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CORRESP
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  CORRESP

    Simpson Thacher & Bartlett

    icbc tower, 35th floor

3 garden road, central

hong kong

telephone: +852-2514-7600

facsimile: +852-2869-7694

    Direct Dial Number

+852-2514-7620

    E-mail Address

ygao@stblaw.com

  December 4, 2023

    CONFIDENTIAL AND VIA EDGAR

    Division of Corporation Finance

U.S. Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Attention:       Mr. Stephen Krikorian

                       Ms. Melissa Walsh

             Re:      Phoenix New Media Ltd
                       Form 20-F for the Year Ended December 31, 2022
                       Response dated October 13, 2023
                       File No. 001-35158

  Ladies and Gentlemen:

  On behalf of our client, Phoenix New Media Limited, a company organized under the laws of the Cayman Islands (the “Company”), we respond to the comments contained in the letter from the staff (the “Staff”) of the Securities and Exchange Commission (the “SEC” or the “Commission”), dated October 30, 2023 (the “October 30 Comment Letter”) relating to the Company’s response letter, dated October 13, 2023 (the “October 13 Response”) to the Commission’s comment letter dated September 29, 2023, relating to the Company’s annual report on Form 20-F for the fiscal year ended December 31, 2022 filed with the Commission on May 1, 2023 (the “Annual Report”).

  Set forth below are the Company’s responses to the Staff’s comments in the October 30 Comment Letter. The Staff’s comments are retyped below in bold italic font for your ease of reference. All capitalized terms used but not defined in this letter shall have the meaning ascribed to such terms in the Annual Report. The Company respectfully advises the Staff that where the Company proposes to add or revise disclosure in its future annual reports on Form 20-F in response to the Staff’s comments, the changes to be made will be subject to relevant factual updates and changes in relevant laws or regulations, or in interpretations thereof.

    Simpson Thacher & Bartlett

    December 4, 2023

    -2-

    Division of Corporation Finance

U.S. Securities and Exchange Commission

  Form 20-F for the Year Ended December 31, 2022

  Notes to Consolidated Financial Statements

  Note 1. Organization and Principal Activities, page F-10

  1.We note your response to prior comment 2, including your representation that the Company’s management and board of directors consulted with the Company’s U.S. counsel, and we reissue in part. Please confirm whether you have received an opinion issued by counsel regarding your reliance on the exemption from the definition of investment company provided by Section 3(b)(1) under the Investment Company Act of 1940 (the “Act”).

  The Company respectfully advises the Staff that the Company’s board of directors consulted the Company’s U.S. counsel on applicable legal standards when performing its analysis under Section 3(b)(1) of the Act, but reiterates that the Company’s view is that the content of those communications is privileged.1  More specifically, the Company believes that if it were to either confirm or deny that it received an opinion of counsel, that statement could be deemed a waiver of privilege because such statement would be conveying the “content” of otherwise privileged communications.  Moreover, what may be viewed as a waiver of privilege in this context may be deemed as a waiver of privilege in other contexts.2  Accordingly, the Company respectfully declines to comment further on its communications with counsel.

  1.This concept of implied waiver is potentially expansive. For example, in United States v. Bilzerian, 926 F2d 1285 (2d Cir 1981) a defendant in a securities fraud suit indicated that he had acted in the good faith belief that his conduct had been legal. The trial court ruled that this testimony opened the door for cross-examination by the prosecutor about the defendant’s consultations with his attorneys. On appeal, the Second Circuit affirmed this ruling, holding that:

  “Bilzerian’s testimony that he thought his actions were legal would have put his knowledge of the law and the basis for his understanding of what the law required in issue. His conversations with counsel regarding the legality of his schemes would have been directly relevant in determining the extent of his knowledge and, as a result, his intent.”

  Similarly, the Company believes the Staff’s question calls for what may inadvertently be deemed to be a waiver privilege.

  2.See In re Steinhardt Partners, 9 F3d 230, 234–36 (2d Cir 1993) (selective waiver to SEC waives privilege as to others, unless client and SEC share a common interest, or SEC agrees that disclosure will not be a waiver as to others). See also In re Lupron(R) Marketing And Sales Practices Litig, 2004 US Dist LEXIS 7812 (D Mass 2004) (voluntary disclosure of privileged documents to the government held to waive privilege in later proceeding even though the government had agreed to keep documents confidential).

