[Click eStock] "CJ ENM to Benefit from End of China’s Hallyu Ban... Targeting Both Markets with Simultaneous Korea-China Content Broadcasts"

On June 11, Hanyang Securities analyzed that CJ ENM is expected to see a recovery in profitability across all business divisions starting in the second quarter of this year. At the same time, the company diagnosed that expectations for the normalization of cultural exchanges with China and the full-scale implementation of its global content strategy are providing new long-term growth drivers.

CJ ENM's performance in the second quarter is showing signs of recovery, with TV advertising revenue on the rise as political issues subside, and Tving's traffic and profitability rebounding in line with the opening of the professional baseball season. Lee Joonseok, a researcher at Hanyang Securities, stated, "A variety of titles are expected to be supplied in the F/S division starting in the second quarter," and projected that "top-line growth will continue through the second half of the year." He also analyzed that growth is anticipated in the music division, citing the success of 'KCON Japan' held in May and the broadcast impact of Mnet's global music program 'World of Swoopa (WSWF)'.

Although Tving and F/S are currently operating at a loss, they are considered core assets for CJ ENM. Lee explained, "Tving experienced a temporary decline in subscribers due to the termination of its partnership with Naver, but secured alternative channels through a new partnership with Baemin." He added, "In particular, traffic surged with the opening of the professional baseball season, allowing Tving to reclaim the No. 2 position in monthly active users (MAU) in May." He assessed that Tving's profitability is visibly recovering, driven by increased advertising revenue and reduced amortization expenses.

F/S supplied only five episodes in the first quarter, but is expected to supply 19 episodes in the second quarter, which is likely to significantly increase its contribution to revenue. Lee projected, "With multiple content releases scheduled for the second half of the year, top-line growth is expected to continue." He also emphasized that Tving has secured the No. 2 position in the domestic OTT market after Netflix and holds high strategic importance in terms of synergy with CJ ENM's own intellectual property. F/S is also serving as a bridgehead for CJ ENM's global expansion strategy by distributing content in a variety of markets, including North America, Central and South America, and Asia.

Meanwhile, recent expectations for the normalization of cultural exchanges with China are also projected to be an important opportunity for CJ ENM. Lee said, "If content that was previously not distributed in China due to regulatory disapproval is permitted to air again, it will be possible to generate revenue without incurring additional production costs." In the music division, he added that if groups such as ZB1, which include Chinese members, resume activities, there is also potential for increased revenue based on their local fan base.

In particular, the upcoming global boy group audition program <Boys2Planet>, scheduled to air in July, is being produced as a Korea-China joint project, increasing the proportion of Chinese participants and aiming for simultaneous broadcasting on local OTT and TV platforms. This strategic move targets both the Chinese and Korean content markets and, combined with CJ ENM's accumulated know-how from operating the 'Produce' series, is expected to contribute to the global expansion of K-POP intellectual property fandom.