[Featured Stock] SM C&C's Strategic Move to Strengthen Video Competitiveness with Naver and Kakao

[Asia Economy Reporter Hyungsoo Park] As Naver and Kakao present various possibilities for collaboration with SM Entertainment, SM C&C's stock price continues to rise. Naver and Kakao Entertainment are aggressively investing in the content sector. They are expected to acquire SM Entertainment, which has global K-pop artists, aiming for synergy such as expanding IP (intellectual property).

At 10:04 a.m. on the 31st, SM C&C was trading at 2,850 KRW, up 18.26% from the previous trading day. The stock price has continued its upward trend since soaring to the price limit on the 28th.

Among SM-affiliated listed companies, SM C&C has the highest rate of increase. Amid the COVID-19 pandemic, with 'online video services (OTT)' emerging as a new business opportunity, investors seem to be flocking to SM C&C, expecting its valuation to rise among SM affiliates.

On the 27th, SM Entertainment stated, "We are having multifaceted discussions regarding business partnerships and equity investments, but nothing has been finalized." Additionally, they added, "Related matters will be re-disclosed at the time of finalization or within one month." On the same day, Naver and Kakao also announced, "We are reviewing various options, but nothing has been specifically decided yet" in relation to this.

The analysis is that Naver and Kakao's push to acquire shares in the entertainment company SM Entertainment is aimed at strengthening content. The lack of affiliated artists has been pointed out as a limitation of the 'platform,' and acquiring shares in SM Entertainment, which has many artists, could also be advantageous for securing IP.

Naver is promoting the integration of 'Weverse,' HYBE's fan club community, and V Live. Kakao Entertainment may feel the need to strengthen competitiveness in the video market together with SM and SM C&C. SM C&C operates businesses such as advertising agency, content production, management, and travel. If SM collaborates with Naver or Kakao Entertainment in the content business, SM C&C's video production capabilities are expected to create a synergy effect.