[Click eStock] "Skylife, Transforming Through Content Business"

Daishin Securities Report

[Asia Economy Reporter Minji Lee] Daishin Securities maintained a buy rating and a target price of 13,000 won on the 8th for Skylife, stating that the company is shifting from a subscriber recruitment-focused business to a content investment company.

In the fourth quarter of last year, sales reached 170 billion won and operating profit was 11.2 billion won, growing 3% and 35% respectively compared to the same period last year. TV subscribers decreased by 70,000, with maintained subscribers totaling 3.84 million. Since the fourth quarter of 2017, there has been a continuous decline, and for the first time since March 2013, subscribers fell below 3.9 million. On a monthly basis, the net decrease trend of Olleh TV Skylife (OTS), which began in December 2014, expanded to its largest scale (-35,000) in December last year, increasing the subscriber decline. Sky TV also experienced a temporary net decrease in November and December last year.

Researcher Kim Hoejae of Daishin Securities explained, “Profit fell short of market expectations due to cost increases from rising network usage fees and advertising revenue, network usage fees, marketing expenses for TPS (TV, internet, mobile) products, and increased incidental costs related to the HCN acquisition.”

UHD subscribers have accumulated to 1.56 million, accounting for 41%, increasing the proportion of high value-added subscribers, and ARPU (average revenue per user) has been on an upward trend since bottoming out in the second quarter of 2019. TV ARPU was 6,500 won, a 5% increase from 6,198 won in the second quarter of 2019. Internet sales recorded 17.9 billion won, a 97% growth year-on-year, as cumulative subscribers rose to 290,000 following the start of the internet resale business in the third quarter of 2017. The performance and outlook of the subsidiary Skylife TV were also favorable. Operating profit in the fourth quarter grew 47% year-on-year to 2.5 billion won, and operating profit for 2021 increased 97% to 13.1 billion won. The original contents ‘Steel Troops’ and ‘I am SOLO’ were hits, contributing to strong advertising growth and good results.

Currently, KT has established Studio Genie, which oversees content planning, investment, production, and distribution, entering the high-growth content business and providing 5G value-added services. Researcher Kim Hoejae said, “In October last year, the first original drama ‘Crime Puzzle’ was released through Seezn and Sky TV,” adding, “Sky TV operates seven channels and has extensive experience in producing original content, so it is expected to play a central role in KT Group’s media business.”

This year, the number of high-ARPU subscribers is expected to increase, centered on UHD. TPS subscribers, including internet and MVNO businesses, are also predicted to grow, mainly through TV. Researcher Kim Hoejae analyzed, “Subsidiary Sky TV has achieved record-high profits and is playing an important role in KT Group’s media business through its transformation into a content company,” adding, “With the completion of the HCN acquisition, synergy effects such as service expansion and cost reduction are expected.”

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