Megabox and Lotte Pursue Merger... Korea's Film Industry 'Big 2' Join Forces

On May 8, JoongAng Group and Lotte Group signed a memorandum of understanding (MOU) for the merger of their respective film-related subsidiaries, Megabox JoongAng and Lotte Cultureworks. With these two major conglomerates joining forces, significant changes are expected in the stagnant domestic film industry.

The merger will include not only the leading multiplex chains Megabox and Lotte Cinema, but also the film investment and distribution companies and content production firms operated by both groups.

Currently, Megabox JoongAng is 95.98% owned by JoongAng Group's Contentree JoongAng, while Lotte Cultureworks is 86.37% owned by Lotte Shopping. The newly established joint venture will be operated under a co-management system by both parties. Moving forward, they plan to swiftly pursue new investment opportunities and undergo a corporate merger review by the Fair Trade Commission.

Megabox JoongAng's main businesses include Megabox (cinemas), Plus M Entertainment (investment and distribution), and Playtime JoongAng (indoor kids park). Lotte Cultureworks operates Lotte Cinema (cinemas), Lotte Entertainment (investment and distribution), and Charlotte Theater (theater).

Through this merger, both companies aim to revitalize the theater industry, which has contracted since the pandemic, as well as to achieve cost savings and enhance competitiveness in areas such as advertising sales and theater operations. In particular, they plan to strengthen financial stability by reducing duplicate investments and to expand differentiated viewing experiences, such as the development of special theaters that cannot be replicated by online video services (OTT).

Additionally, by combining their respective film intellectual property (IP) and production and distribution capabilities, the companies intend to focus on producing and investing in high-quality content. They aim to reinvest improved profits to establish a virtuous cycle within the industry ecosystem.

A JoongAng Group representative stated, "We will create a sustainable business environment by securing differentiated screening environments and competitive content," and added, "This merger will provide better service to customers and serve as a catalyst for the revival of the Korean film industry."