"Content Stocks Rise on Hopes of Hallyu Ban Lift in China"

NRTA Mentions "Promotion of Overseas Program Broadcasting"
Content Producers Anticipate Revenue from Copyright Sales and Simultaneous Broadcasting

After nearly nine years, China appears to be moving toward easing the "Hallyu Ban" (Hanhanryeong·Korean Wave Restriction Order). This development is raising expectations among domestic content producers, who have seen revenue growth through global OTT platforms such as Netflix, that a new market may soon open up.

On August 20, DB Financial Investment released a report titled "A Step Closer to Lifting the Hallyu Ban," analyzing that China's official remarks regarding overseas programs have increased the possibility of the ban being lifted. The report suggested that it is time to pay renewed attention to the media sector, which has been marginalized until now.

NRTA: "Remakes of Overseas Works Allowed, Imports of Foreign Dramas Encouraged"

On August 18, the National Radio and Television Administration (NRTA), which oversees China's broadcasting industry, announced through its official WeChat account that it would introduce "measures to promote the supply of radio, TV, and video content." The main focus was on revitalizing content through support for domestic dramas in China. However, the phrase "introduction and broadcasting of outstanding overseas programs" was officially included in the announcement.

Although the official document has not yet been released, media reports indicate that among the 21 measures known so far, the following are included: allowing remakes of Korean and Japanese works, encouraging the import of high-quality foreign dramas, and shortening the review period for imported dramas. Shin Eunjeong, an analyst at DB Financial Investment, commented, "This news is highly significant in that China has officially encouraged the import of foreign dramas," and added, "It is time to refocus attention on the previously neglected media sector."

"Stock Price Volatility Should Be Managed Until Official Contracts Are Signed with Domestic Producers"

DB Financial Investment analyzed that if the Chinese content market opens up, media companies can expect the following: (short-term) sales of existing titles, (mid-term) simultaneous broadcasting, and (long-term) original or co-productions. The report also provided revenue estimates assuming that copyright sales can proceed freely.

For Studio Dragon, it is expected that for existing titles (excluding originals), sales recognition could reach approximately KRW 3.5 billion, based on 10 titles per year (half of 20 annual titles) x 5 years x KRW 500 million to 1 billion per title. For simultaneous broadcasting, assuming a 50% recoupment rate in China and an average blockbuster value of KRW 4-5 billion, annual revenue contribution could reach KRW 4.5 billion for two titles. For Contentree JoongAng, for existing titles (excluding originals), sales recognition could reach about KRW 2.5 billion, based on 7 titles per year (half of 15 annual titles) x 5 years x KRW 500 million to 1 billion per title. For simultaneous broadcasting, the company could expect copyright sales of KRW 2.5 billion, based on two blockbusters at KRW 2-3 billion each x 50%. SBS, which holds 8-10 IP titles annually, could recognize about KRW 1.5 billion in sales for existing titles (4 titles x 5 years x KRW 500 million to 1 billion per title), and for simultaneous broadcasting, could expect copyright sales of about KRW 2 billion for two blockbusters at KRW 2 billion each x 50%.

Among small and medium-sized production companies, AStory, which owns its own IP and has extensive experience in overseas remake copyright contracts, such as with "Extraordinary Attorney Woo," is expected to benefit. CJ ENM is also expected to be able to sell IP for series such as "Hospital Playlist" and variety shows, and if it utilizes Chinese-speaking members from "Boys Planet 2," it could gain an advantage in the Chinese performance market as well. Analyst Shin Eunjeong stated, "The true lifting of the Hallyu Ban will ultimately be realized through simultaneous broadcasting, so until official contracts are signed with domestic producers, it is important to manage stock price volatility carefully."