, video or mobile services or conduct any advertising activities and, therefore, is not required to have an authorized business scope that covers such services. On December 31, 2009, Fenghuang On-line entered into a series of contractual arrangements with each of our affiliated consolidated entities, Tianying Jiuzhou and Yifeng Lianhe, and their respective shareholders to govern our relationships with the affiliated consolidated entities, at which time we became operational in our current corporate structure. These contractual arrangements allow us to effectively control the affiliated consolidated entities and to derive substantially all of the economic benefits from them. See "—Contractual Arrangements with Our Affiliated Consolidated Entities" below. Accordingly, we treat these companies as variable interest entities and have consolidated their historical financial results in our financial statements in accordance with U.S. GAAP.

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Our Corporate Structure

        The following diagram illustrates our corporate structure as of the date of this prospectus:

GRAPHIC


(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, including Keung Chui, Shuang Liu, Ya Li, Daguang He, Qin Liu, Qianli Liu and Yulin Wang, will collectively beneficially own 5.55% of our ordinary shares, which will consist of Class A ordinary shares.

        We established Phoenix New Media (Hong Kong) Company Limited, a Hong Kong limited liability company, on February 24, 2011 in order to begin to establish a corporate structure that may allow for more efficient withholding tax treatment of any dividends to our company, provided that Phoenix New Media (Hong Kong) Company Limited becomes the parent company of our PRC subsidiary and the beneficial owner of any of its dividends, and receives approval from the PRC tax authority to enjoy preferential withholding tax treatment.

        In 1999, PHOENIXi Investment Limited, which holds 100% equity ownership of PHOENIXi Inc. and Guofeng On-line (Beijing) Information Technology Co., Ltd., was established primarily to develop an Internet business in North America. The business operations of PHOENIXi Investment Limited and its subsidiaries ceased before 2006, and the legal process of liquidating these three entities, which began in 2006, is expected to be completed in 2011. Given that these entities have long ceased their operations, we do not anticipate that the dissolution of PHOENIXi Investment Limited and its subsidiaries will have any effect on our business, results of operations or financial position. Our consolidated financial statements do not include the financial statements of PHOENIXi Investment

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Limited and its subsidiaries, but rather account for them under the cost method and recognize any other than temporary impairment.

Contractual Arrangements with Our Affiliated Consolidated Entities

        Foreign investment in the Internet and mobile services industries is currently prohibited or restricted in China. As a Cayman Islands company, we do not qualify to conduct these businesses under PRC regulations. In addition, foreign investment in the advertising industry requires the foreign investor to possess certain qualifications, which we do not have. See "Regulation." As a result, our business in China is operated through contractual arrangements with our affiliated consolidated entities.

        We do not have any equity interests in Tianying Jiuzhou or its subsidiary or Yifeng Lianhe. However, as a result of these contractual arrangements, we are the primary beneficiary of each of Tiangying Jiuzhou and Yifeng Lianhe and account for them as our consolidated affiliated entities under U.S. GAAP. Outstanding equity interests in Tiangying Jiuzhou and Yifeng Lianhe are held by Haiyan Qiao and Ximin Gao, and Yinxia Liu and Yansheng He, respectively. Mssrs. Qiao, Gao and He are all current employees of our company and have each been employed by us for approximately ten years. Mr. Liu is an employee of Zhongcheng Letian Property Development Company, a company founded by the chairman of Phoenix TV, Mr. Changle Liu. See "Risk Factors—Risks Relating to Our Corporate Structure—The shareholders of the affiliated consolidated entities may have potential conflicts of interest with us."

        We have consolidated the financial results of each of Tianying Jiuzhou and its subsidiary and Yifeng Lianhe in our consolidated financial statements in accordance with U.S. GAAP. In 2010, Tianying Jiuzhou and its subsidiary accounted for 87.5% of our total revenues, and Yifeng Lianhe accounted for 10.0% of our total revenues.

Overview of the Contractual Arrangements

        The contractual arrangements among Fenghuang On-line, the affiliated consolidated entities and the shareholders of the affiliated consolidated entities enable us to:

    receive substantially all of the economic benefits from Tianying Jiuzhou and its subsidiary and Yifeng Lianhe in consideration for the technical and consulting services provided and intellectual property rights licensed by Fenghuang On-line;

    exercise effective control over Tianying Jiuzhou and its subsidiary and Yifeng Lianhe; and

    have an exclusive option to purchase all of the equity interests in Tianying Jiuzhou and Yifeng Lianhe when and to the extent permitted under PRC laws.

Agreements that Transfer Economic Benefits to Us

        Exclusive Technical Licensing and Service Agreements.    Under the exclusive technical licensing and service agreements between Fenghuang On-line and each of the respective affiliated consolidated entities, or the technical service agreements, Fenghuang On-line has the exclusive right to provide designated technical and consulting services to the consolidated affiliated entities, including developing and upgrading various software, developing system technology, maintaining operational hardware and providing various training and consulting services, among other services. Third parties may only be engaged to provide the designated services to the affiliated consolidated entities under limited circumstances that are within the control of Fenghuang On-line.

        Pursuant to the technical service agreements, the affiliated consolidated entities have each agreed to pay to Fenghuang On-line an amount equal to a certain percentage of their respective annual revenues, plus a special service fee for certain services rendered by Fenghuang On-line at the request

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of the relevant affiliated consolidated entity. However, the technical service agreements also provide that notwithstanding such agreement as to payment, the actual amount of the service fee may be adjusted upon mutual agreement of the parties. Historically, the affiliated consolidated entities have deducted relevant costs and expenses from the amount that is subject to the service fee payment, and have paid 100% of any of their respective net incomes to Fenghuang On-line.

        The technical service agreements also transfer all of the economic benefit of intellectual property created by the affiliated consolidated entities to Fenghuang On-line. To the extent that the affiliated consolidated entities jointly develop business-related technologies with Fenghuang On-line or are entrusted by Fenghuang On-line to develop business-related technologies, the ownership and patent application rights for such technologies are vested in Fenghuang On-line. To extent that the affiliated consolidated entities develop business-related technologies independently, the affiliated consolidated entities are required to promptly notify Fenghuang On-line of such technologies, and Fenghuang On-line has the right to purchase each such technology for RMB 1 or the minimum purchase price permitted by then applicable law, or otherwise has priority rights with respect to any transfer or license of such technologies. In addition, Fenghuang On-line controls the patent applications of any business-related technologies created by the affiliated consolidated entities.

        The term of each technical service agreement is indefinite unless terminated by Fenghuang On-line by providing prior written notice to the relevant affiliated consolidated entity. The technical service agreements provide that the affiliated consolidated entities cannot terminate such agreements under any circumstances or on any ground unless otherwise provided for by law.

        The technical service agreements provide that any disputes shall be resolved by the parties through negotiation, and if the parties cannot reach an agreement within thirty days, the dispute shall be submitted to the China International Economic and Trade Arbitration Commission in Beijing. The arbitral awards shall be final and binding upon both parties.

Agreements that Provide Us with Effective Control and Grant Fenghuang On-line an Exclusive Option to Purchase all of the Equity Interests in the Affiliated Consolidated Entities When and To the Extent Permitted Under PRC Laws

        Voting Right Entrustment Agreements.    Each of the respective affiliated consolidated entities, their respective shareholders and Fenghuang On-line have entered into a voting right entrustment agreement. Pursuant to the voting right entrustment agreements the shareholders of each affiliated consolidated entity have granted a person designated by Fenghuang On-line, or the trustee, the right to exercise their rights as shareholders, including all voting rights, as well as rights to attend and propose the convening of shareholder meetings. Under the voting right entrustment agreements, the respective trustees have the right to access all information regarding the relevant affiliated consolidated entity's operation, business, clients, finances and employees, as well as their financial, business and corporate documentation.

        The term of each voting right entrustment agreement is indefinite unless both parties agree to terminate the agreement in writing, or unless Fenghuang On-line decides in its discretion to terminate the relevant agreement after the relevant affiliated consolidated entity or one of its shareholders breaches the agreement and such breach is not remedied within ten days of receipt of written notice. The voting right entrustment agreements provide that the affiliated consolidated entities cannot terminate such agreements under any circumstances or on any ground unless otherwise provided for by law.

        The voting right entrustment agreements provide that any disputes shall be resolved by the parties through negotiation, and if the parties cannot reach an agreement within thirty days, the dispute shall be submitted to the China International Economic and Trade Arbitration Commission in Beijing. The arbitral awards shall be final and binding upon both parties.

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        Exclusive Equity Option Agreements.    Each of the respective affiliated consolidated entities, their respective shareholders and Fenghuang On-Line have entered into an exclusive equity option agreement, or equity option agreement, pursuant to which Fenghuang On-line has an irrevocable, unconditional and exclusive option to purchase, or to designate other persons to purchase from the shareholders, to the extent permitted by applicable PRC laws, rules and regulations, all of the equity interest in the affiliated consolidated entities. Fenghuang On-line may acquire all of the equity interest in the relevant affiliated entity through one purchase or a series of purchases, the timing, manner and frequency of which are in Fenghuang On-line's discretion. The purchase price for the entire equity interest is to be calculated based on the paid-up amount of the relevant equity interest or the minimum price permitted by applicable PRC laws, rules and regulations. In addition, the amount borrowed by the respective shareholders from Fenghuang On-line for making the capital contributions to the relevant affiliated consolidated entities under the loan agreements, as described in "—Loan Agreements," shall offset the purchase price paid for any transfer of equity interest from the respective shareholders to Fenghuang On-line.

        Under the equity option agreements, the shareholders have agreed that, without Fenghuang On-line's written consent, they will not take certain actions, including transferring any of their equity interests in the affiliated consolidated entities, disposing or causing the affiliated consolidated entities' management to dispose of any of the entities' tangible or intangible assets, terminating any material agreement to which the affiliated consolidated entities are party, appointing or removing any of the affiliated consolidated entities' directors, supervisors or management members, causing or endorsing the declaration or actual distribution of any profit, bonus, dividends or interests of the affiliated consolidated entities, or causing or endorsing any lending or borrowing or provision of any guarantee or creation of any other security interest other than in the normal course of business, among other actions.

        The term of each equity option agreement will expire when all of the equity interests in the relevant affiliated consolidated entities has been duly transferred to Fenghuang On-line or its designated representative. In addition, the equity option agreements provide that neither of the affiliated consolidated entities nor their shareholders may terminate such agreements under any circumstances or on any ground.

        The equity option agreements provide that any disputes shall be resolved by the parties through negotiation, and if the parties cannot reach an agreement within thirty days, the dispute shall be submitted to the China International Economic and Trade Arbitration Commission in Beijing. The arbitral awards shall be final and binding upon both parties.

        Loan Agreements.    Pursuant to the loan agreements among Fenghuang On-line and the respective shareholders of each of the affiliated consolidated entities, Fenghuang On-line granted interest-free loans to the shareholders of the affiliated consolidated entities in an amount equal to their respective capital contribution in the affiliated consolidated entities. The loans can be repaid only with proceeds from the sale of all of the respective shareholder's equity interests in the applicable affiliated consolidated entity to Fenghuang On-line or its designated representatives pursuant to the applicable equity option agreement.

        The term of each loan is ten years from the execution of the applicable loan agreement, and may be extended upon mutual agreement of the parties. Any disputes shall be resolved by the parties through negotiation, and if the parties cannot reach an agreement within thirty days, the dispute shall be submitted to the China International Economic and Trade Arbitration Commission in Beijing. The arbitral awards shall be final and binding upon both parties.

        Equity Pledge Agreements.    Each of the affiliated consolidated entities, their respective shareholders and Fenghuang On-line, have entered into an equity pledge agreement. Under the equity pledge agreements, the shareholders have pledged their respective equity interests in the affiliated

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consolidated entities to Fenghuang On-line to secure the performance of the obligations of the affiliated consolidated entities and the shareholders under the applicable technical service agreements, voting right entrustment agreements, equity option agreements and loan agreements, including, among others, the payment of the service fees, the entrustment of the shareholders' voting rights in the affiliated consolidated entities, the conditional transfer of the shareholders' equity interests in the affiliated consolidated entities and the repayment of the shareholder loans with proceeds from the transfer of the shareholders' equity interests, respectively. All registrations necessary to secure the enforceability of each of the equity pledge agreements have been completed.

        The term of each equity pledge agreement will expire when the secured obligations have been fully performed or released. Any disputes shall be resolved by the parties through negotiation, and if the parties cannot reach an agreement within thirty days, the dispute shall be submitted to the China International Economic and Trade Arbitration Commission in Beijing. The arbitral awards shall be final and binding upon both parties.

        We have been advised by our PRC legal counsel, Zhong Lun Law Firm, that the structure for operating our business in China (including our corporate structure and our contractual arrangements with our affiliated consolidated entities) complies, and after the completion of this offering will continue to comply with all applicable PRC laws, rules and regulations, and does not violate, breach, contravene or otherwise conflict with any applicable PRC laws, rules or regulations. However, there are uncertainties regarding the interpretation and application of the relevant PRC laws, rules and regulations. Accordingly, there can be no assurance that the PRC regulatory authorities will not take a view that is contrary to the opinion of our PRC legal counsel. Our PRC legal counsel has further advised that if a PRC government authority determines that our corporate structure, the contractual arrangements or the reorganization to establish our current corporate structure violates any applicable PRC laws, rules or regulations, the contractual arrangements will become invalid or unenforceable, and we could be subject to severe penalties and required to obtain additional governmental approvals from the PRC regulatory authorities. See "Risk Factors—Risks Relating to Our Corporate Structure—If the PRC government finds that the agreements that establish the structure for operating our business in China do not comply with PRC governmental restrictions on foreign investment in Internet businesses, or if these regulations or the interpretation of existing regulations change in the future, we would be subject to severe penalties or be forced to relinquish our interests in those operations" and "Risk Factors—Risks Relating to Doing Business in China—Uncertainties with respect to the PRC legal system could limit the protections available to you and us."