    Simpson Thacher & Bartlett

    December 4, 2023

    -3-

    Division of Corporation Finance

U.S. Securities and Exchange Commission

  2.Please (i) provide a detailed description of the material terms of the instruments you refer to as “‘Demand deposits’ with term-based interest to incentivize longer-term deposits,” together with your analysis regarding why, specifically, such terms indicate that such a product is a demand deposit (rather than a time deposit) that should be treated as a cash item; (ii) provide a description of the “investment in money market funds with daily redemptions,” including whether such funds are registered with the Commission and subject to Rule 2a-7 under the Act, and to the extent not, provide your detailed legal analysis supporting your proposed treatment of the money market funds as cash items; and (iii) provide your detailed legal analysis supporting your proposed treatment of your “investments in bank products with monthly redemptions” as cash items.

  (i) “Demand deposits” with term-based interest to incentivize longer-term deposits.

  The Company submits that the terms of these instruments allow for withdrawal at the request of the depositor at any time with lower (e.g., 0.5% per annum) or no interest paid on top of the principal returned.  However, if the funds remain deposited longer than a specific period of time, the interest rate paid on top of principal is higher. For instance, in one such product in which the Company is currently invested, if the depositor maintains a certain balance in the account for more than six months, the deposit offers an annual interest rate of 4.8%.

  The company previously treated these deposits as cash items because these instruments have a high liquidity feature and thus capital can be returned  “on demand.” After further consideration of these deposits under applicable guidance, the Company respectfully submits that these particular investments are represented by certificates of deposit held by the Company and are not demand deposits, and accordingly, the Company will treat such investments as investment securities in the future. As noted below, this change does not result in any changes to the Company’s previously reported numbers of investment securities under Section 3(a)(1)(C) because of the unconsolidated nature of that test.

  (ii) Investments in non-US money market funds with daily redemptions

  The money market funds the Company invests in are not registered with the Commission. The money market funds’ advisors and the funds themselves are instead registered with the China Banking and Insurance Regulatory Commission. The money market funds described under this category allocate 100% of their funds to cash, bank deposits, bond repurchases, central bank bills, interbank deposits, bonds, asset-backed securities, and other currency market instruments recognized by the China Banking and Insurance Regulatory Commission and the People’s Bank of China for their high liquidity and stability. The money market funds also maintain a stable rate of return.

  These investments are treated as cash items due to their safety and high liquidity. The funds arrive in the Company's bank accounts within 1-2 days after sending the redemption request via online banking.

    Simpson Thacher & Bartlett

    December 4, 2023

    -4-

    Division of Corporation Finance

U.S. Securities and Exchange Commission

  The Company respectfully submits that a difference in domicile and regulator should not transform daily liquidity money market fund interests from cash items into investment securities, when the intent of the holder is functionally identical. A U.S. operating company that acquires interests in a 2a-7 money market fund has no more or no less “investment intent” than does a Chinese operating company that acquires interests in Chinese-regulated money market fund.

  (iii) Investments in bank products with monthly redemptions

  This specific instrument (NAV-based financial product) originally had a one-month term and was due in February 2022. After the due date, it became redeemable every month. Since the goal of cash management is to preserve the Company’s capital against inflation, and the product has generated a modest return of around 2.9% per annum, the Company only redeemed the amounts needed for daily operations and kept the rest in these products. These investments are considered cash items due to their safety and relatively high liquidity. In particular the Company notes that these deposits were prompted by a significant influx of cash around the end of the year due to customers settling their open accounts around that time of the year.

  3.Please describe the length of time you have held investment securities in amounts substantially greater than 40% of your non-cash assets, including how this affected your analysis of the Company’s “historical development” under the Tonopah test.

  In response to the Staff’s comment the Company notes that it does not prepare unconsolidated analysis under 3(a)(1)(C) in the ordinary course and retroactively preparing them would be a time consuming exercise. Based on a historical analysis of the Company’s consolidated financial statements, however, the Company believes that it likely first exceeded the threshold for relying on Rule 3a-1 (i.e., 45% of Rule 3a-1 securities) in 2015. The Company believes this would also correspond to when the Company would have exceeded the 40% threshold of 3(a)(1)(C) as well.

