CJ ENM 'Soaring' Reinvigorated

Expectations for Media Sector Growth Resumption

[Asia Economy Reporter Eunmo Koo] CJ ENM's stock price is gaining momentum again with the start of the new year. Despite the slump in the film sector, which was hit hard by the novel coronavirus disease (COVID-19), the diversified growth strategy of the core media division is expected to boost overall profitability.

According to the Korea Exchange on the 12th, CJ ENM's stock price closed at 159,900 won, up 2.37% (3,700 won) from the previous trading day. While the KOSDAQ index, which seemed poised to easily surpass the 1,000-point mark, has only risen 0.8% this year and is stalling, CJ ENM's stock price has surged 14.6% during the same period, drawing a steep upward curve. Notably, it reached a 52-week high of 164,000 won intraday yesterday.

The recent upward trend in CJ ENM is interpreted as reflecting expectations for the resumption of growth in the media division. CJ ENM is diversifying its growth strategy through recent moves such as attracting external funding for its proprietary online video service (OTT) ‘Tving’ and signing a memorandum of understanding (MOU) with NCSoft. Earlier, Tving announced that JTBC Studio has become the second-largest shareholder with a 16.7% stake. With this funding, CJ ENM is expected to invest over 400 billion won in production costs over the next three years to strengthen platform competitiveness. Additionally, since Tving is scheduled to be added to Naver Membership, which has 2.5 million members, starting at the end of next month, subscriber growth is expected to gain further momentum.

The MOU signed with NCSoft is also raising expectations for various businesses utilizing related intellectual property (IP). The MOU with NCSoft is seen as a decision aimed at comprehensive synergy effects encompassing games, IT technology, and content. It is evaluated that the video adaptation of NCSoft’s game IP, characters, and universes, along with the use of CJ ENM-affiliated artists on digital platforms, will be key points.

Hwang Sung-jin, a researcher at Hyundai Motor Securities, said, "This MOU is part of a strategy to expand the partner group that can maximize business synergy beyond boundaries," adding, "Additional value creation will be possible through synergy between each other's platforms, owned IP, and content production capabilities."

Performance this year is also expected to meet investors’ expectations. According to financial information provider FnGuide, CJ ENM’s operating profit for this year is estimated at 313.1 billion won, an 18.9% increase from last year. Operating profit for the first quarter alone is expected to rise 55.1% year-on-year to 61.6 billion won.

However, the prolonged COVID-19 pandemic means that the slump in the film sector remains unavoidable. As theater demand has not recovered, anticipated releases such as ‘Hero’ and ‘Seobok’ have been postponed to next year, and last year’s fourth-quarter anticipated films like ‘Pawn’ and ‘Collectors’ underperformed, with audience numbers falling short of 2 million.

This content was produced with the assistance of AI translation services.