Our Relationship with Phoenix TV

        We are currently a subsidiary of Phoenix TV, the leading Hong Kong-based satellite TV network broadcasting Chinese language content globally and into China. Phoenix TV owns 62.44% of our outstanding share capital as of the date of this prospectus. Phoenix TV first reported its new media business as one of its business segments in its annual report submitted to the Hong Kong Stock Exchange for the year ended December 31, 2007. Prior to this offering, in an effort to more clearly delineate our related party transactions with Phoenix TV on an arm's length basis, Fenghuang On-line entered into a cooperation agreement with Phoenix TV, or the Phoenix TV Cooperation Agreement on November 24, 2009. Under this agreement Fenghuang On-line and Phoenix TV agreed to certain cooperative arrangements in the areas of content, branding, promotion and technology and Phoenix TV agreed to procure and procured its subsidiaries, Phoenix Satellite Television Company Limited and Phoenix Satellite Television Trademark Limited, to enter into the Content License Agreements and Trademark Licenses Agreements, respectively, with each of our affiliated consolidated entities on November 24, 2009.

        We have a mutually beneficial relationship with Phoenix TV. We and Phoenix TV share a common vision of the convergence of traditional and new media channels, and work together to realize this

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vision. While we furnish Phoenix TV with access to our new media delivery channels, Phoenix TV enables us to display our proprietary content on its TV programs. 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 chief executive officer is also a vice president of Phoenix TV.

        Pursuant to the Content License Agreements, Phoenix TV has also granted each of our affiliated consolidated entities an exclusive license to use its content on our Internet and mobile channels in China. These exclusive content licenses 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. In addition, our affiliated consolidated entities license certain of Phoenix TV's logos. These logos help to affiliate our brand name with that of Phoenix TV and vice versa, which helps to enhance our respective brand names. These logos, however, do not directly contribute any revenues to our company and are not material to our business. Phoenix Satellite Television Trademark Limited has completed the application form to transfer the "ifeng" logo from Phoenix Satellite Television Trademark Limited to Tianying Jiuzhou, and Tianying Jiuzhou has submitted the application to the PRC Trademark Office to serve to remedy a current noncompliance with PRC regulation. See "Risk Factors—Risks Relating to Our Business and Industry—Our consolidated affiliated entities and their respective shareholders do not own the trademarks used in their value-added telecommunications services, which may subject them to revocation of their licenses or other penalties or sanctions."

        As compensation for the rights granted to Fenghuang On-line under the Phoenix TV Cooperation Agreement, Fenghuang On-line is obligated to pay Phoenix TV an annual service fee in the amount of RMB1.6 million for the first year of the agreement that incrementally increases by 25% for each subsequent year of the agreement. In the event that Phoenix TV's indirect voting interest in Fenghuang On-line decreases to 50% or below, Phoenix TV has the right to amend the annual service fee, provided that it may not be raised to more than 500% of the original annual service fee. Each of the Phoenix TV Cooperation Agreement, the Content License Agreements and the Trademark License Agreements will expire in March 2016 unless both of the relevant parties agree to extend their respective terms. Each of these agreements may be terminated early subject to the occurrence of certain events. For more information about these agreements, see "Related Party Transactions—Transactions and Agreements with Phoenix TV and Certain of its Subsidiaries."

        Upon completion of this offering, Phoenix TV, through its wholly owned direct subsidiary, Phoenix TV (BVI), will continue to be our controlling shareholder, with beneficial ownership and voting power of 52.17% and 58.65%, respectively, of our outstanding ordinary shares, assuming the underwriters do not exercise their over-allotment option, the entire assured entitlement distribution to Phoenix TV's shareholders is made in ADSs and the assured entitlement distribution occurs immediately after this offering. 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 so, the resolution may be less favorable to us than if we were dealing with a non-controlling shareholder. For more information about our potential conflicts of interest with Phoenix TV, 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 interest in our company, may not be able to resolve such conflicts on terms favorable for us."

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SELECTED CONSOLIDATED FINANCIAL DATA

        The following selected condensed consolidated statement of operations data for the two years ended December 31, 2008, 2009 and 2010, and the selected condensed consolidated balance sheet data as of December 31, 2008, 2009 and 2010 have been derived from our audited consolidated financial statements which are included elsewhere in this prospectus. Selected consolidated financial data as of and for the years ended December 31, 2006 and 2007 have not been included, as such information is not available on a basis that is consistent with the consolidated financial data included in this prospectus and cannot be provided on a U.S. GAAP basis without unreasonable effort or expense.

        You should read the selected consolidated financial data in conjunction with those financial statements and the related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus. Our consolidated financial statements are prepared and presented in accordance with U.S. GAAP. Our historical results do not necessarily indicate our results expected for any future periods.

 
  For the year ended December 31,  
 
  2008   2009   2010  
 
  RMB   RMB   RMB   US$  
 
  (In thousands, except for per share data)
 

Revenues:

                         
 

Net advertising revenues

    40,259     81,632     204,370     30,965  
 

Paid service revenues

    182,367     180,715     324,326     49,140  

Total Revenues

    222,626     262,347     528,696     80,105  
                   

Cost of revenues(1)

    (163,502 )   (170,062 )   (299,423 )   (45,367 )
                   

Gross Profit

    59,124     96,285     229,273     34,738  
                   

Operating expenses:

                         
 

Sales and marketing expenses(1)

    (33,855 )   (46,364 )   (76,153 )   (11,538 )
 

General and administrative expenses(1)

    (37,613 )   (27,727 )   (39,955 )   (6,054 )
 

Technology and product development expenses(1)

    (17,104 )   (16,579 )   (31,012 )   (4,699 )
                   

Total operating expenses

    (88,572 )   (90,670 )   (147,120 )   (22,291 )

Income/(loss) from operations

    (29,448 )   1,615     82,153     12,447  
                   

Other income:

    1,146     332     2,429     368  

Income/(loss) before tax

    (28,302 )   1,947     84,582     12,815  
                   

Income tax benefits/expenses

    149     (1,660 )   (10,499 )   (1,590 )

Net income/(loss) attributable to Phoenix New Media Limited

    (28,153 )   287     74,083     11,225  
                   

Accretion to Series A convertible redeemable preferred shares (US$0.01 par value, 130 million shares authorized and issued as of December 31, 2009 and 2010; aggregate liquidation value of RMB197 million and RMB246 million as of December 31, 2009 and 2010, respectively, and none outstanding on a pro-forma basis as of December 31, 2010)

        (14,129 )   (206,409 )   (31,274 )

Income allocation to participating preferred shares

        (287 )   (33,093 )   (5,014 )

Amortization of beneficial conversion feature

        (17,138 )        

Net loss attributable to ordinary shareholders

    (28,153 )   (31,267 )   (165,418 )   (25,063 )
                   

Net loss per ordinary share:

                         
 

Basic

    (0.09 )   (0.10 )   (0.51 )   (0.08 )
 

Diluted

    (0.09 )   (0.10 )   (0.51 )   (0.08 )

Weighted average number of ordinary shares used in computation of loss per share:

    320,013     321,388     327,045     327,045  

Weighted average number of ordinary shares used in computation of loss per share:

    320,013     321,388     327,045     327,045  

Non-GAAP adjusted net income(2)

    1,777     10,527     90,644     13,734  

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Notes:

(1)
Includes share-based compensation expenses as follows:

 
  For the Year Ended
December 31,
 
 
  2008   2009   2010  
 
  RMB   RMB   RMB   US$  
 
  (in thousands)
 

Allocation of share-based compensation expenses:

                         
 

Cost of revenues

    2,455     775     854     129  
 

Sales and marketing expenses

    6,539     2,904     4,664     707  
 

General and administrative expenses

    18,374     5,757     10,406     1,577  
 

Technology and product development expenses

    2,562     804     637     96  
(2)
We define adjusted net income/(loss), a non-GAAP financial measure, as net income/(loss) attributable to Phoenix New Media Limited excluding share-based compensation expenses. We believe that separate analysis and exclusion of the non-cash impact of share-based compensation adds clarity to the constituent parts of our performances. We review adjusted net income/(loss) together with net income/(loss) to obtain a better understanding of our operating performance. We use this non-GAAP financial measure for planning and forecasting and measuring results against the forecast. Using several measures to evaluate our business allows us and our investors to assess our relative performance against our competitors and ultimately monitor our capacity to generate returns for our investors. We also believe it is useful supplemental information for investors and analysts to assess our operating performance without the effect of non-cash share-based compensation expenses, which have been and will continue to be significant recurring expenses in our business. However, the use of adjusted net income/(loss) has material limitations as an analytical tool. One of the limitations of using non-GAAP adjusted net income/(loss) is that it does not include all items that impact our net income/(loss) for the period. In addition, because adjusted net income/(loss) is not calculated in the same manner by all companies, it may not be comparable to other similar titled measures used by other companies. In light of the foregoing limitations, you should not consider adjusted net income/(loss) in isolation from or as an alternative to net income/(loss) prepared in accordance with U.S. GAAP.

        Our non-GAAP adjusted net income is calculated as follows for the periods presented:

 
  For the Year Ended
December 31,
 
 
  2008   2009   2010  
 
  RMB   RMB   RMB   US$  
 
  (in thousands)
 

Net income/(loss) attributable to Phoenix New Media Limited

    (28,153 )   287     74,083     11,225  

Add back: Share-based compensation expenses

    29,930     10,240     16,561     2,509  
                   

Non-GAAP adjusted net income

    1,777     10,527     90,644     13,734  
                   

 

 
  As of December 31,  
 
  2008   2009   2010  
 
  RMB   RMB   RMB   US$   RMB   US$  
 
  (in thousands)
 
 
   
   
   
   
  (Pro Forma)(1)
 

Consolidated Balance Sheet Data

                                     

Cash and cash equivalents

    67,999     223,086     287,173     43,511     287,173     43,511  

Accounts receivable, net

    21,892     35,318     77,043     11,673     77,043     11,673  

Total current assets

    106,277     275,059     400,705     60,713     400,705     60,713  

Total assets

    144,208     314,302     447,262     67,767     447,262     67,767  

Current liabilities

    126,817     115,358     148,555     22,508     148,555     22,508  

Total liabilities

    127,942     116,931     152,038     23,036     152,038     23,036  

Net assets

    16,266     197,371     295,224     44,731     295,224     44,731  

Mezzanine equity

        183,774     390,182     59,119          

Total shareholders' equity/(deficit)

    16,266     13,597     (94,958 )   (14,388 )   295,224     44,731  

(1)
Our consolidated balance sheet data as of December 31, 2010 is presented on a pro forma basis to reflect the automatic conversion of all of our outstanding Series A convertible redeemable preference shares into 130,000,000 Class A ordinary shares immediately upon the closing of this offering.

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RECENT DEVELOPMENTS

        The following are certain selected unaudited consolidated statements of operations data for the three months ended March 31, 2010 and 2011. This unaudited consolidated financial information reflects all adjustments, consisting only of normal and recurring adjustments, which we consider necessary for a fair presentation of our financial position and operating results for the periods presented. Our financial results for the three months ended March 31, 2011 may not be indicative of our full year results for 2011 or future quarterly periods. See "Risk Factors—Risks Relating to Our Business and Industry—Our quarterly revenues and results may fluctuate, which makes our results of operations difficult to predict and may cause our quarterly results of operations to fall short of expectations" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus for information regarding trends and other factors that may influence our results of operations and for recent quarterly results of operations.

    Total Revenues.  Our total revenues increased by 77.0% from RMB97.0 million in the three months ended March 31, 2010 to RMB171.7 million (US$26.0 million) in the three months ended March 31, 2011. The increase in our total revenues was due to increases in both our net advertising revenues and paid service revenues in the three months ended March 31, 2011 as compared to three months ended March 31, 2010. Growth in our net advertising revenues from RMB34.5 million in the three months ended March 31, 2010 to RMB75.2 million (US$11.4 million) in the three months ended March 31, 2011 was driven by increases in our number of advertisers, from 137 as of March 31, 2010 to 231 as of March 31, 2011, and in ARPA, from RMB0.25 million in the three months ended March 31, 2010 to RMB0.33 million (US$0.1 million) in the three months ended March 31, 2011. The increase in our paid service revenues was primarily attributable to an increase in our WVAS revenues from RMB35.8 million in the three months ended March 31, 2010 to RMB63.4 million (US$9.6 million) in the three months ended March 31, 2011, which resulted mainly from an increase in business volume, and an increase in our video VAS revenues from RMB2.8 million in the three months ended March 31, 2010 to RMB8.9 million (US$1.4 million) in the three months ended March 31, 2011, which resulted mainly from an increased number of purchases of our mobile video services.

    Cost of Revenues.  Our cost of revenues increased by 124.4% from RMB51.2 million in the three months ended March 31, 2010 to RMB 114.9 million (US$17.4 million) in the three months ended March 31, 2011 primarily due to an increase in revenue sharing fees from RMB24.0 million in the three months ended March 31, 2010 to RMB52.9 million (US$8.0 million) in the three months ended March 31, 2011, which resulted primarily from the increase in our WVAS revenues, and an increase in content and operational costs from RMB17.7 million in the three months ended March 31, 2010 to RMB44.7 million (US$6.8 million) in the three months ended March 31, 2011, which resulted primarily from share-based compensation expenses associated with our content production and advertising sales support staff.