  In 2014, as part of the Company’s strategy to expand its mobile platform, the Company began making substantial investments in Particle Inc. (“Particle”) in the form of equity investments and loans.3 Particle operates Yidian Zixun, a personalized news and lifestyle information application in China that allows users to define and explore desired content on their mobile devices. By April 2015, the Company would have owned approximately 49.02% of the equity interest in Particle on an as-if-converted basis and had an option to consolidate it as a subsidiary if Particle achieved a certain level of users.4

  3.As of December 31, 2015, the Company held an aggregate of approximately 46.95% of the equity interest in Particle on an as-if converted basis and paid a total cash consideration of US$68.6 million and a number of the Company’s ordinary shares with fair value of US$2.8 million. As of December 31, 2015, the carrying value of the Company’s convertible preferred equity investments in Particle was US$79.3 million. In addition, on January 28, 2016, the Company granted short-term unsecured loans to Particle in an aggregate principal amount of US$20 million.

  4.2015 20-F at 23.

    Simpson Thacher & Bartlett

    December 4, 2023

    -5-

    Division of Corporation Finance

U.S. Securities and Exchange Commission

  The Company believed the non-controlling investments into Particle were consistent with its digital media focus.  It disclosed to investors in 2017 20-F, “While we do not have control over, and therefore do not consolidate Particle, we may consolidate Particle as a subsidiary once Yidian Zixun’s user base reaches a certain level. We have also been collaborating closely with Particle in executing our mobile strategy. As such, if Yidian Zixun fails to grow its user base and expand its business, our efforts to expand our mobile platform may be materially and adversely affected, we may not be able to realize anticipated benefits from consolidating Particle as a subsidiary, and we may lose our entire investments in Particle.”

  Although the Company invested into Particle to expand its mobile platform and intended to consolidate Particle as a subsidiary once Yidian Zixun’s user base reaches a certain level, as the valuation of Particle increased, the fair value of the Company’s preferred shares in Particle increased. Soon thereafter, the investments into Particle became one of the Company’s most valuable assets, and the Company exceeded the threshold for relying on Rule 3a-1 (i.e., 45% of Rule 3a-1 securities) in 2015.

  In March 2019, the Company noted that there was a declining trends in Yidian Zixun’s user base, which meant that the Company was not able to take control over Particle and consolidate it as a subsidiary, and the Company entered into a share purchase agreement and a series of supplemental agreements thereafter, for the sale of the entire previously held convertible redeemable preferred shares of Particle for a total consideration of US$350 million in cash, as was disclosed to investors in the Company’s 2020 20-F.  The transaction was arranged to deal in several installments and the last batch transaction was closed on October 19, 2020.5

  As the Company sold down its interests in Particle, it began primarily investing the cash obtained from that into Capital Preservation Investments discussed previously to preserve the principal amounts and protect against erosion in real value due to inflation.

  The Company acknowledges that its investments into Particle and the subsequent disposition arguably represent significant milestones in the Company’s historical development, but the Company’s view is that the investment into Particle and its ultimate disposition was consistent with how the Company has consistently held itself out to investors as a digital new media business. The investment into Particle were a strategic investment designed to help the Company compete in the increasingly-important mobile space. The investments were initially structured as convertible preferred equity investment, and the Company had an option to assume a controlling stake over Particle and integrate its operations fully into the Company’s business once Yidian Zixun’s user base reaches a certain level. Throughout the duration of the investments, certain members of management of the Company held senior positions at Particle as well, further aligning the interests between the Company and Particle.

  5.2020 20-F at F-37.

    Simpson Thacher & Bartlett

    December 4, 2023

    -6-

    Division of Corporation Finance

U.S. Securities and Exchange Commission

  Ultimately, the Company sold its investments in Particle when there was a declining trends in Yidian Zixun’s user base made it clear that the Company was not able to take control over Particle and consolidate it as a subsidiary.

  When examined in full, and in the context of the broader analysis under the Tonopah factors, the Company does not believe that this episode in its historical development and the resulting impact on the Company’s historical asset test under Section 3(a)(1)(C) or Rule 3a-1, would prevent the Company from relying on Section 3(b)(1) today.

  4.Please (i) provide the approximate percentage of your non-cash assets that would be composed of investment securities, if all of the items described in comment 2 above would be tr