[Click eStock] "Jcontentree, Enhanced Mid-to-Long-Term Growth Potential through Establishment of Independent Studio System"

[Asia Economy Reporter Eunmo Koo] Regarding JCNT, its subsidiary JTBC Studio has established an independent studio system, and it is analyzed that mid- to long-term growth potential will increase through securing funds via pre-IPO investment attraction and strengthening partnerships.

On the 15th, the merger of subsidiary JTBC Studio absorbing JCNT Studio was announced. Researcher Hwajung Lee of NH Investment & Securities stated in a report on the 24th, “With the establishment of JTBC Studio’s independent studio system, synergy among the value chain of the company’s content investment, production, and distribution will begin in earnest.” Furthermore, “Content investment funds are expected to be secured soon through a pre-IPO, with both financial investors (FI) and strategic investors (SI) participating in a paid-in capital increase valued at around 1 trillion KRW. If a Chinese online video service (OTT) operator participates as an SI, it will be possible to secure a stable Chinese revenue source through strengthened partnerships,” she explained.

On a consolidated basis for the fourth quarter, sales are estimated at 96.6 billion KRW, down 37% compared to the same period last year, and an operating loss of 14 billion KRW is expected to fall short of consensus. The researcher said, “The broadcasting sector is expected to turn profitable with an operating profit of 8.9 billion KRW,” adding, “Based on a binding contract with Netflix, Wednesday-Thursday dramas are being sold steadily, and ‘Hush’ is being simultaneously broadcast globally through the global OTT iQIYI, so strong overseas sales are expected in the fourth quarter.”

However, the theater sector is expected to turn to a loss, recording an operating loss of 22.9 billion KRW. The researcher forecasted, “Due to the prolonged COVID-19 pandemic, domestic box office sales in the fourth quarter shrank about 75% compared to the same period last year. Despite structural cost-efficiency efforts, a sharp decline in sales makes losses inevitable.”

JCNT operates holding and film and broadcasting businesses and was transferred to the KOSPI market in October 2019. Its major affiliates include Megabox (90.8%) in the film sector and JTBC Content Hub (68.0%) in the broadcasting sector. As of the end of 2019, the sales composition was 47.8% film and 42.2% broadcasting. The film business is the third-largest domestic operator with cost efficiency that stands out compared to competitors, and the broadcasting business is in the stage of building references based on binding contracts with global operators.