    Gross Profit.  Our gross profit increased by 24.1% from RMB45.8 million in the three months ended March 31, 2010 to RMB56.9 million (US$8.6 million) in the three months ended March 31, 2011. The increase in our gross profit was due to the increase in our total revenues, partly offset by an increase in our cost of revenues.

    Share-Based Compensation Expenses.  Our total share-based compensation expenses increased substantially from RMB2.7 million in the three months ended March 31, 2010 to RMB48.0 million (US$7.3 million) in the three months ended March 31, 2011. The increase in our share-based compensation expenses was primarily due to our grant of restricted shares and restricted share units to certain of our employees on March 17, 2011.

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    Net Loss Attributable to Phoenix New Media Limited.  Our net loss attributable to Phoenix New Media Limited was RMB26.2 million (US$4.0 million) in the three months ended March 31, 2011, as compared to net income attributable to Phoenix New Media Limited of RMB14.8 million in the three months ended March 31, 2010. The negative change in our net income/(loss) attributable to Phoenix New Media Limited was due to an increase in operating expenses, which offset the increase in gross profit. The increase in operating expenses resulted primarily from an increase in staff costs due mainly to the increase in our share-based compensation expenses and an increase in headcount.

    Net Loss Attributable to Ordinary Shareholders.  Our net loss attributable to ordinary shareholders was RMB588.8 million (US$89.2 million) in the three months ended March 31, 2011, as compared to our net loss attributable to ordinary shareholders of RMB41.0 million in the three months ended March 31, 2010. The increase in our net loss attributable to ordinary shareholders was primarily attributable to an increase in accretion to Series A redeemable convertible preferred shares redemption value from RMB48.1 million in the three months ended March 31, 2010 to RMB562.6 million (US$85.2 million) in the three months ended March 31, 2011, which resulted from the increase in the fair value of our ordinary shares.

    Non-GAAP Adjusted Net Income.  Our non-GAAP adjusted net income increased by 24.9% from RMB17.5 million in the three months ended March 31, 2010 to RMB21.8 million (US$3.3 million) in the three months ended March 31, 2011.

        We define adjusted net income, a non-GAAP financial measure, as net income attributable to Phoenix New Media Limited excluding share-based compensation expenses. We believe that separate analysis and exclusion of the non-cash impact of share-based compensation adds clarity to the constituent parts of our performances. We review adjusted net income together with net income/(loss) to obtain a better understanding of our operating performance. We use this non-GAAP financial measure for planning and forecasting and measuring results against the forecast. Using several measures to evaluate our business allows us and our investors to assess our relative performance against our competitors and ultimately monitor our capacity to generate returns for our investors. We also believe it is useful supplemental information for investors and analysts to assess our operating performance without the effect of non-cash share-based compensation expenses, which have been and will continue to be significant recurring expenses in our business. However, the use of adjusted net income has material limitations as an analytical tool. One of the limitations of using non-GAAP adjusted net income is that it does not include all items that impact our net income/(loss) for the period. In addition, because adjusted net income is not calculated in the same manner by all companies, it may not be comparable to other similar titled measures used by other companies. In light of the foregoing limitations, you should not consider adjusted net income in isolation from or as an alternative to net income/(loss) prepared in accordance with U.S. GAAP.

        Our non-GAAP adjusted net income is calculated as follows for the periods presented:

 
  For the Three Months Ended
March 31,
 
 
  2010   2011  
 
  RMB
  RMB
 
 
  (in thousands)
 

Net income/(loss) attributable to Phoenix New Media Limited

    14,755     (26,235 )

Add back: Share-based compensation expenses

    2,698     48,033  
           

Non-GAAP adjusted net income

    17,453     21,799  
           

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the section entitled "Selected Consolidated Financial Data" and our consolidated financial statements and the related notes included elsewhere in this prospectus. The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under "Risk Factors" and elsewhere in this prospectus.

Overview

        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 TV, we enable consumers to access professional news and other quality information 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, BBC.co.uk, and CNTV.cn, in March 2011 according to Alexa.com, a third-party web information company, and ranked 8th 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 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.

        Our net advertising revenues collectively accounted for 18.1%, 31.1% and 38.7% of our total revenues in 2008, 2009 and 2010, respectively. Our advertising solutions present brand advertisers with attractive opportunities to access our highly educated, affluent and engaged user base with the consumer targeting capabilities of the Internet. We provide advertising services through our online and video channels primarily and, to a small extent at present, through our mobile channel. We recognize revenues from our advertising services on a net basis, deducting the agency service fees we pay to advertising agencies. As is customary in the advertising industry in China, we generate most of our net advertising revenues by selling our advertising services through third-party advertising agencies. Driven by the growth in our number of advertisers, which reached 197, 319 and 502 as of December 31, 2008, 2009 and 2010, respectively, our net advertising revenues grew at rates of 102.8% from 2008 to 2009, and 150.4% from 2009 to 2010.

        Our paid service revenues comprised 81.9%, 68.9% and 61.3% of our total revenues in 2008, 2009 and 2010, respectively. We offer a variety of paid services through 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 consist 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 derived 87.3%, 8.1% and 4.6% of our paid service revenues, respectively, from our MIVAS, video VAS and Internet VAS in 2010. We generate the majority our paid service revenues from our WVAS, digital reading services and mobile subscription and pay-per-view video services by providing content to mobile device users and collecting revenue shares from the relevant mobile operator. We also earn a significant portion of our paid service revenues in the form of fixed fees from China Mobile for our digital reading services. We recognize most of our paid service revenues on a gross basis.

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        In 2008, 2009 and 2010, we generated revenues of RMB222.6 million, RMB262.3 million and RMB528.7 million (US$80.1 million), respectively, representing a 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.

Factors Affecting Our Results of Operations

        Our business and operating results are affected by general factors affecting China's new media industry, which include China's overall economic growth, per capita disposable income, the trend of media convergence, growth of new media and its popularity as an advertising medium, growth of Internet penetration, adoption of paid services, including 3G mobile services, and smartphones. Unfavorable changes in any of these general industry conditions could negatively affect demand for our services and negatively and materially affect our results of operations.

        Our business, results of operations, financial condition and future growth are more directly affected by company specific factors and trends, including:

    our ability to maintain and expand our target user base;

    our ability to provide effective advertising services and enhance our pricing power;

    our ability to grow our MIVAS and mobile subscription and pay-per-view video services; and

    our ability to procure and produce content in a cost-effective manner.

Our ability to maintain and expand our target user base.

        We have a large, highly educated and affluent user base, which is critical for us to continue to attract advertisers and grow our revenues from paid services. Our ability to continue to effectively target, maintain and expand such a user base will affect the growth of our advertising business and our revenues going forward. While advertisers are drawn to our platform because of our attractive user base demographics, the efficacy of their advertisements on our website largely depends on our website's PV. As a result, our number of users, the number of pages they view in aggregate, the amount of time they spend on our website and their level of interaction on our integrated online and mobile platform all affect our revenues. We believe that the growth of our target user base sets the foundation for achieving a higher conversion rate for turning non-paying users into paying users.

Our ability to provide effective advertising services and enhance our pricing power.

        Our financial condition and results of operations depend substantially on the demand for our advertising services, as well as our pricing power in selling our advertising services. In 2008, 2009 and 2010, net advertising revenues accounted for 18.1%, 31.3% and 38.7% of our total revenues. Our net advertising revenues are recognized on a net basis after deducting advertising agency service fees, and therefore any changes in these service fees will affect our net advertising revenues going forward. Our agency services fees have increased in the past due to a Chinese industry practice whereby advertising agencies increase their fees on a sliding scale as clients' business volumes grow. Therefore, we may experience increases in our agency service fees commensurate with gross advertising revenue growth in the future.

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        Generally, demand for our advertising services will continue to be affected by the pace of adoption of online and mobile advertising by brand advertisers in China. On a more specific level, we need to provide innovative and effective advertising services to increase our existing clients' advertising spending and to attract new advertising clients. To this end, we need to continue to offer a diverse suite of advertising formats and develop new innovative formats. It is also important for us to continue to engage third-party organizations to conduct more research to analyze and demonstrate to clients the efficacy of the advertisements we develop. In past years, we have been able to increase our advertising pricing at a higher rate than the online advertising industry average due to our rapid growth in PV and our increased brand recognition. We strive to leverage our affluent and highly educated user base and further increase our pricing power through enabling advertisers to target subsections of our user base by posting advertisements on our interest-based verticals and matching their advertisements to particular content, and users with relevant behavioral patterns. In addition, we believe that an improved ability to leverage our integrated platform to provide cross-channel advertising solutions can also strengthen our pricing power. In order to grow our advertising business, we must expand our advertising strategy, advertising solution and creative design, direct sales and customer service teams and improve our dialogue with advertisers and advertising agencies. We also believe that our ability to capture increasing demand for video and mobile Internet advertising services will affect the growth of our net advertising revenues going forward.

Our ability to grow our MIVAS and mobile subscription and pay-per-view video services.

        We generate a significant portion of our revenues by providing content services to mobile device users, including our MIVAS and mobile subscription and pay-per-view video services. We believe these businesses offer substantial growth potential, and they are important components of our growth strategy. In order to grow our paying user base, subscription revenues and average revenues per user, or ARPU, we need to continue to provide premium, professional and differentiated content and engaging interactive services. We also need to continue to develop user-friendly applications that are compatible with a wide range of mobile operating systems. In addition to our internal initiatives, the growth of these services, and in particular that of our WVAS, is affected by the business policies of mobile operators. We plan to grow our paid service offerings by further developing services such as digital reading services and mobile subscription and pay-per-view video services and pursuing new business opportunities, such as audio services.

Our ability to procure and produce content in a cost-effective manner.

        We need to license, acquire and produce high quality content in order to deliver a differentiated and engaging experience for our users and provide attractive advertising solutions for our advertisers. We obtain the largest portion of our content portfolio from third party professional sources pursuant to license agreements. We base our content purchase decisions on the quality of the content, its relevance to our users' preferences and the advertising appeal of a particular piece of content relative to its cost, and aim at ensuring that we realize substantial value from the content that we license. We expect that our increasing utilization of content across our Internet and mobile channels will lead to cost synergies as we continue to grow our business. We may increase our procurement of third-party video content and our in-house production of video content going forward in order to attract more users, which may increase our content procurement cost. Our ability to continue to manage and control our third-party content acquisition costs while maintaining the high quality and attractiveness of our content will continue to affect our results of operations going forward.

        We also obtain a substantial portion of our video content from Phoenix TV. Pursuant to the Content License Agreements entered into between each of our affiliated consolidated entities and Phoenix Satellite Television Company Limited, a wholly owned subsidiary of Phoenix TV, Phoenix Satellite Television Company Limited has granted each of our affiliated consolidated entities an exclusive license to use its copyrighted content on our Internet and mobile channels in China. Phoenix

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Satellite Television Company Limited has provided these exclusive licenses as part of the broad arrangement between our PRC subsidiary and Phoenix TV under the Phoenix TV Cooperation Agreement, which is effective until March 2016, subject to Phoenix TV's percentage indirect equity interest in our PRC subsidiary. See "Related Party Transactions—Transactions and Agreements with Phoenix TV and Certain of its Subsidiaries" for more information. Therefore, our ability to control our content costs is dependent to a significant extent on the nature of our relationship with Phoenix TV.

Critical Accounting Policies

Critical Accounting Policies and Estimates

        The following descriptions of critical accounting policies, judgments and estimates should be read in conjunction with our consolidated financial statements and other disclosures included in this prospectus. When reviewing our financial statements, you should consider (i) our selection of critical accounting policies, (ii) judgment and other uncertainties affecting the application of such policies and (iii) the sensitivity of reported results to changes in conditions and assumptions.

Basis of Presentation

        The consolidated financial statements include our financial statements of the Company, our subsidiaries, our consolidated affiliated entities for which Fenghuang On-line is the primary beneficiary, and the subsidiary of one of our consolidated affiliated entities prepared on a going concern basis. The consolidated financial statements do not include the financial statements of PHOENIXi and its subsidiaries on a consolidated basis as they are undergoing liquidation, but rather account for them under the cost method and recognize any other than temporary impairment. All significant transactions and balances among us, our subsidiaries, our consolidated affiliated entities and subsidiary of the consolidated affiliated entities have been eliminated upon consolidation.

        Our statement of operations include all the historical costs related to the online advertising, MIVAS, video VAS and Internet VAS businesses, including expenses incurred by Phoenix TV on behalf of us, and an allocation of certain general corporate expenses of Phoenix TV. These general corporate expenses primarily relate to advertising and promotion fees, technical service expenses and other expenses arising from the provisions of certain corporate functions, including finance, legal and executive management. We allocated these expenses based on estimates that our management believes to be a reasonable reflection of the utilization of services provided to, or benefits received by us.

        Our management believes that the assumptions underlying our consolidated financial statements and the above allocations are reasonable. Our consolidated financial statements, however, may not be reflective of our result of operations, financial position and cash flows had we been operated as a standalone company during those periods. Our historical results for any prior period are not necessarily indicative of results to be expected for any future period.

