[Click e-Stock] "CJ ENM Expected to Recover in Second Half with TVING Partnership and Stronger Music IP"

On July 4, Samsung Securities analyzed that CJ ENM can expect a gradual recovery in the second half of the year, driven by the partnership effects of its OTT service TVING and the strengthening of intellectual property (IP) in its music business.

Choi Minha, a researcher at Samsung Securities, stated in a report released on this day, "Consolidated sales in the second quarter of this year are expected to reach approximately 1.205 trillion won, a 3.5% increase compared to the same period last year. However, operating profit is projected to be 32.8 billion won, a 7.2% decrease from last year and below the market consensus of 41.4 billion won." She explained, "Although content performance improved compared to the previous quarter, overall industry sluggishness and high performance in the same period last year led to a decline in TV advertising revenue by about 12.5%, which weighed on overall results."

In the case of TVING, there was a subscriber outflow in the first quarter due to the end of the Naver Plus Membership partnership in March. However, with the opening of the KBO League and the launch of new partnership products, subscribers recovered compared to the previous quarter. Nevertheless, compared to the same period last year, it is expected that a decline in subscribers was still unavoidable.

In the music business segment, all five artist teams under Lapone Entertainment released new albums and were actively engaged in promotions. In addition, KCON JAPAN, held in May, attracted 110,000 attendees over three days, raising expectations for improved profitability. Choi noted, "Profitability in the music business is expected to improve through the strengthening of IP."

The drama and film production subsidiary, Fifth Season, delivered three dramas and two films, increasing the number of titles delivered compared to the previous quarter and improving profits. On the other hand, the commerce segment is expected to see a decline in operating profit due to increased costs from the 'Come On Style' shopping festival held in April and the operation of an offline pop-up store in Seongsu-dong.

By business segment, operating profit in the media platform division is expected to decrease significantly to about 4.7 billion won, while the film and drama division is projected to record an operating loss of approximately 6.4 billion won. The music division is expected to post an operating profit of about 9.7 billion won, an increase from the same period last year, while the commerce division is projected to see a slight decrease to about 24.8 billion won.

In the second half of the year, changes are anticipated in both TVING and the music business. Choi stated, "TVING has seen a renewed increase in new subscribers since launching a bundled product with Baemin Club in June and introducing an integrated pricing plan with Wavve." She added, "In the music segment, additional profit improvement is expected through IP enhancement via the upcoming show 'Boys II Planet,' which is scheduled to air for the first time on July 17, as well as the effects of label diversification."