Revenue Recognition

        Revenue is recognized when persuasive evidence of an arrangement exists, the price is fixed or determinable, service has been performed and the collectibility of the related fee is reasonably assured. For multiple element arrangements (arrangements with more than one deliverable), we have early adopted ASU 2009-13 "Multiple Deliverable Revenue Arrangements" (effective June 15, 2010), which requires us to separate multiple element arrangements into different units of accounting, when possible, and allocate total arrangement consideration to each unit of accounting on the basis of their relative selling price.

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Net Advertising Revenues

        Online advertising arrangements allow advertisers to place advertisements on particular areas of our website, in particular formats and over particular periods of time.

        While the majority of our revenue transactions contain standard business terms and conditions, there are certain transactions that contain non-standard business terms and conditions. In addition, the majority of our advertising service arrangements involve multiple element arrangements (arrangements with more than one deliverable) that may include placement of different advertising formats on our website over different periods of time, which are accounted for under ASU 2009-13 "Multiple-Deliverable Revenue Arrangements."

        As a result, significant contract interpretation is sometimes required to determine the appropriate accounting for these transactions including: (1) how the arrangement consideration should be allocated among potential multiple elements; (2) when to recognize revenue on the deliverables; and (3) whether all elements of the arrangement have been delivered. Changes in judgments on these assumptions and estimates could materially impact the timing or amount of revenue recognition.

        For arrangements where we are required to provide only one deliverable, we recognize revenues either on a straight line basis over the contract period (where performance obligations are uniform over the contract period) or based on the proportion of obligations performed (where the performance obligations are not uniform over the contract period).

        We provide cash incentives in the form of agency service fees to certain third-party advertising agencies based on their sales performance, and account for such incentives as a reduction of revenue in accordance with ACS 605-50-25.

Paid Service Revenues

        Paid service revenues are primarily derived from MIVAS and video VAS, and to a small extent from Internet VAS.

        MIVAS.    MIVAS revenues are derived from a variety of mobile services and applications focused on information, entertainment, and communications, consisting of digital reading services, mobile games and WVAS. We mainly offer news and other content subscriptions, picture and logo downloads, mobile phone ring-back tones, mobile games, access to music files and various other services to mobile phone users primarily through contracts signed with China Mobile, a shareholder of Phoenix TV, and its subsidiaries, and to a lesser degree, other third party mobile operators.

        Revenues are recorded on a gross basis when most of the gross indicators are met, such as when we are considered the primary obligor in the arrangement, where we design and develop (in some cases with the assistance of third-parties) the MIVAS, have reasonable latitude to establish price, have discretion in selecting the mobile operators to offer our MIVAS, provide customer services and take on the credit risks associated with the transmission fees. Conversely, revenues are recorded on a net basis when most of the gross indicators are not met. The determination of whether we are the primary obligor for a particular type of service is subjective in nature and is based on an evaluation of the terms of the arrangement. If the terms of the arrangement with operators were to change and cause the gross indicators to not be met, we would need to record our MIVAS revenues on a net basis. In 2010, approximately 64.3% of our MIVAS revenues were recorded on a gross basis. Consequently, recording MIVAS revenues on a net basis would cause a significant decline in our total revenues and could have a significant impact on our gross profit margin.

        We receive monthly billing statements from mobile operators which provide details of the total revenues collected by them relating to MIVAS and the Company's shares of such revenues. Due to the time lag between when the services are rendered and when the mobile operators' reports are received, MIVAS revenues are estimated based on our internal records of billings and transmissions for the

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month. If subsequent billing statements from the operators differ significantly from management's estimates, our revenues could be materially impacted. We have not noted any significant differences between management's estimates and the operators' billing statements historically.

        We also contract with China Mobile to provide news content and other services to support China Mobile's mobile newspaper services. A fixed fee is charged for the contract period, and is recognized as revenue using the straight-line method.

        Video VAS.    We generate revenues by offering television content and documentaries produced in-house or licensed from Phoenix TV or third parties and edited by us through our video VAS, which consist of online subscription and pay-per-view video services, mobile subscription and pay-per-view video services and video content sales. Revenues from our online subscription and pay-per-view video services and mobile subscription and pay-per-view video services are recognized in the period in which the service is performed, provided no significant obligations remain, collection of the receivables is reasonably assured and the amounts can be accurately estimated.

        Mobile subscription and pay-per-video video services are provided through contracts we sign with China Mobile and other third party mobile operators. Revenues from these services are recorded on a net basis as the mobile operators are considered to be the primary obligors in the transactions, and set the prices of the services.

        We also generate revenues by sublicensing a portion of the video content we obtain from Phoenix TV, mainly including TV programs and documentaries. The licensing agreements we enter into with third party websites or other media companies involve the transfer of broadcasting rights with a definitive license period. In accordance with Accounting Standards Codification (ASC) 926-605, Entertainment-Films, Revenue Recognition, we recognize revenues in respect of our video content sales arrangements when the following criteria are met: persuasive evidence of a sublicensing arrangement with a customer exists, the content has been delivered or is available for immediate and unconditional delivery, the sublicense period of the arrangement has begun and the customer can begin its exploitation, exhibition, or sale, the arrangement fee is fixed or determinable and collection of the arrangement fee is reasonably assured. Pursuant to the Phoenix TV Cooperation Agreement, we pay Phoenix TV 50% of the revenues we earn from sublicensing Phoenix TV's video content, which is recognized in our cost of revenues.

        Internet VAS.    Internet VAS revenues are derived principally from online promotion solutions, including Internet advertising campaigns, Internet website design and development services provided to promote certain special marketing events of our customers. We also provide other Internet VAS, such as our "Pick-Ur-Stock" service. Internet VAS revenues are recognized ratably over the period during which the required services were provided and when all revenue recognition criteria were met.

Expenses Incurred by Phoenix TV on our Behalf

        Our consolidated statements of operations include all the related costs of providing net advertising revenues and paid service revenues, including those costs incurred by Phoenix TV to produce its content, which are also used to support our operations. These content production costs are allocated based on relative revenues generated from this content by us and by Phoenix TV.

        Our consolidated statements of operations also include an allocation of certain general corporate expenses from Phoenix TV, including allocation of advertising and promotion fees, technical services expenses, and corporate administrative expenses:

    Advertising and promotion fees are allocated to us based on our percentage of revenue to the total historical revenues of Phoenix TV.

    Technical service expenses relate to salaries, bonuses and other benefits of the technical support staffs which are allocated to us based on the percentage of estimated time incurred for our

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      business to total time incurred for Phoenix TV, and technical service fees paid to external parties by other entities of Phoenix TV on our behalf.

    Corporate administrative expenses relate to salaries, bonuses and other benefits of the Phoenix TV's top management which are allocated to us based on percentage of estimated time incurred for our business to total time incurred for Phoenix TV, and other general corporate expenses paid to external parties by other entities of Phoenix TV on our behalf.

Share-based Compensation

        We use the fair-value based method to account for share-based compensation. Accordingly, share-based compensation is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the employees' requisite service period. Share-based compensation for awards granted with service conditions are recognized, net of a forfeiture rate, over the requisite service period of the award, which is the vesting term, based on the fair value of the award on the grant date.

        If the equity instrument is modified after the grant date, additional compensation expenses may be recognized, in an amount equal to the excess of the fair value of the modified equity instrument over the fair value of the original equity instrument immediately before the modification. The additional compensation expenses are recognized immediately on the date of the modification or over the remaining requisite service period, depending on the vesting status of the awards.

        Total share-based compensation expenses in 2008, 2009 and 2010 were RMB29.9 million, RMB10.2 million and RMB16.6 million, respectively.

        Determining the value of our share-based compensation expense in future periods requires the input of highly subjective assumptions, including the expected life of the share-based payment awards, estimated forfeitures and the price volatility of the underlying shares. The assumptions used in calculating the fair value of share-based payment awards represent management's best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and we use different assumptions, our share based compensation expense could be materially different in the future.

        Determining the fair value of options requires making complex and subjective judgments. In assessing the fair value of the options we have granted, we considered the following principal factors:

    the nature of our business and the contracts and agreements relating to our business;

    the global economic outlook in general and the specific economic and competitive elements affecting our business;

    the nature and prospects of our industry in China;

    the growth of our operations; and

    the risks facing our business.

        We are responsible for estimating the fair value of ordinary shares and share-based awards. To determine the fair value of our ordinary shares, the three generally accepted approaches were considered: the cost, market and income approaches. While useful for certain purposes, the cost approach is generally not considered applicable to the valuation of companies which are a going concern, as it does not capture the future earnings potential of the business. Given that our current stage of development is different from those of other publicly listed companies in the same industry, comparability of the financial metrics of peer companies and the relevance of the market approach were considered low. In view of the above, we considered the income approach to be the most appropriate method to derive the fair value of our ordinary shares, and market approached was also

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considered for verifying the result. We also utilize the market approach to check the valuation derived from the income approach.

        For the income approach, we utilized a discounted cash flow, or DCF, analysis based on our management's best estimates of projected cash flows as of each of the valuation dates. The projected cash flows include among other things, an analysis of projected revenue growth, gross margins, effective tax rates, capital expenditures, working capital requirements and depreciation and amortization. We used cash flow projections up to year 2014 for valuation dates up to July 1, 2010, and used cash flow projections to year 2015 for valuations as of December 31, 2010 and thereafter. Terminal value is determined by the capitalized economic income method, in which a perpetual and constant growth rate of 3% to 4% is assumed after the projection period. The income approach involves applying appropriate discount rates to estimated cash flows that are based on earnings forecasts. The assumptions used in deriving the fair value of our ordinary shares are consistent with our business plan. These assumptions include: we have no significant contingent liabilities, unusual contractual obligations or substantial commitments; there are no significant pending or threatened litigation involving our company; there are no violations of any regulations or laws by us; and we have no redundant assets. These assumptions are inherently uncertain and subjective. The discount rates reflect the risks management perceived as being associated with achieving the forecasts and were derived by using the Capital Asset Pricing Model, after taking into account systematic risks and company-specific risks. The risks associated with achieving our forecasts were assessed in selecting the appropriate discount rates, which ranged from 20.30% to 27.43%. If different discount rates had been used, the valuations would have been different and the amount of share-based compensation would also have been different because the fair value of the underlying ordinary shares for the awards granted would be different.

        We also applied discounts for lack of marketability or, DLOM, to our equity value to reflect the fact that there is no ready public market for our shares as we are a closely held private company. When determining the DLOM, the Black-Scholes option pricing model was used. Under this method, the cost of a put option that could be used to hedge the price change before a privately held share can be sold, is considered as a basis to determine the appropriate discount factor for lack of marketability. Based on the analysis, the DLOMs of 30%, 30% and 9.8%-30.0% were used for the valuation of our ordinary shares as of each of the option grant dates in 2008, 2009 and 2010, respectively.

        For the market approach, we considered the market profile and performance of four guideline companies engaged in Internet and mobile industry and used such information to derive equity value to earnings multiple. Due to the different growth rates, profit margins and risk levels between us and those four guideline companies, we made adjustments to determine the estimated equity value to our earnings multiple and derived our value accordingly. The comparison with market approach did not result in any adjustments to value derived from the income approach.

        The equity value of our company determined at the respective valuation dates based on the above assumptions was allocated between the preferred shares and ordinary shares using the option pricing allocation method and straight allocation method. We have also taken into consideration the transaction price of our Series A convertible redeemable preferred shares issued in November 2009. Considering the premium for the preference of Series A shares, 20% discount is applied to the transaction price of US$0.19, and the implied fair value of underlying ordinary shares for option valuation purpose would be approximately US$0.15 as in November 2009, which supports the estimated valuation of our ordinary share of approximately US$0.15-US$0.16 for the options grants in July and September 2009 and January 2010.

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        Valuation Assumptions:    We estimated the fair value of share options using the Black-Scholes option pricing model. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:

 
  For the Year Ended December 31,  
 
  2008   2009   2010  

Expected volatility (%)

    55.91%-59.07%     57.60%-58.07%     54.37%-54.91%  

Expected dividend yield (%)

             

Expected term (years)

    4.58-5.88     5.31-5.46     4.64-5.30  

Risk-free interest rate (per annum) (%)

    2.68%-4.14%     2.94%-2.95%     2.65%-3.57%  

        Expected Volatility:    We estimated the expected volatility at the date of grant based on the average annualized standard deviation of the share prices of comparable listed companies.

        Expected Dividend Yield:    The Black-Scholes option pricing model calls for a single expected dividend yield as an input. We have not declared or paid any cash dividends on our capital stock, and we do not anticipate any dividend payments on our ordinary shares in the foreseeable future.

        Expected Term:    We estimated the expected term based on the timing of the expected public offering, the vesting schedule and the exercise period of the options.

        Risk-Free Interest Rate:    We based the risk-free interest rate used in the Black-Scholes option pricing model on the derived market yield of the USD denominated Chinese government bond for the term approximating the expected life of award at the time of grant.

        Estimated Pre-vesting Forfeitures:    When estimating forfeitures, we considered both voluntary and company initiated termination.

        As of the date of this prospectus, the total number of options outstanding was 17,619,725, of which there were 13,207,750 vested and 4,411,975 unvested options with a weighted average exercise price of US$0.03215. In addition, 5,618,167 contingently issuable shares were outstanding as of the date of this prospectus.

        The grant date, number of options granted, exercise price, fair value and intrinsic value of the options granted to date are set forth below. The number of options, price and value information below are based upon ordinary shares.

Grant Date
  Number
of Options
Granted
  Exercise
Price
(US$)
  Fair Value of
the Options as
of the Grant
Date
(US$)
  Fair Value of
Underlying
Ordinary
Shares as of the
Grant Date
(US$)
  Intrinsic
Value
(US$)
 

July 4, 2008

    67,000,000     0.03215     0.08     0.12     0.09  

November 5, 2008

    1,374,000     0.03215     0.09     0.12     0.09  

July 31, 2009

    10,584,900     0.03215     0.12     0.15     0.12  

September 15, 2009

    10,029,900     0.03215     0.12     0.15     0.12  

January 8, 2010

    4,557,900     0.03215     0.14     0.16     0.13  

July 1, 2010

    4,760,325     0.03215     0.18     0.21     0.18  

September 30, 2010

    910,000 (1)   0.03215     0.38     0.40     0.37  

December 1, 2010

    5,540,000 (1)   0.03215     0.39     0.43     0.39  

(1)
In July 2010, we issued 6,450,000 stock options to certain non-employees with a vesting period of four years starting from the date of issuance, provided that the holders of such stock options became our employees before December 31, 2010. These stock options are considered for accounting purposes to be granted as of the date when the holders became employees of our company, and therefore they are included in our September 30, 2010 and December 1, 2010 grants and their fair values are determined as of such dates.

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        On March 15, 2011, we cancelled 18,778,200 stock options granted historically, and granted 19,008,200 restricted shares to the affected employees on March 17, 2011. In addition, we further granted 10,050,958 restricted share units to the employees on the same date. The fair value of the restricted shares and restricted share units on March 17, 2011 was US$1.07 and the fair value of the underlying ordinary shares was US$1.14.

Income Taxes

        Our current income taxes are provided on the basis of income for financial reporting purposes, adjusted for income and expense items which are not assessable or deductible for tax purposes, in accordance with the regulations of the relevant tax jurisdictions. We follow ASC 740, Income Taxes, and account for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for tax consequences attributable to differences between carrying amounts of existing assets and liabilities in financial statements, their respective tax basis, and operating loss carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates to be applied to taxable income in the year in which those temporary differences are expected to be recovered or settled.

        A valuation allowance is provided to reduce the carrying amount of deferred tax assets if it is considered more likely than not that some portion, or all, of the deferred tax assets will not be realized. Accordingly, we consider various tax planning strategies, forecasts of future taxable income and our most recent operating results in assessing the need for a valuation allowance. The effect on deferred tax assets and liabilities arising from changes in tax rates is recognized in statements of operations in the period of such change.

        We adopted the guidance on accounting for uncertainty in income taxes as of January 1, 2008. The guidance prescribes a more likely than not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Guidance was also provided on de-recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods and income tax disclosures. Significant judgment is required in evaluating the uncertain tax positions and determining its provision for income taxes. We establish reserves for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes will be due. These reserves are established when we believe that certain positions might be challenged despite our belief that our tax return positions are in accordance with applicable tax laws. We adjust these reserves in light of changing facts and circumstances, such as the closing of a tax audit, new tax legislation or the change of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made.

        In April 2010, the State Administration of Tax ("SAT") issued Circular 157, which seeks to provide additional guidance on the interaction of certain preferential tax rates under the transitional rules of the EIT Law. Prior to Circular 157, we interpreted the law to mean that if an entity was in a period where it was entitled to a 50% reduction in the tax rate and was also entitled to a 15% rate of tax due to New Technology Enterprise status under the EIT Law, then it was entitled to pay tax at the rate of 7.5%. Circular 157 appears on its face to have the effect that such an entity is entitled to pay tax at either 15% or 50% of the applicable PRC tax rate. The effect of Circular 157 is retrospective and would apply to 2008 and 2009.

        However, to date, the Beijing local-level tax bureau has not implemented Circular 157 and is holding the view that the relevant provisions might not apply to New Technology Enterprises in Science & Technology Park of Haidian District, where Fenghuang On-line is located. Therefore Fenghuang On-line has kept its current practice unchanged. Based on our communications with Beijing local-level tax bureau, we have a high confidence level in the technical merits of this tax position, and are highly confident that the 7.5% tax rate will be ultimately applied. Accordingly, we recognized the

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full amount of the tax benefit from the preferential tax rate of 7.5% in the financial statements, and did not provide reserve for this tax position.

        We expect more guidance to be issued in the future. Upon the issuance of such guidance, Fenghuang On-line's effective tax rate might increase. For example, if Circular 157 were implemented with a retroactive effect, we would be liable to pay an additional RMB2.1 million in taxes.

        The EIT Law also provides that an enterprise which is established under the laws of foreign countries or regions but whose "de facto management body" is located in the PRC would be treated as a resident enterprise for PRC tax purposes and consequently be subject to the PRC income tax at the rate of 25% with respect to its global income. The Implementing Rules of the EIT Law merely define the location of the "de facto management body" as "the place where the exercising, in substance, of the overall management and control of the production and business operation, personnel, accounting, properties, etc., of a non-PRC company is located." Based on a review of surrounding facts and circumstances, we consider that it is more-likely-than-not that our operations outside of the PRC should not be considered a resident enterprise for PRC tax purposes, and it is likely that the full amount of benefit will be realized upon settlement. Accordingly, we did not provide a reserve for this tax position. However, due to the limited guidance and implementation history of the EIT Law, should Phoenix New Media Limited be treated as a resident enterprise for PRC tax purposes, we would be subject to PRC tax on worldwide income at a uniform tax rate of 25% retroactive to January 1, 2008.

        In accordance with accounting guidance, undistributed earnings of a subsidiary are presumed to be transferred to the parent company and are subject to withholding taxes, unless the parent company has evidence of specific plans for reinvestment of undistributed earnings of a subsidiary which demonstrate that remittance of the earnings will be postponed indefinitely. The current policy adopted by the Company's Board of Directors allows the Company's PRC subsidiary to distribute PRC earnings offshore only if the Company does not have to pay a dividend tax. Based on the Enterprise Income Tax Law, which became effective on January 1, 2008, such policy would require the Company's PRC subsidiary to indefinitely reinvest all earnings made in China since 2008 onshore or be subject to a 10% withholding tax should it decide to distribute earnings accumulated since 2008 offshore. We did not record any tax liability related to the dividend withholding tax provision as the Company has specific plans to reinvest its undistributed earnings in the PRC.

Allowance for Doubtful Accounts Receivable

        The carrying value of accounts receivable is reduced by an allowance that reflects our best estimate of the amounts that will not be collected. We make estimations for the collectability of accounts receivable considering many factors including but not limited to reviewing accounts receivable balances, historical bad debt rates, repayment patterns, customer credit worthiness, financial conditions of the customers and industry trend analysis resulting in their inability to make payments due to us. We also make a specific allowance if there is evidence showing that the receivable is likely to be not recoverable.

Foreign Currency

        Our functional currency is the U.S. dollar and functional currency of our subsidiaries and consolidated affiliated entities is RMB. An entity's functional currency is the currency of the primary economic environment in which the entity operates or, in the case of a start-up entity, is the currency that the entity plans to use on a long-term basis. Management must use judgment in determining an entity's functional currency, assessing economic factors including cash flow, sales price, sales market, expense, financing and inter-company transactions and arrangements. The determination of our functional currency as the U.S. dollar is based largely on our planned future operations in North America and Taiwan. To the extent we significantly change how we carry out these plans or they do not materialize, we would need to re-assess the determination of our functional currency. To the extent a re-assessment results in a change to our functional currency our financial position and results of operations may be materially impacted.

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        Impact from exchange rate changes related to transactions denominated in currencies other than the functional currency is recorded as a gain and loss in our consolidated statements of operations, while impact from exchange rate changes related to translating a foreign entity's financial statements from its functional currency to our reporting currency, the RMB, is disclosed and accumulated in a separate component under the equity section of our consolidated balance sheets. Translation gains or losses are not released to net income unless the associated net investment has been sold, liquidated or substantially liquidated. Management uses judgment in determining the timing of recognition of translation gains or losses. Such determination requires assessing whether translation gains or losses were derived from the sale or complete or substantially complete liquidation of an investment in a foreign entity. Different judgments or assumptions resulting in a change of the timing of recognition of foreign exchange gains or losses may materially impact our financial position and results of operations.

Fair Value of Our Ordinary Shares

        We are a private company with no quoted market prices for our ordinary shares. We have therefore needed to make estimates of the fair value of our ordinary shares at various dates for the following purposes:

    Determining the fair value of our ordinary shares at the date of issuance of convertible instruments as one of the inputs into determining the intrinsic value of the beneficial conversion feature, if any.

    Determining the fair value of our ordinary shares at the date of the grant of a share-based compensation award to our employees as one of the inputs into determining the grant date fair value of the award.

        The following table sets forth the fair value of our ordinary shares estimated at different times.

Date
  Class of Shares   Fair Value   DLOM   Discount Rate  

July 4, 2008

  Ordinary Shares     US$0.12     30.0%     27.43%  

November 5, 2008

  Ordinary Shares     US$0.12     30.0%     26.79%  

July 31, 2009

  Ordinary Shares     US$0.15     30.0%     24.30%  

September 15, 2009

  Ordinary Shares     US$0.15     30.0%     24.34%  

January 8, 2010

  Ordinary Shares     US$0.16     30.0%     23.02%  

July 1, 2010

  Ordinary Shares     US$0.21     16.3%     22.25%  

September 30, 2010

  Ordinary Shares     US$0.40     11.1%     20.75%  

December 1, 2010

  Ordinary Shares     US$0.43     9.8%     20.60%  

March 17, 2011

  Ordinary Shares     US$1.14     8.0%     20.30%  

        When estimating the fair value of the ordinary shares, our management has considered a number of factors, including the result of a third-party appraisal prepared in 2011 on a retrospective basis and equity transactions of our company, while taking into account standard valuation methods and the achievement of certain events.

        The following table sets forth a summary of our cash flows for the periods indicated:

 
  For the year ended December 31,  
 
  2008   2009   2010  
 
  (RMB in thousands)
 

Net cash provided by (used in) operating activities

    13,875     (8,627 )   85,676  

Net cash used in investing activities

    (12,108 )   (6,555 )   (18,059 )

Net cash provided by financing activities

    76     170,085     620  

Effect of changes in exchange rate

    3,494     184     (4,150 )

Net increase in cash

    5,336     155,087     64,087  

Cash and cash equivalents at the beginning of period

    62,663     67,999     223,086  

Cash and cash equivalents at the end of period

    67,999     223,086     287,173  

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        The fair value of the ordinary shares was determined with the assistance of Grant Sherman Appraisal Limited, or Grant Sherman, an independent third-party valuation firm. The valuation reports from Grant Sherman have been used as part of our analysis in reaching our conclusion on share values. We reviewed the valuation methodologies used by Grant Sherman and believe the methodologies used are appropriate and the valuation results are representative of the fair value of our ordinary shares.

        The increase in the fair value of our ordinary shares from US$0.16 as of the January 2010 option grants to US$0.21, as of the July 2010 option grants, and to US$0.40 as of the September 2010 option grants primarily because our ability to generate cash increased substantially driven by:

    an increase in our advertising space selling price since the third quarter of 2010 as the average daily PV and monthly unique visitors, or UV, of our website were substantially higher than the industry average and many of our major competitors and we therefore were able to charge a higher premium;

    experienced executives joining us after we obtained the investment from our issuance of Series A convertible redeemable preferred shares in November 2009; and

    the high growth rate of our WVAS revenues in 2010 resulting from our larger WVAS business volume due to our ability to offer revenue sharing payments to our channel partners on a more frequent basis and our securing better quality channel partners based on the quality of our content.

        The above factors caused an increase of the revenue and cash flow forecasts used to estimate our value in July and September 2010, as compared to those used in January 2010, resulting in increased fair value of our ordinary shares.

        The increase in the fair value of our ordinary shares from US$0.40 as of the September 30, 2010 option grants to US$0.43 as of the December 1, 2010 option grants is primarily attributable to the following factors:

    We received approval from Phoenix TV in October 2010 to begin to undertake an initiative to enhance the integration of our and Phoenix TV's content management systems, by allowing us to directly access Phoenix TV's programs digitally, in addition to our current access via satellite signal, and to expedite the transmission of our content to Phoenix TV. This initiative is expected to further enhance our and Phoenix TV's cross promotion of content, resulting in increased synergies from greater convergence of our respective platforms.

    We officially kicked off our initial public offering project in November 2010, resulting in a decrease of our DLOM from 11.1% as of September 30, 2010 to 9.8% as of December 1, 2010.

        The increase in the fair value of our ordinary shares from US$0.43 as of the December 1, 2010 option grants to US$1.14 as of the March 17, 2011 award grants is primarily attributable to the following factors:

    We completed our financial audit for 2010 and achieved significantly better financial performance than our previous estimate as of December 1, 2010, resulting from strong growth in net advertising revenues and all components of paid services revenues, including MIVAS, video VAS and Internet VAS. Our non-GAAP adjusted net income of RMB90.6 million for 2010 exceeded the threshold target for a Qualified IPO as set forth in our amended and restated memorandum and articles of association by 13.3%. This percentage by which we exceeded the threshold target surpassed our expectation as of December 1, 2010. In view of the above, we increased our financial forecasts from our previous estimates as of December 1, 2010.

    Year-on-year growth of the average daily PV and monthly UV of ifeng.com for January and February 2011 reached unprecedented growth rates for our company, at 115.9% and 61.6% for

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      January and 147.6% and 66.6% for February, respectively, and significantly exceeded the growth rates we anticipated as of December 1, 2010. By March 17, 2011, ifeng.com's average daily PV surpassed that of Sohu.com, according to iWebChoice.

    Three senior management members joined our company in December 2010, including our chief financial officer, editor-in-chief and vice president in charge of our video business.

    We formally established our video division and formulated a new video business strategy in January 2011, we also increased the headcount of this division from 64 to 78 from December 31, 2010 to March 17, 2011, including five key hires of personnel at or above director-level positions, which will help us to expand our video business according to our planned actions.

    We determined in December 2010 to strengthen our Northeast regional advertising sales force by increasing this sales force's employees by over 40% in the first half of 2011.

    We made our first confidential submission to the SEC on January 5, 2011 and our third confidential submission to the SEC, including our financial statements for 2010, on March 14, 2011, which significantly increased the certainty of this offering. In addition, we estimated the date of this offering to be in May 2011. The increased certainty and decrease in expected time to the initial public offering lowered the discount for lack of marketability ("DLOM") from 9.8% as of December 1, 2010 to 8.0% as of March 17, 2011.

    Tianying Jiuzhou entered into a new digital reading contract with China Mobile Communications Group Zhejiang Company Limited, or China Mobile Zhejiang, effective as of December 10, 2010, pursuant to which Tianying Jiuzhou provides digital book content to China Mobile Zhejiang, which in turn distributes this content to its customers through its mobile network. China Mobile Zhejiang is obligated to pay Tianying Jiuzhou 40% of the revenues it earns from providing Tianying Jiuzhou's digital book content to its customers. The term of this contract is two years.

    Tianying Jiuzhou entered into a new cooperation agreement with China Mobile in February 2011, pursuant to which the parties agreed to jointly explore the mobile advertising business, subject to Tianying Jiuzhou and China Mobile entering into a supplemental agreement. Accordingly, we increased our estimates for future net advertising revenues.

    Following the successful initial public offering of Youku.com Inc. in December 2010 and until March 17, 2011, advertisers' acceptance of Internet video advertising increased significantly. Consequently, we increased our projections for our video advertising business.

    We successfully entered into a series of advertising framework agreements from December 31, 2010 to March 17, 2011 which not only met our budgeted target in terms of aggregate contract amount for the first quarter of 2011, but were also mostly entered into directly with advertisers. This was in contrast with past practice wherein we typically entered into most of our advertising framework agreements with advertising agencies. Since advertisers, as opposed to advertising agencies, ultimately decide whether to actually purchase our advertising services, entering into framework agreements directly with advertisers provides us with greater certainty of generating business than entering into such agreements with advertising agencies. The number and contract amount of the framework agreements we entered into directly with advertisers from December 31, 2010 to March 17, 2011 exceeded our expectation as of December 1, 2010.

        The increase in the fair value of our ordinary shares from US$1.14 as of the March 17, 2011 award grants to US$1.63, based on the mid-point of the estimated range of the initial public offering price, is primarily due to the following factors:

    There have been positive market developments since March 17, 2011.

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      The capital markets have stabilized since March 17, 2011, following the Japanese earthquake on March 11, 2011. The S&P 500 index dropped to as low as 1,257 in the week following the Japanese earthquake. Between March 17, 2011 and April 26, 2011, the S&P 500 index rose by 5.8%, and for the 30 days preceding April 26, 2011, the S&P 500 remained above 1,300.

      The Chinese economy continued to show robust growth in the three months ended March 31, 2011, as indicated by year-on-year GDP growth of 9.7% in this period.

      In general, the market sentiment towards China-based publicly traded companies further improved since mid-March 2011, which resulted in an overall appreciation in the market value of their shares. For instance, the NASDAQ China Index increased by 17.0% from March 16, 2011 to April 26, 2011.

      Preliminary market feedback indicates the possibility of strong demand for our ADSs during our offering process because we are the leading new media company providing quality content across Internet, mobile and television channels in China and there is no other China-based Internet company listed in the U.S. with a similar convergence model. Based on this feedback, several investors are considering Sina Corporation and Sohu.com Inc. to be our comparable companies for valuation purposes. The stock prices of Sina Corporation and Sohu.com Inc. increased by 53.2% and 28.2%, respectively, from March 17, 2011 to April 26, 2011.

    We have achieved significant business development since March 17, 2011.

    Based on our selected unaudited financial results for the three months ended March 31, 2011, a number of our financial results in this period exceeded our estimates as of March 17, 2011.

    The average daily PV and monthly UV of ifeng.com continued to grow rapidly in March 2011, at rates of 165.8% and 103.7%, respectively, as compared to March 2010.

    Tianying Jiuzhou received its Internet Publication License on April 15, 2011.

    Tianying Jiuzhou submitted the application forms to transfer the "ifeng" logo from Phoenix Satellite Television Trademark Limited to Tianying Jiuzhou to the PRC Trademark Office on April 13, 2011.

    The estimated offering public initial offering price of US$1.63, based on the mid-point of the estimated range of the initial public offering price, was determined assuming this offering would be successfully completed, which will have the effect of increasing the fair value of our ordinary shares.

    This offering is expected to provide us with additional capital, enhance our ability to access the capital markets to grow our business and provide our shareholders with greater liquidity. The imminent launch of our initial public offering allows us to forego the 8.0% DLOM used in the March 17, 2011 valuation.

    Through a successful initial public offering and listing on the NYSE, we expect to further enhance our brand awareness and raise our profile, which will attract more users and advertisers to our website.

    The automatic conversion of all of our Series A convertible redeemable preferred shares into Class A ordinary shares upon the closing of the initial public offering and the corresponding elimination of the related liquidation and other preferences and redemption rights, allows us to allocate our equity value equally among all of our outstanding ordinary

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        shares, compared with a higher allocation to Series A convertible redeemable preferred shares in our March 17, 2011 valuation.

      The completion of this offering will enable us to provide equity-based compensation arrangements using freely tradable securities, which will allow us to conserve cash and increase the loyalty and motivation of our employees, officers, directors and consultants, which are critical assets of our business.

Fair Value of Our Series A Convertible Redeemable Preference Shares

        In addition to our ordinary shares, we have also, with the assistance of Grant Sherman Appraisal Limited, determined the fair value of the Series A convertible redeemable preference shares. The result of which is used to determine the amount of redemption value as well as the amortization of the associated beneficial conversion feature. Consistent with ordinary shares discussed above, the determination of the fair value of our Series A convertible redeemable preference shares requires complex and subjective judgments to be made regarding our projected financial and operating results, our unique business risks, the liquidity of these shares and our operating history and prospects at the time of valuation.

        Grant Sherman used the discounted cash flow, or DCF, method of the income approach to assess the fair value of ordinary shares in 2009 and 2010. The determination of the fair value of our ordinary shares requires complex and subjective judgments to be made regarding our projected financial and operating results, our unique business risks, the liquidity of our shares and our operating history and prospects at the time of valuation.

Internal Control over Financial Reporting

        Prior to this offering, we have been a private company with a relatively short operating history and limited accounting personnel and other resources with which to address our internal controls and procedures over financial reporting. During the course of the audit of our consolidated financial statements for the years ended December 31, 2008, 2009 and 2010, we and our independent registered public accounting firm identified one material weakness and one significant deficiency in our internal control over financial reporting, as defined in AU 325, Communicating Internal Control Related Matters Identified in an Audit, of the AICPA Professional Standards. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of our company's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

        The material weakness identified relates to the lack of sufficient accounting personnel with appropriate understanding of U.S. GAAP accounting issues and the SEC's reporting requirements. The significant deficiency relates to the lack of written accounting manual and closing procedures to facilitate preparation of financial statements for financial reporting purposes. The material weakness resulted in audit adjustments and corrections to our financial statements.

        We hired a chief financial officer with public company reporting and U.S. GAAP experience in early December 2010. In addition, we plan to take initiatives to improve our internal control over financial reporting and disclosure controls, including (i) establishing an audit committee to oversee the accounting and financial reporting processes as well as external and internal audits of our company, (ii) establishing an internal audit function, (iii) hiring additional qualified professionals with relevant accounting experience for our finance and accounting department at both headquarters and subsidiaries levels, (iv) providing U.S. GAAP accounting and financial reporting training for our existing personnel, (v) standardizing our accounting systems by introducing additional programs and procedures,

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(vi) formalizing and standardizing policies and procedures in relation to period-end-closing and financial reporting at both headquarters and subsidiaries levels and (vii) increasing the level of interaction among our management, audit committee and other external advisors. However, the implementation of these initiatives may not fully address the material weakness and significant deficiency in our internal control over financial reporting. See "Risk Factors—Risks Relating to Our Business and Industry—During the course of the audit of our consolidated financial statements, we and our independent registered public accounting firm identified one material weakness and one significant deficiency in our internal control over financial reporting. If we fail to establish and maintain effective internal control over financial reporting, our ability to accurately and timely report our financial results in accordance with U.S. GAAP may be materially and adversely affected. In addition, investor confidence in us and the market price of our ADSs may decline significantly if we or our independent registered public accounting firm conclude that our internal control over financial reporting is not effective."

        Upon the completion of this offering, we will become a public company in the United States that will be subject to the U.S. Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, will require that we include a report of management on our internal control over financial reporting in our annual report on Form 20-F beginning with our annual report for the fiscal year ending December 31, 2012. In addition, our independent registered public accounting firm must report on the effectiveness of our internal control over financial reporting. See "Risk Factors—Risks Relating to Our Business and Industry—During the course of the audit of our financial statements, we and our independent registered public accounting firm identified one material weakness and one significant deficiency in our internal control over financial reporting. If we fail to establish and maintain effective internal control over financial reporting, our ability to accurately and timely report our financial results in accordance with U.S. GAAP may be materially and adversely affected. In addition, investor confidence in us and the market price of our ADSs may decline significantly if we or our independent registered public accounting firm conclude that our internal control over financial reporting is not effective."

Description of Key Statement of Operations Items

Revenues

        The following table sets forth the principal components of our total revenues by amount and by percentage of total revenues for the periods presented.

 
  For the year ended December 31,  
 
  2008   2009   2010  
 
  RMB   %   RMB   %   RMB   US$   %  
 
  (in thousands except percentages)
 

Revenues:

                                           
 

Net advertising revenues

    40,259     18.1%     81,632     31.1%     204,370     30,965     38.7%  
 

Paid service revenues

    182,367     81.9%     180,715     68.9%     324,326     49,140     61.3%  
                                     

Total revenues

    222,626     100%     262,347     100%     528,696     80,105     100%  
                                     

Revenues

        We derive our revenues from advertising services and paid services.

        Advertising services.    Our net advertising revenues accounted for 18.1%, 31.1% and 38.7% of our total revenues in 2008, 2009 and 2010, respectively. We generate our net advertising revenues from payments made by advertisers to place advertisements on our websites for particular durations of time. We provide our advertising services through our online and video channels primarily and, to a small

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extent at present, through our mobile channel. The advertising formats we offer generally include banners, videos, text-links, logos, buttons and rich media. Growth in our number of advertisers and average revenue per advertiser, or ARPA, both contributed significantly to the growth of our net advertising revenues from 2008 to 2009, and from 2009 to 2010. Our number of advertisers reached 197, 319 and 502 as of December 31, 2008 and 2009 and 2010, respectively. Our ARPA increased from RMB0.2 million in 2008, to RMB0.3 million in 2009, and to RMB0.4 million in 2010. Such increases in ARPA were driven by greater demand for our advertising services and our offering of a greater variety of advertising services in attractive service packages, which allowed us to increase the prices we charged and generate a greater volume of advertising business per customer.

        Advertisers purchase our advertising services primarily through third-party advertising agencies. As is typical in the Chinese online advertising industry, most of the advertisements on our website are charged on the basis of duration. A small amount of the advertisements presented on our website are charged on a cost-per-thousand-impression, or CPM, basis. Our advertising contracts establish fixed prices for the advertising services we provide. We recognize advertising revenues on a net basis after deducting service fees earned by advertising agencies, and based on the delivery pattern over the display period as specified in the relevant contract. Going forward, we expect our net advertising revenues to comprise an increasing share of our total revenues.

        We also earn advertising revenues from Phoenix TV for joint TV and new media advertising solutions which we provide together with Phoenix TV to certain Phoenix TV advertising customers. We record these revenues as net advertising revenues earned from related parties. Our net advertising revenues earned from related parties accounted for 7.8%, 4.7% and 8.5% of our advertising revenues in 2008, 2009 and 2010, respectively.

        Paid Services.    Our paid service revenues contributed 81.9%, 68.9% and 61.3% of our total revenues in 2008, 2009 and 2010, respectively. The following table sets forth our paid service offerings and their respective contributions to our paid service revenues and total revenues in 2010.

Paid Service Offerings(1)
  % of paid
service
revenues
  % of total
revenues
 

MIVAS (mobile channel)

    87.3 %   53.6 %
 

WVAS

    60.6 %   37.2 %
 

Digital reading services

    23.5 %   14.4 %
 

Mobile game services

    3.2 %   2.0 %

Video VAS (video channel)

    8.1 %   5.0 %
 

Online video services, mobile video services and video content sales

    8.1 %   5.0 %

Internet VAS (ifeng.com channel)

    4.6 %   2.8 %
 

Pick-Ur-Stock and other Internet VAS

    4.6 %   2.8 %

(1)
Tianying Jiuzhou conducts most of our WVAS services, our digital reading services, most of our mobile game services, our video VAS services and a portion of our Internet VAS services. Yifeng Lianhe conducts a portion of our WVAS and a small portion of our mobile game services. Fenghuang On-line provides generates revenue from conducting certain promotional activities for Phoenix TV, which we categorize within our Internet VAS from an accounting perspective under US GAAP.

        We generate most of our paid service revenues from our WVAS, digital reading services and video VAS, which respectively accounted for 60.6%, 23.5% and 8.1% of our paid service revenues in 2010.

    WVAS.  We generate revenues from our WVAS by providing content to mobile operators, including China Mobile, China Unicom and China Telecom, who then transmit our content to their mobile phone users through the relevant value-added service technologies, which include short messaging service (SMS), multimedia messaging service (MMS), ring back tone (RBT), interactive voice response (IVR) and wireless application protocol (WAP). Our WVAS primarily

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      consist of messaging-based services (SMS and MMS). Mobile phone users in China pay for these WVAS as part of their subscriptions or on a per-usage basis. We generally recognize revenues from WVAS in the periods in which the services are performed, either on a gross basis or net of revenue sharing fees, depending on whether certain accounting criteria are met. See "—Critical Accounting Policies—Critical Accounting Policies and Estimates—Paid Service Revenues."

    Digital Reading Services.  We earn revenues from our digital reading services by offering mobile newspapers, which are series of periodicals that can be easily viewed and navigated on a mobile phone interface. We generate revenues from this service through two means. First, we provide mobile newspaper content to China Mobile for a fixed fee pursuant to our cooperation agreements with China Mobile. China Mobile pays us at specified periods as set forth in the relevant agreement. China Mobile in turn offers our mobile newspaper content to VIP subscribers of its Go-Tone service as part of their subscriptions. In addition, mobile phone users who are not VIP subscribers to China Mobile's Go-Tone service can also subscribe to the mobile newspaper services. We provide our mobile newspaper content to all three of the mobile telecommunications operators in China in order to reach these users, and share a portion of the revenues generated from purchases of the service with the operators in the form of a revenues sharing fee. We recognize our digital reading revenues on a net basis.

    Video VAS.  We generate the majority of our video VAS revenues from our mobile subscription and pay-per-view video services by providing short video clips to mobile phone users through China Mobile's video platform. We launched our mobile video services in 2010. China Mobile's customers pay a monthly subscription fee to access the ifeng video channel on this platform, or pay on a per-clip basis. We generally recognize revenues from its mobile video service in the periods in which the service is performed and on a net basis. We also earn video VAS revenues from our online subscription and pay-per-view video services by offering short clips on our dedicated video vertical, v.ifeng.com. We charge subscribers RMB45 per month for full access to all VIP content available on our vip.v.ifeng.com vertical and also offer more tailored subscriptions for fees ranging from RMB8 to RMB20 per month. We charge pay-per-view users RMB2 for each video they watch on vip.v.ifeng.com. In addition, we generate video VAS revenues through our video content sales services by sublicensing content we obtain from Phoenix TV to third parties, and generate a small amount of video VAS revenues at present from selling our in-house produced video content to third parties.

    Other.  The remainder of our paid service revenues are derived from our mobile game services and Internet VAS.

        Our paid service revenues earned from China Mobile, a related party, accounted for 90.3%, 87.0% and 86.8% of our paid service revenues in 2008, 2009 and 2010, respectively. We generated paid service revenues of RMB130.2 million, RMB100.8 million and RMB218.4 million (US$33.1 million) from providing content services to customers of China Mobile and collecting fees through revenue sharing arrangements with China Mobile in 2008, 2009 and 2010, respectively. In the same periods, we derived paid service revenues of RMB34.4 million, RMB56.4 million and RMB63.8 million (US$9.7 million), respectively, from fixed fees from China Mobile for our "mobile newspaper" digital reading service.

    Cost of Revenues

        Our cost of revenues consists primarily of (1) revenue sharing fees paid to or retained by mobile operators and channel and content partners, (2) content and operational costs, including content procurement costs, salaries and benefits and other operating costs, (3) bandwidth costs and (4) business

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taxes and related surcharges. The following table sets forth the components of our cost of revenues by amount and by percentage of total revenues for the periods indicated.

 
  For the year ended December 31,  
 
  2008   2009   2010  
 
  RMB   %   RMB   %   RMB   US$   %  
 
  (in thousands except percentages)
 

Cost of revenues:

                                           
 

Revenue sharing fees

    106,640     47.9 %   75,496     28.8 %   151,732     22,990     28.7 %
 

Content and operational costs

    34,865     15.6 %   61,815     23.5 %   99,838     15,127     18.8 %
 

Bandwidth costs

    14,243     6.4 %   18,904     7.2 %   19,552     2,962     3.7 %
 

Business tax and surcharges

    7,754     3.5 %   13,847     5.3 %   28,301     4,288     5.4 %
                                     

Total cost of revenues

    163,502     73.4 %   170,062     64.8 %   299,423     45,367     56.6 %
                                     

        Revenue Sharing Fees.    We share the revenues generated from the majority of our MIVAS and from our mobile video services with the mobile operators through whose networks and/or service platforms we offer our MIVAS and mobile video services to our users, and channel partners through whose platforms we market and distribute our MIVAS and mobile video services. We also share certain MIVAS revenues with content providers, as applicable. The percentage allocations for our revenue sharing is determined with the relevant parties and varies by service.

        The amount of revenue sharing fees that we pay to such third party content and service providers accounts for the largest portion of our revenue sharing fees. In addition, increases in revenue sharing fees are attributable more to increases in revenue sharing fees paid to third party content and service providers, than to increases in revenue sharing fees paid to China Mobile. The revenue sharing percentage to third party content and services providers is generally greater than that to China Mobile. Additionally, revenues sharing fees paid to China Mobile for mobile video services and certain MIVAS are not recognized in the cost of revenues, as they are deducted from these revenues, while revenue sharing fees paid to third party content and service providers for these same services are recognized in cost of revenues. Accordingly, increases in revenue sharing fees for such services are all attributable to fees paid to third party content and service providers.

        Content and Operational Costs.    Our content costs consist of (i) personnel-related costs which include share-based compensation associated with content production and advertising sales support, (ii) payments we make to third-party professional media companies, (iii) the license fees we pay to Phoenix TV for the use of its content, (iv) content procurement costs and (v) production costs related to our in-house produced content. Our operational costs consist of office expenses, costs related to events, channel testing costs in connection with advertising revenue generating activities and other miscellaneous costs.

        Bandwidth Costs.    Bandwidth costs are the fees we pay to mobile operators and other service providers for telecommunications services and for hosting our servers at their Internet data centers.

        Business Tax and Related Surcharges.    Business tax is imposed by the Chinese government on revenues we report for the provision of taxable services, transfers of intangible assets and sales of immovable properties. The business tax rate varies depending on the nature of the revenues. Our advertising services are subject to business tax, surcharges and cultural development fees of 8.5%. Our paid services are subject to business taxes and surcharges of 3.3% or 5.5%. For more information see "—Taxation."

Operating Expenses

        Our operating expenses consist of sales and marketing expenses, general and administrative expenses and technology and product development expenses, and include allocations of expenses from

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Phoenix TV. Share-based compensation expenses are included in our operating expenses as they are incurred. Our operating expenses have increased in absolute terms since 2008 due primarily to increased sales commissions and staff costs in support of our revenue growth, and have declined as a percentage of total revenues. After completion of this offering, we intend to use the net offering proceeds for content acquisition and production, product development and technology infrastructure, marketing and sales, as well as for general corporate purposes. See "Use of Proceeds." In addition, we intend to undertake efforts to remediate our financial controls. As a result, our sales and marketing expenses, general and administrative expenses, and technology and product development expenses may each increase materially in absolute amount, although we do not expect any of these operating expenses to increase materially as a percent of our total revenues.

        The following table sets forth our operating expenses, divided into their major categories, by amount and by percentage of total revenues for the periods indicated.

 
  For the year ended December 31,  
 
  2008   2009   2010  
 
  RMB   %   RMB   %   RMB   US$   %  
 
  (in thousands except percentages)
 

Operating expenses:

                                           
 

Sales and marketing expenses

    33,855     15.2%     46,364     17.7%     76,153     11,538     14.4%  
 

General and administrative expenses

    37,613     16.9%     27,727     10.6%     39,955     6,054     7.6%  
 

Technology and product development expenses

    17,104     7.7%     16,579     6.3%     31,012     4,699     5.9%  
                                     

Total operating expenses

    88,572     39.8%     90,670     34.6%     147,120     22,291     27.8%  
                                     

        Sales and Marketing Expenses.    Our sales and marketing expenses consist primarily of sales and marketing personnel-related expenses and advertising and promotion expenses.

        General and Administrative Expenses.    Our general and administrative expenses primarily consist of personnel-related expenses for management and administrative staff and professional accounting and legal fees and depreciation and amortization.

        Technology and Product Development Expenses.    Our technology and product development expenses mainly consist of personnel-related expenses associated with the development and maintenance of, and enhancement to our website and expenses associated with new technology and product development and enhancement.

        Share-based Compensation Expenses.    We measure the cost of employee services received in exchange for share-based compensation at the grant date fair value of the award. We recognize share-based compensation expenses, net of forfeitures, on a graded-vesting basis over the vesting term of the award. We adopt the Black-Scholes option pricing model to determine the fair value of stock options and account for share-based compensation expenses using an estimated forfeiture rate at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from initial estimates. Share-based compensation expenses are recorded net of estimated forfeitures such that expenses are recorded only for share-based awards that are expected to vest.

        Related Party Transactions.    We have entered into transactions with our related parties, including Phoenix TV and China Mobile, in 2008, 2009 and 2010 that impact our net advertising revenues, paid service revenues, cost of revenues, sales and marketing expenses, general and administrative expenses

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and technology and product development expenses. See "Related Party Transactions." The following table sets forth the significant transactions with our related parties.

 
  For the Year Ended
December 31,
 
 
  2008   2009   2010  
 
  RMB
  RMB
  RMB
  US$
 
 
  (in thousands)
 

Transactions with the non US listing part of Phoenix TV:

                         

Content provided by Phoenix TV

    (1,165 )   (1,540 )   (3,671 )   (556 )

Advertising and promotion services allocated from Phoenix TV

    (3,722 )   (3,920 )   (7,181 )   (1,088 )

Technical services provided by Phoenix TV

    (399 )   (866 )   (998 )   (151 )

Corporate administrative expenses allocated from Phoenix TV

    (760 )   (1,155 )   (617 )   (93 )

Revenues earned from Phoenix TV and its customers

    3,134     3,845     17,274     2,617  

Transactions with China Mobile:

                         

Paid service revenues earned from China Mobile

    164,642     157,276     281,577     42,663  

Paid service revenues sharing and bandwidth cost to China Mobile

    (25,735 )   (22,786 )   (34,777 )   (5,269 )

Other Income/(Expenses)

        Our other income/(expenses) reflects interest income, exchange rate gains or losses and others, net, which primarily consists of government subsidies.

Taxation

        We are incorporated in the Cayman Islands. Under the current law of the Cayman Islands, we are not subject to income or capital gains tax. In addition, dividend payments are not subject to withholding tax in the Cayman Islands.

        Each of our PRC subsidiary and our affiliated consolidated entities are obligated to pay income tax in the PRC. Any technical service fees paid by our affiliated consolidated entities to Fenghuang On-line are deducted from these entities' taxable incomes for purpose of calculating their respective income taxes. On March 16, 2007, the National People's Congress of PRC enacted the Enterprise Income Tax Law, or the EIT Law, under which foreign investment enterprises and domestic companies would be subject to EIT at a uniform rate of 25% of taxable net income. There will be a five-year transition period for foreign invested enterprises, during which foreign invested enterprises are allowed to continue to enjoy their existing preferential tax treatments. Preferential tax treatments will continue to be granted to entities which conduct businesses in certain encouraged sectors and to entities otherwise classified as "Software Enterprises" and/or HNTE, irrespective of whether they are foreign invested enterprises or domestic companies. The EIT Law became effective on January 1, 2008.

        Under the EIT Law, enterprises that were established and already enjoyed preferential tax treatments before March 16, 2007 will continue to enjoy them (i) in the case of preferential tax rates, for a period of five years from January 1, 2008, or (ii) in the case of preferential tax exemption or reduction for a specified term, until the expiration of such term.

        Under the previous income tax laws and rules prior to January 1, 2008, Fenghuang On-line has been qualified as "New Technology Enterprise," and could enjoy a favorable tax rate of 15% and were exempted from income tax for three years beginning with their first year of operations, and were entitled to a 50% tax reduction to 7.5% for the subsequent three years and 15% thereafter. In addition, the EIT Law provides grandfather treatment for enterprises which were qualified as "New Technology Enterprises" under the previous income tax laws and were established before March 16, 2007, if they continue to meet the criteria for New Technology Enterprises after January 1, 2008. The grandfather provision allows these enterprises continue to enjoy their unexpired tax holiday

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provided by the previous income tax laws and rules. Fenghuang On-line continued to meet the criteria for New Technology Enterprises from 2008 to 2010 under the EIT Law, and it can continue to enjoy its unexpired tax holidays. Therefore, Fenghuang On-line was entitled to tax exemption from 2006 to 2008 and a 50% reduction of its applicable EIT rate to 7.5% from 2009 to 2010. If Fenghuang On-line will continue to be qualified as New Technology Enterprise in 2011, it will continue to be entitled to a 50% reduction of its applicable EIT rate to 7.5% in 2011.

        In April 2010, the State Administration of Tax issued Circular 157, which seeks to provide additional guidance on the interaction of certain preferential tax rates under the transitional rules of the EIT Law. Prior to Circular 157, we interpreted the law to mean that if an entity was in a period where it was entitled to a 50% reduction in the tax rate and was also entitled to a 15% rate of tax due to New Technology Enterprise status under the EIT Law, then it was entitled to pay tax at the rate of 7.5%. Circular 157 appears on its face to have the effect that such an entity is entitled to pay tax at either 15% or 50% of the applicable PRC tax rate. The effect of Circular 157 is retrospective and would apply to 2008 and 2009.

        However, to date, the Beijing local-level tax bureau has not implemented Circular 157 and has held the view that the relevant provisions might not apply to New Technology Enterprises in Science & Technology Park of Haidian District, where Fenghuang On-line is located. Therefore Fenghuang On-line has kept its current practice unchanged. We expect more guidance to be issued in the future. Upon the issuance of such guidance, Fenghuang On-line's effective tax rate might increase. For example, if Circular 157 were implemented with a retroactive effect, we would be liable to pay an additional RMB2.1 million in taxes.

        Tianying Jiuzhou has been qualified as HNTE under the EIT Law from 2008 to 2010. Therefore, Tianying Jiuzhou was entitled to the preferential tax rate of 15% from 2008 to 2010 and will continue to enjoy this preferential tax rate, provided that it continues to be qualified as HNTE during such period.

        Yifeng Lianhe and Tianying Chuangzhi are subject to a 25% EIT rate for all the periods presented.

        Under the EIT Law, dividends paid from our PRC subsidiary are subject to a withholding tax at 10%. This new dividend withholding tax, however, will only be levied on our PRC subsidiary in respect of profits earned in 2008 onwards. Profits distributed after January 1, 2008 but related to financial results generated in the year ended December 31, 2007 and prior years will not be subject to dividend withholding tax. The dividend withholding tax rate can be lower than 10% subject to tax treaties between China and foreign countries or regions.

        The EIT Law also provides that an enterprise established under the laws of foreign countries or regions but whose "de facto management body" is located in the PRC be treated as a resident enterprise for PRC tax purposes and consequently be subject to the PRC income tax at the rate of 25% for its global income. The Implementing Rules of the EIT Law merely define the location of the "de facto management body" as "the place where the exercising, in substance, of the overall management and control of the production and business operation, personnel, accounting, properties, etc., of a non-PRC company is located." Based on a review of surrounding facts and circumstances, the Company does not believe that it is likely that its operations outside of the PRC should be considered a resident enterprise for PRC tax purposes. However, due to limited guidance and implementation history the EIT Law, should we be treated as a resident enterprise for PRC tax purposes, we will be subject to PRC tax on worldwide income at a uniform tax rate of 25% retroactive to January 1, 2008.

        The advertising revenues of Tianying Jiuzhou and its subsidiary earned from external customers are subject to business taxes, surcharges and cultural development fees at a rate of 8.5%. The affiliated consolidated entities' paid service revenues earned from external customers are subject to business taxes and surcharges at rates of 3.3% to 5.5%. Additionally, the technical service fees paid by the affiliated consolidated entities to Fenghuang On-line pursuant to the contractual arrangements are

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subject to business taxes and surcharges at a rate of 5% to 5.5%. Therefore, due to our current structure in the PRC, our revenues may be subject to business tax and surcharge more than once.

Our Selected Quarterly Results of Operations

        The following table presents our selected unaudited quarterly results of operations for the eight quarters in the period from January 1, 2009 to December 31, 2010. This information should be read together with our audited consolidated financial statements and related notes included elsewhere in this prospectus. We have prepared the unaudited condensed consolidated financial statements for the quarters presented on the same basis as our audited consolidated financial statements. The unaudited condensed consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, that we consider necessary for a fair presentation of our financial position and operating results for the quarters presented. The historical quarterly results presented below are not necessarily indicative of the results that may be expected for any future quarters or periods.

 
  Three Months Ended,  
 
  March 31,
2009
  June 30,
2009
  September 30, 2009   December 31, 2009   March 31, 2010   June 30,
2010
  September 30, 2010   December 31,
2010
 
 
  RMB
  RMB
  RMB
  RMB
  RMB
  RMB
  RMB
  RMB
  US$
 
 
  (in thousands)
   
 

Revenues:

                                                       
 

Net advertising revenues

    9,533     16,971     23,046     32,082     34,497     45,511     49,326     75,034     11,369  
 

Paid service revenues

    39,643     46,418     57,279     37,375     62,517     78,544     100,028     83,237     12,612  
                                       

Total revenues

    49,176     63,389     80,325     69,457     97,014     124,056     149,354     158,271     23,980  

Cost of revenues(1)

    (33,734 )   (40,442 )   (47,604 )   (48,282 )   (51,188 )   (69,120 )   (83,920 )   (95,196 )   (14,424 )
                                       

Gross profit

    15,442     22,947     32,721     21,175     45,827     54,936     65,434     63,076     9,557  
                                       

Operating expenses:

                                                       

Sales and marketing expenses(1)

    (6,630 )   (8,636 )   (11,807 )   (19,290 )   (14,911 )   (14,142 )   (21,717 )   (25,382 )   (3,846 )

General and administrative expenses(1)

    (6,410 )   (5,010 )   (7,274 )   (9,032 )   (8,340 )   (8,214 )   (8,237 )   (15,163 )   (2,297 )

Technology and product development expenses(1)

    (4,049 )   (3,714 )   (4,769 )   (4,047 )   (6,085 )   (6,853 )   (8,519 )   (9,556 )   (1,448 )
                                       

Total operating expenses

    (17,090 )   (17,361 )   (23,850 )   (32,369 )   (29,336 )   (29,209 )   (38,473 )   (50,101 )   (7,591 )
                                       

Income/(loss) from operations

    (1,647 )   5,586     8,870     (11,194 )   16,491     25,727     26,961     12,975     1,966  

Other income

    8     176     48     100     498     (89 )   890     1,130     171  
                                       

Income/(loss) before tax

    (1,640 )   5,762     8,919     (11,094 )   16,988     25,639     27,851     14,104     2,137  

Income tax benefits/expenses

    (177 )   (1,347 )   (626 )   491     (2,234 )   (2,363 )   (3,278 )   (2,624 )   (398 )
                                       

Net income/(loss) attributable to Phoenix New Media Limited

    (1,817 )   4,415     8,292     (10,603 )   14,755     23,275     24,573     11,481     1,740  
                                       

Net income/(loss) attributable to ordinary shareholders

    (1,817 )   4,415     8,292     (42,157 )   (40,992 )   (47,504 )   (62,749 )   (14,173 )   (2,147 )

Non-GAAP adjusted net income(2)

    (641 )   5,364     12,726     (6,922 )   17,453     25,471     29,322     18,398     2,788  

Notes:

(1)
Includes share-based compensation expenses as follows:

 
  Three Months Ended,  
 
  March 31,
2009
  June 30,
2009
  September 30, 2009   December 31, 2009   March 31, 2010   June 30,
2010
  September 30, 2010   December 31,
2010
 
 
  RMB
  RMB
  RMB
  RMB
  RMB
  RMB
  RMB
  RMB
  US$
 
 
  (in thousands)
 

Allocation of share-based compensation expenses:

                                                       
 

Cost of revenues

    163     129     237     246     180     146     366     161     24  
 

Sales and marketing expenses

    228     185     1,705     785     592     488     2,667     917     139  
 

General and administrative expenses

    641     520     2,179     2,418     1,755     1,422     1,507     5,722     867  
 

Technology and product development expenses

    144     115     313     232     171     140     209     117     18  

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(2)
We define adjusted net income/(loss), a non-GAAP financial measure, as net income/(loss) attributable to Phoenix New Media Limited excluding share-based compensation expenses. We believe that separate analysis and exclusion of the non-cash impact of share-based compensation adds clarity to the constituent parts of our performances. We review adjusted net income/(loss) together with net income/(loss) to obtain a better understanding of our operating performance. We use this non-GAAP financial measure for planning and forecasting and measuring results against the forecast. Using several measures to evaluate our business allows us and our investors to assess our relative performance against our competitors and ultimately monitor our capacity to generate returns for our investors. We also believe it is useful supplemental information for investors and analysts to assess our operating performance without the effect of non-cash share-based compensation expenses, which have been and will continue to be significant recurring expenses in our business. However, the use of adjusted net income/(loss) has material limitations as an analytical tool. One of the limitations of using non-GAAP adjusted net income/(loss) is that it does not include all items that impact our net income/(loss) for the period. In addition, because adjusted net income/(loss) is not calculated in the same manner by all companies, it may not be comparable to other similar titled measures used by other companies. In light of the foregoing limitations, you should not consider adjusted net income/(loss) in isolation from or as an alternative to net income/(loss) prepared in accordance with U.S. GAAP.

Our non-GAAP adjusted net income is calculated as follows for the periods presented:

 
  Three Months Ended,  
 
  March 31,
2009
  June 30,
2009
  September 30, 2009   December 31, 2009   March 31, 2010   June 30,
2010
  September 30, 2010   December 31,
2010
 
 
  RMB
  RMB
  RMB
  RMB
  RMB
  RMB
  RMB
  RMB
  US$
 
 
  (in thousands)
 

Net income/(loss) attributable to Phoenix New Media Limited

    (1,817 )   4,415     8,292     (10,603 )   14,755     23,275     24,573     11,481     1,740  

Add back: Share-based compensation expenses

    1,176     949     4,434     3,681     2,698     2,196     4,749     6,917     1,048  

Non-GAAP adjusted net income

    (641 )   5,364     12,726     (6,922 )   17,453     25,471     29,322     18,398     2,788  

        We have generally experienced consistent growth in our quarterly total revenues for the eight quarters in the period from January 1, 2009 to December 31, 2010, although our total revenues decreased from the third quarter to the fourth quarter of 2009 due to the timing of recognition of certain revenues earned from our digital reading "mobile newspaper" service and certain changes in the policies of mobile operators, as discussed below. The growth in our quarterly total revenues was driven by continual increases in our net advertising revenues and generally by increases in our paid service revenues. Increases in our net advertising revenues were mainly attributable to the increased use by brand advertisers of our advertising services to promote their brands and market their products and services, as evidenced by our increased number of advertisers and increased ARPA during these periods. Increases in our paid service revenues were primarily due to our increased paid service offerings and increased number of users of our paid services. On a year-on-year basis, our total revenues increased at a higher rate than our cost of revenues and operating expenses during these periods, as we have been able to achieve greater economies of scale and higher operating leverage.

        Our quarterly results of operations are affected by seasonal trends. In particular, our net advertising revenues are generally higher in the fourth quarter due to greater advertising spending by our advertisers near the end of each calendar year when they spend the remaining portions of their annual budgets. In addition, advertising spending has historically been cyclical, reflecting overall economic conditions as well as the budgeting and buying patterns of our advertisers. Our rapid growth has lessened the impact of seasonal fluctuations and cyclicality. However, we expect that seasonal fluctuations and cyclicality will continue to affect our quarterly and annual operating results. See "Risk Factors—Risks Relating to Our Business and Industry—Our quarterly revenues and results may fluctuate, which makes our results of operations difficult to predict and may cause our quarterly results of operations to fall short of expectations."

        Our paid service revenues decreased in the fourth quarter of 2010 compared to the third quarter of 2010 and in the fourth quarter of 2009 compared to the third quarter of 2009 because we did not recognize revenues for the digital reading "mobile newspaper" content we provided to China Mobile in November and December 2009 and 2010 as we were in the process of renegotiating the relevant cooperation contracts with China Mobile. The decrease in our paid service revenues in the fourth quarter of 2009 compared to the third quarter of 2009 was also due to a change in the policies of mobile operators, including China Mobile, to restrict pre-installations of mobile applications on handsets, tighten the requirement of additional customer billing confirmations and temporarily suspend

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the billing of WAP services due to government restrictions on WAP services providing offensive content. Our sales and marketing expenses increased significantly from the third quarter to the fourth quarter of 2009 and from the second quarter to the third quarter of 2010 due to a greater number of promotional activities that we undertook in the relevant periods. These expenses also decreased from the first quarter of 2010 to the second quarter of 2010, and increased from the second quarter 2010 to the third quarter of 2010 due to adjustments in personnel that we made in order to strengthen our advertising sales team.

Results of Operations

        The following table sets forth a summary of our consolidated results of operations for the periods indicated both in absolute amount and as a percentage of our total revenues. This information should be read together with our consolidated financial statements and related notes included elsewhere in this prospectus. The operating results in any period are not necessarily indicative of the results you may expect for future periods.

 
  For the year ended December 31,  
 
  2008   2009   2010  
 
  RMB   %   RMB   %   RMB   US$   %  
 
  (in thousands, except percentage)
 

Revenues:

                                           
 

Net advertising revenues(1)

    40,259     18.1   %   81,632     31.1   %   204,370     30,965     38.7   %
 

Paid service revenues(1)

    182,367     81.9   %   180,715     68.9   %   324,326     49,140     61.3   %
                               

Total Revenues

    222,626     100.0   %   262,347     100.0   %   528,696     80,105     100.0   %

Cost of revenues(1)(2)

    (163,502 )   (73.4 )%   (170,062 )   (64.8 )%   (299,423 )   (45,367 )   (56.6 )%
                               

Gross Profit

    59,124     26.6   %   92,285     35.2   %   229,273     34,738     43.4   %
                               

Operating expenses:(1)(2)

                                           
 

Sales and marketing expenses(1)(2)

    (33,855 )   (15.2 )%   (46,364 )   (17.7 )%   (76,153 )   (11,538 )   (14.4 )%
 

General and administrative expenses(1)(2)

    (37,613 )   (16.9 )%   (27,727 )   (10.6 )%   (39,955 )   (6,054 )